Chain of Thought

Gimme Shelter from Falling Productivity Numbers

Just when the daily business stats start pointing to a boom in the making, someone grabs hold of that boom and lowers it on you. Here's a headline that appeared in the business section of my local paper this morning:

“U.S. productivity rose less than first estimated”

Even we at MH&L have been reporting a lot of positive economic numbers from various sources lately. But apparently the Labor Department was too generous in its last report. The measure of employee output per hour rose only at a 2.3% annual rate during that period, not the 3.1% it reported previously.

“Companies may find it harder to maintain earnings growth with productivity cooling relative to the recovery, when employment fell faster than output,” the report stated.

If these productivity numbers get you down, the Material Handling Industry is always there to lift you up—ergonomically, of course. Last week I traded e-mails with Tom Kozenski, VP of Product Marketing at RedPrairie, the warehouse management system (WMS) providers. I was doing some research for a story on automation. We discussed system integration and the new role a WMS played in today's businesses.

First of all, we should really call a WMS by the role it has grown into: as a supply chain execution system. As such, today's SCE products help to “productize” integration between two technologies. Kozenski says the component-based design of today's solutions allow for an “iterative communication” between a WMS and material handling equipment.

The term “iterative” has also been applied to system design in general. That's where the designer goes back and forth between the different steps until a satisfactory design is produced. It also fits into the “Services Oriented Architecture” material handling system vendors are offering. Where warehousing and distribution are concerned, SOA separates functions into distinct units, or modules, which users can access over a network and combine them as needed in their operations.

What does this have to do with productivity?

“Automation provides an opportunity to minimize the labor impact on operational costs, as well as optimize overall facility throughput,” he told me. “If anything, the current use of automation has been enhanced over the past few years because of that more intimate system integration that's going on. The communication between a WMS and material handling equipment is highly configurable and offers real-time connectivity. The use of automation supports the idea of what some economists call the “workerless recovery,” where companies are starting to grow again and increase capacities, but doing so without a reciprocal hiring of warehouse labor.”

So if you've been struggling to squeeze more productivity out of your workers—or even to hire the talent you need to maintain productivity, the material handling industry is working to make a good case that the overall ROI of an automation project looks a lot better today than what employee turnover is costing you.

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