Fallacies of Logistics Productivity Management

Productivity management represents perhaps the lowest-hanging fruit for companies interested in reducing supply chain and distribution costs. With its accelerated return on investment, a productivity management system delivers a rapid, deterministic payback that can improve distribution center labor productivity 10 percent to 30 percent, as well as provide a long list of other benefits.

A report produced by RedPrairie, The 10 Fallacies of Productivity Management, shows how understanding these misperceptions and the reality of actual experience will clear a path for distribution companies to take advantage of the opportunity for significant savings through productivity gains and rapid return on investment afforded by these solutions.

Included in these fallacies are:

  • I'm already getting productivity management from my current software systems.
  • While leading best-of-breed warehouse management systems drive enhanced distribution center productivity, they do not deliver the depth of productivity management capabilities a true productivity management system can.
  • Productivity management embodies an old, unenlightened way of thinking about employee relations.
  • Achieving increased labor productivity, improved quality and enhanced employee retention will always be in style.
  • Implementing a productivity management system will reduce morale and increase employee turnover.
  • Experience in implementing productivity management systems indicates the reverse is true.
  • Productivity management benefits are primarily for the distribution center manager.
  • While the DC manager and his operation will benefit significantly, productivity management can provide a broad set of benefits that support many organizational objectives.
  • Adding productivity management to a WMS implementation will increase complexity and, therefore, risk.
  • Actually, the reverse is generally true. Almost invariably, companies that implement warehouse management systems wish they had invested more in training.
  • Productivity management software doesn't add a lot of value. Developing and implementing engineered standards drives most of the benefits.
  • Companies that have embarked on engineered standards for distribution find their investment in this process delivered less than expected results. Those that do achieve benefits from the standards process find the momentum and results realized deteriorate through gradual neglect.
  • We have high quality DC supervision — a new "system" won't provide much incremental benefit. The foundation of productivity management is precise, discrete goaltime calculation and detailed feedback, along with reporting and capabilities that require robust technology support.
  • Productivity management requires too much time for data collection and administration.
  • Companies that have implemented warehouse management and radio frequency identification systems already have the data collection infrastructure required to support a productivity management system. Those without these systems can benefit from productivity management through collection methods such as computer-based data entry.
  • Productivity management is unnecessary in an incentive environment.
  • The distribution incentive systems of most companies are built on historical average unit-based productivity. Much less often, they include travel distance as a factor in the incentive calculations.
  • Productivity management won't work in a union environment.
  • Productivity management systems have a successful history of implementation in union distribution shops. Unions have accepted the fundamental basis of preferred methods for warehouse tasks, and desire fair and accurate reporting.

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