Set Labor and Human Standards High

May 19, 2011
In my last blog post from the Warehousing Education and Research Council (WERC) conference in Orlando, I may have left you with the impression that a theme seemed to be emerging—that successful material handling and logistics as practiced by warehousing ...

In my last blog post from the Warehousing Education and Research Council (WERC) conference in Orlando, I may have left you with the impression that a theme seemed to be emerging—that successful material handling and logistics as practiced by warehousing professionals is based on people skills. As I conclude my WERC observations, I can't help but continue this theme.

I attended several sessions on labor standards and training, and the clear message is that, even when adopting new technologies, the only way to achieve an ROI is by focusing on your human element. In his session on “Crowd Engineering in your DC,” Charles Epps, industrial engineer, director of customer service for the William Carter Co., providers of baby and young children's clothing, explained how he worked with The Progress Group consultants to apply labor standards. It had been using training guides for zone picking that told employees how to do their job.

“We knew what to do but we never told them how to do it the right way, so performance varied,” Epps said. “For example, how do you walk and scan at the same time? The Progress Group was brought in to improve efficiency and productivity by developing labor standards to improve methods.”

Epps is an industrial engineer, and he admitted that one of the problems is that IEs in his organization tend to get promoted to other areas of the company so the company loses a lot of methodology with those moves. That makes it more important to ask associates what the engineers don't see on the floor. The conclusion is that supervisors have issues too. They're responsible for making sure work is always available for the associates. Holds, slow neighbors and out-of-work were the main performance barriers.

Crowd engineering at Carter changes the game from the laboratory to leveraging the collective intelligence of associates in the real world of work. They come up with their own best methods. Carter has developed coaching sheets to train supervisors so they can learn to explain variances. The result was over a 40% improvement in productivity. They celebrate successes and recognize those who are doing a good job. They also found they didn't need a financial incentive program to make standards work.

In another session on labor management, Caroline Dreyer, vice president of fulfillment operations for the Home Shopping Network, explained how she worked with TZA Consulting to find the right way to apply people, processes and technology. In contrast to the Carter story, HSN does apply financial incentives to juice up human performance. This makes standards even more critical, and Dreyer said if you build standards around what people have already done you build inefficiencies into your approach. That's why she relies on a best practice multidisciplinary team that includes HR, IT and engineering to make sure they're defining fair standards.

“You can have 400% variability if you don't define a fair standard,” Dreyer said. “Engineered standards give you building blocks. But make sure management validates the standards. This promotes buy-in.”

HSN uses those standards as the foundation of their pay-for-performance system. They took two years to roll this program out, but eventually realized a 20% increase in productivity and asset utilization. They also drove cost per unit down 13% resulting in a savings of $4.9 million.

Lessons: don't start in your most tenured, experienced facility. Start with the smallest. Dreyer admitted their original timeline was too short, and they learned the importance of taking more time to help employees understand the standards. Their biggest results came from processing more throughput using the same headcount. 75% of their employees are earning gainsharing money—an additional $25 per week on average.

But, just as was learned in the Carter experience, supervisors need to provide the right environment to make standards work. That means releasing work to the floor on time and ensuring a clean, uncluttered workplace.

Clutter is a mental thing too, and it was luncheon speaker Randy Lewis, senior V.P. of distribution and logistics for Walgreens who stole the WERC show with his moving presentation demonstrating how it's possible for “typically abled” executives and associates to clear the clutter of prejudice from their minds to bring a new standard of excellence to the logistics workplace. Lewis said that before his organization committed itself to employing “differently abled” people in Walgreen's Anderson, SC distribution center, he was concerned about their ability to find enough good candidates for employment.

That concern is gone. Today, 40% of the employees at the Anderson site have disabilities. That's 198 people. Another facility in Connecticut has 222 with disabilities—half the workforce. Lewis says it ups everyone's game. The differently abled rise to the challenge of working in a DC environment and their typically abled associates learn the joy of helping make someone else successful. The payoff is employees who find things to do during lulls in the action—without waiting for a push to get busy.

“It changed the way we manage,” Lewis said. “We're better people as well as better managers.”

In a follow-up session, Chris Johnson, division VP at Walgreen's, said his biggest fear was how the typically abled would accept this. Just as in the Carter and HSN cases, communication is key. Walgreen's focused on getting employee input in preparation for this model.

“They came up with solutions on how to make it work,” Johnson said.

And it works in more ways than one. What I learned from this year's WERC conference through session after session was that just as labor standards help make the work environment safer and more productive, so do high standards of human behavior. But don't take it from me, take it from Randy Lewis, who lives this philosophy every day at Walgreen's. His typically-abled employees have raised their own performance bar and their differently-abled colleagues are more than happy to join them in their leap of faith to get over preconceived doubts about the power of their own human spirit.