What is a Labor Management System, and Why You Need One Today
Labor costs reportedly take up to 60% of total costs in many production facilities. Such increases have enhanced the need for businesses to prioritize labor management systems (LMS) to achieve high returns from their operations.
An LMS generally manages the day-to-day human labor activities within an industrial setting. It compiles employee data, sets benchmarks, and measures overall productivity alongside costs.
These systems provide multiple features such as visibility and reporting tools. They can be both niche and comprehensive to cater to different types of businesses.
This article will show you why you need a Labor Management system for your warehouse today and how to choose the best one.
How Does a Warehouse Labor Management System Work?
Ideally, a Warehouse LMS supports and monitors labor productivity at your facility. It keeps track of labor units (workers), inventory, equipment use, etc.
With this data, your HR staff can then analyze such data as outputs, productivity levels, and bottlenecks.
What does it do?
- Pulls data from your Warehouse Management system and other sources, which it then reorganizes in the system for easy reporting and visualization.
- The LMS sets the standard/benchmark for employee performances which it then uses to analyze their outputs. Your supervisory teams could determine this standard through observation. Alternatively, your existing data-based systems can examine the current output levels and choose a higher ideal level. With that data in the system, your staff can compare your workers’ actual performances to determine their current overall productivity.
- When integrated with the warehouse labor management system, it can also forecast the number of workers needed at a given time/task.
Example: Labor Management in SAP EWM
SAP Extended Warehouse Management (EWM) fulfils the need for a comprehensive link between the supply chain and warehouse activities.
It handles not only the basic in and out goods activities but also supports other processes like returns switching, among others.
The system monitors all activities in the warehouse and automates additional functions like resource optimization, creating batch numbers, packaging, etc.
Whereas the SAP EWM is more beneficial for larger facilities, you can also adapt it to a small warehouse.
Key benefits of SAP EWM and Warehouse labor management systems include:
- Facilitates resource management: our staff will be able to identify, track and operate inventory and other resources. With this information, it would become easier to assign the needed labor.
- Increases transparency and accuracy: Since the system interlinks multiple supply chain elements, you can have full insight all through the process. Ultimately, this boosts efficiency.
- Predicts required staffing levels: With enterprise-wide visibility, you can tell how many workers you will need at a given period. That way, you reduce issues associated with overstaffing or understaffing.
- Low labor costs: An SAP EWM will help you significantly lower your labor costs. It provides insight into the present and potential productivity levels, which you can use to balance your labor needs.
- Improve employee productivity: The system helps you identify your most productive and unproductive workers. You can then act accordingly to provide training or lay off workers as required to boost profitability.
What to Look For When Choosing a Labor Management System
Choosing the right LMS is essential for your business to get the most out of your human capital and maximize productivity and effectiveness. No wonder it is a top priority for many companies.
Some key functionalities an ideal LMS should have include:
1. Flexible and Advanced Reporting Features
The primary function of an LMS is to help you analyze employee performance. Whichever system you use must have robust reporting features. Since your reports will constantly change, the system’s features must also be adjustable in the long run.
If your system only offers basic reports, it could get more expensive to purchase add-ons or constantly seek support help from your seller.
Top tools like Conmitto and others offer a wider range of analytics tools, backed by data and advanced intelligence systems. These can help you create custom or hybrid reports easily from scratch or using existing base files.
Additionally, the system should allow you multiple reporting formats such as graphs, pie charts, etc. It should also permit you to export your reports in several formats for flexibility, such as excel PDFS.
2. A comprehensive and adaptable system facilitates growth and reduces system operational costs in the long run. Integration Capabilities
Often, businesses need to feed their LMS with inputs from other systems, e.g., production data from their WMS. In such a case, your chosen LMS must be able to integrate seamlessly with your existing tools.
A smooth integration will save you the time and labor costs of manually inputting your data into the system.
If you need to integrate an existing interface with your new system, you must choose an LMS vendor with the necessary experience. Ensure they are familiar with your current systems and their functionality.
The right LMS for your business should effectively pull all the necessary data to generate your reports with less time and money costs. It could also help you create an all-in-one system that links your warehousing, labor, and sales teams for better operations.
3. Overall Performance Focus
Most LMS tools emphasize productivity and labor scheduling. However, this often comes at the cost of quality and employee welfare.
The ideal LMS should factor in such third-party considerations when calculating benchmarks. These could include damages caused, safety considerations, workers’ off days, etc.
LMSs with comprehensive functionality help managers to take informed action when relying on the tools for data. They would also find a healthy balance between the outputs and overall business interests and functionalities.
The ideal LMS should be able to grow with your business. You want to avoid the costs of acquiring new systems every other year as your business grows. Therefore, it is best to choose a solution that offers you scalability in terms of storage, features, additional integration, among others.
5. Cloud-based vs. on-premise systems
When choosing a Labor Management System, you will have to choose between a physical or a cloud-based system. The latter requires physical system installations and maintenance.
On the other hand, cloud-based LMSs work on subscription models and require no hardware installations.
Whereas physical systems pose a few benefits like increased control, you may want to consider getting a cloud-based LMS like Conmitto. Cloud-based warehouse labor management systems provide:
- Faster implementation: These are easy to set up and start using since they do not involve any installations.
- Cost-effectiveness: You only pay for subscriptions upfront on day one. Furthermore, the costs are based on usage, for example, the number of accounts you need. Therefore, you spend less on the system itself and maintenance costs in the long run.
- Scalable: Cloud-based systems are easily adaptable and scalable to your business needs. So, as you grow, you won’t need to worry about complex upgrades and accounts.
Regardless of your business size or industry, you need an LMS if labor takes up a large part of your costs. The systems will greatly reduce your labor costs in the long run while improving your productivity immediately.
However, to maximize these benefits, you should adopt a comprehensive, adaptable system, like Conmitto. This Supply Chain Management system is the all-in-one solution you need to sync all your logistics, warehousing, and production activities.
Want to know more? Contact us today and find out how we can help your business.