INVENTORY

Unlocking the Secret to Warehouse Labor Costs

BY CSA STAFF

By Jeff Boudreau, Ryder Supply Chain Solutions

With the holidays approaching, retailers are once again facing the challenge of securing the right staffing levels in their stores to meet the higher demand of the season. And just as obtaining the right manpower levels is critical for capturing sales, reaching the right labor mix in the warehouse is essential in keeping inventory flowing smoothly through the supply chain.

But as every workforce planning expert knows, one of the major challenges of labor planning is balancing the need for more manpower with the need to control costs – which is why finding ways to work smarter with the same or fewer resources can help save on costs.

Retailers face unique workforce challenges. Demand is often difficult to project, which makes managing costs, labor, and productivity a tricky task. For the holidays or any season, retailer warehouses often need to operate with extended hours and extra staff. During off-peak times, or even downturns, retailers need to staff down.

One potential solution in the warehouse for retailers is applying the “Lean” production philosophy that originated in manufacturing. The fundamental principle of Lean is to focus on enhancing the quality of processes through continuous improvement and incremental changes. Workforce management is by no means a new concept to retail, but incorporating lean principles to workforce management is very new. A lean approach helps achieve optimal staffing and productivity in a constantly changing environment. Supervisors can build rules around staffing up and down depending on different business needs. Onboarding and training can be flexible and customized based on an employee’s unique skills. And the workforce can be directly engaged in identifying opportunities for improvement that will ultimately reap them personal rewards and incentives.

A lean approach to labor management in the warehouse is implemented by creating a culture where employees are taught to identify waste and inefficiencies in the processes carried out in the warehouse and are trained and incented to improve their performance continuously. Part of this process includes standardizing tasks and training employees in these standard tasks, identifying performance goals that are used to encourage better performance, and creating a rewards and recognition program that promotes improvement on an ongoing basis.

In a lean warehouse, workers are taught to identify inefficiencies and find better ways of carrying out tasks with Lean tools such as Kaizen exercises, A3 sheets, problem-solving jackets, and fishbone diagrams. Managers coach employees on finding new ways to carry out processes more quickly and with fewer errors.

The warehouse itself is also laid out for greater efficiency and productivity. The preferred way of carrying out a task is identified and work is standardized, so that employees understand exactly how they are expected to work, how much time should be delegated to each task, and whether they are meeting those performance and time targets.

By laying out the warehouse with clear labels and visual cues and standardizing work, managers are also able to understand how to plan labor to ensure they don’t have too many employees with not enough tasks, or not enough employees who end up being stretched too thin.

Additionally, standardized work makes it possible for warehouse managers to set performance goals and engage in the active training of the workforce for better performance. Managers can use tactics such as employee shadowing and instant feedback, or daily shift start meetings and monthly team meetings to coach employees on areas for improvement on an ongoing basis as well as continuously evaluate performance goals for more efficient operation. This focus on training should also include cross training, or encouraging workers to learn new tasks continuously within the warehouse so as to be able to create a flexible labor force that can adapt to changing needs.

Once these basic building blocks are in place, warehouse managers can then engage in a key piece for achieving peak performance from employees – creating a recognition and rewards program. Formalizing an incentive program motivates employees by developing the opportunities for workers to be recognized and serves as an engine to spur improvements on an ongoing basis. The truth is that people drive results, and employees must be motivated to give 100%. With goals in place and the coaching and tools to meet those goals, a recognition and rewards program ensures that employees feel motivated continually.

A Lean Labor Management program in the warehouse helps to control costs by preventing errors, mistakes, and inefficiencies through standard work processes; providing a map for desired performance; and securing a flexible labor force that is cross-trained in multiple tasks. A labor force with a Lean foundation will continue to provide value as it looks for new ways on an ongoing basis to take costs out of the supply chain.

Jeff Boudreau is VP, retail, Ryder Supply Chain Solutions


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Sandy Bodecker, the current VP of Action Sports at Nike, will now work on special projects involving long-term product innovation. Additionally, Jim Calhoun, CEO of Converse, will report directly to Mark Parker, president and CEO of Nike.

“Roger’s leadership over these important businesses will help continue to drive success for Nike,” said Parker. “I’d like to thank Sandy for his strong leadership over the last five years and look forward to his continued significant contributions to the company.”

Scott LeClair, VP and GM of Nike Skate and Nike Snow, will report to Wyett. Bob Hurley, currently the interim CEO of Hurley, will also remain in that position and will report to Wyett.

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Kohl’s makes it easy being green

BY CSA STAFF

MENOMONEE FALLS, Wis. — Kohl’s has activated its largest solar project to date at its million-sq.-ft. e-commerce fulfillment center in Edgewood, Md.

Kohl’s, a leader in renewable energy usage, opened the facility in 2011, and recently earned Leadership in Energy and Environmental Design certification from the U.S. Green Building Council at the gold level. The location is Kohl’s sixth solar site in Maryland. It is also the company’s first LEED-certified logistics facility.

“The Edgewood facility demonstrates Kohl’s collective approach to environmental responsibility in many ways, including our commitment to collaboration with our partners and expanding our successful programs such as solar and LEED certification,” said John Worthington, Kohl’s CAO. “We worked with experts internally and externally to maximize the sustainable aspects of this site, which ranged from expanding onto and retrofitting an existing building structure to addressing the nature of the distribution center as an industrial, round-the-clock facility with different operational considerations than what our stores may have. We are very pleased with the results and look forward to carrying forward what we have learned into future building and LEED projects.”

The Edgewood e-commerce fulfillment center’s 2.4 MW, 8,360-panel rooftop solar array will generate more than 3 million kWh of electricity annually and provide more than 40% of the facility’s energy. Up until this project, Kohl’s largest solar site was its San Bernardino, Calif., distribution center with a 1 MW, 6,208-panel rooftop solar array. As one of the largest single retail hosts of solar power in North America, Kohl’s solar portfolio now totals nearly 42 MW, generating more than 57,400 Megawatt-hours of electricity annually.

The company has also made continued progress related to its commitment to environmentally responsible building design, construction and operation. Beginning with the gold LEED certification of its Milwaukee photo studio in 2008, Kohl’s set a goal to LEED certify all new corporate buildings and all newly constructed stores. The company has since earned LEED gold certification on volume prototypes for new and existing stores, resulting in more than 300 LEED-certified locations from coast to coast.

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