At the Container Store's DC, there's no need for bosses to ride herd over work crews. Performance scores displayed on a giant electronic scoreboard let workers pace themselves throughout the day.
James Cooke is a principal analyst with Nucleus Research in Boston, covering supply chain planning software. He was previously the editor of CSCMP?s Supply Chain Quarterly and a staff writer for DC Velocity.
Though they work deep in the heart of Texas Rangers and Dallas Cowboys territory, workers won't find the latest game results on the giant scoreboards in the Container Store's Dallas-area DC. But they will find something very nearly as compelling. With its displays refreshed throughout the day, the four-foot electronic LED scoreboards delivers continuous updates on a topic of almost limitless (and universal) fascination to workers: their own performance.
Drawing on real-time data from the DC's labor management and warehouse management systems, the giant scoreboards system from Symon Communications tells workers exactly where they stand—how many tasks they've completed, how many assignments are left in the queue, and how their performance is stacking up against the facility's standards. The scoreboards itself represents something of a productivity breakthrough. When the company first installed its labor management system, supervisors found themselves constantly stopping to run performance reports for workers eager to know how they were doing. Now, key performance numbers are displayed on a screen mounted near the ceiling for all to see.
It's important to note that this is not management by intimidation (or public humiliation). The Container Store, which has earned a spot on Fortune magazine's "100 best companies to work for" list for seven consecutive years, is not that kind of place. The performance scores shown on the big boards aren't for individual workers but for work areas, explains John Murphy, a vice president for work-force management at Waukesha, Wis.-based RedPrairie, which provided the labor management software used at the facility. The idea is to make workers responsible for getting the work done without bosses riding herd over them, he says. "You want to make the associates self-accountable to get the work done in an appropriate amount of time with safety and quality."
Stuart M. Smith, senior supply chain specialist at Symon Communications, says that his company has found that real-time measures clearly visible to workers helps drive workers to perform at higher levels.
So far, the scoreboards system appears to be having the desired effect. "It has been very successful [in] giving our employees visibility about their performance throughout the day," says Christy Parra, director of logistics systems for the national retailer. "It's neat to see an employee come up at the dock and say,'88 [percent], I've got to get a move on,' and you can watch it go to 90 percent within the next 15 minutes."
The push for labor standards
Like the Container Store, DCs across the country have been implementing labor management systems (LMS) in an effort to boost labor productivity. The reason is no mystery. "You've got more competition from outsourcing or offshoring for labor," says Richard Sherman, an industry solutions manager for Microsoft's World Wide Enterprise Partner Group at the company's Austin, Texas, office. "You've got to find a way to dramatically increase the productivity of your workers."
Labor management systems are relatively new. A decade or so ago, reliable data on how long it took workers to complete various warehouse tasks were hard to come by. Most DCs didn't even try to keep tabs on the activities of their order selectors, receivers and forklift drivers. The few that did relied on the recollections of supervisors.
The advent of warehouse management systems (WMS)—coupled with radio-frequency (RF) systems— changed all that. Warehousing software offers a simple— and automated—method of monitoring a worker's performance through "time-stamping." When an employee takes a pallet off the loading dock and scans its bar code with an RF reader, for example, the WMS records the action and logs it into a database. Then when the worker deposits the pallet into a storage rack and scans the bin location, another time-stamp is created to indicate that the task has been completed. The WMS can keep a log for each task performed by each individual worker.
"The advent and universality of WMS has opened the door to these labor packages," says Geoff Sisko, a senior vice president with the consulting firm Gross & Associates in Woodbridge, N.J. "The warehouse management systems capture time information to create baselines."
Today's labor management systems can do much more than simply compile records of how many time-stamped tasks have been completed, however. They can also analyze the data, comparing an individual's performance against an established labor standard, for example. To establish labor standards, companies often hire an industrial engineer to come in and analyze workplace activities, conducting ergonomic, labor and time-andmotion studies of the various operations. Once the standards are fed into the application, the LMS can then benchmark activity against those standards and generate performance reports for both individuals and the operation as a whole.
the Container Store's metrics system
In the world of DC order fulfillment, there are only two things that matter: getting orders out quickly and getting them right. So it should come as no surprise that the performance metrics used in the Container Store's DC focus squarely on speed and accuracy. Here what the DC measures:
Store replenishment:
Picking performance to standard
Loading performance to standard
Labor hours per truck
Replenishment and putaway:
Full pallet replenishment performance to standard
Partial pallet replenishment performance to standard
Putaway performance to standard
Moves performance to standard
Completed tasks per hour
Fulfillment (direct to customer for online and phone sales):
Picking performance to standard
Packing performance to standard
48 hour order throughput
Payroll $ per order (requisition)
Quality:
Audit accuracy rate
Fill rate
Location unit accuracy (generated from daily random cycle counts of DC locations)
Dock to stock throughput:
Units received per labor hour (unloading, sorting, receiving into WMS)
Quick results
Among the first industries to embrace the use of DC labor management software was the grocery industry, which is still a largely manual operation. "Although some grocery chains have tried to automate, the most efficient method is still guys walking around with pallet jacks," says Sisko. Given the manual nature of the work and the industry's notoriously low margins, it's not hard to see the appeal of a tool that promises to optimize their DC labor and cut costs.
As word has spread about the benefits of LMS, other industries that rely heavily on manual labor—retail and consumer goods manufacturing, for instance—have begun to follow suit. "In the last six months, we've seen a surge of interest in labor packages," says Peter Schnorbach, senior director of product management for Atlanta-based Manhattan Associates, a supply chain software vendor whose offerings include a labor package. "We've seen this surge because wages are up and productivity is low, and everybody is looking to cut their costs."
Companies that install labor management software can expect to see productivity improvements of as much as 20 percent, reports Greg Aimi, a research director with AMR Research Inc. in Boston. And it doesn't take years to get these applications up and running, he adds. Most companies find they can implement a labor management package in 15 to 30 weeks.
The buzz appears to be translating into increased sales. Aimi reports that software vendors earned between $40 million and $50 million in revenue from labor systems last year. Key players in this market include such well-known names as RedPrairie, Manhattan Associates, Catalyst, Retalix, Provia and SSA Global, which sell either stand-alone packages or modules that can be added to their warehouse management systems. Aimi notes that some warehouse consulting firms have begun marketing their own labor software as well.
Container Store gets its DC in order
In the Container Store's case, the decision to install labor management software was prompted by double-digit growth. In recent years, business has been expanding at a rate of 20 to 25 percent for the retailer, which sells totes, bins, stacking units, garbage cans, shelving and baskets—just about everything needed to organize the home or office.
Though it's been steadily adding stores in the past few years (the company now operates 38 stores nationwide), the retailer has not added DCs. Everything sold by the Container Store is received, processed and shipped by a single DC located in the Dallas suburb of Coppell, Texas. And as the DC's workload swelled, the company began looking for ways to manage the growth without hiring battalions of new workers.
The Coppell DC, which serves both stores and individual customers, employs between 250 and 325 non-union workers and houses about 8,000 stock-keeping units (SKUs). As trucks roll into the facility, workers use forklifts to offload the merchandise and move pallets of product into storage. In most cases, the workers who handle pallet putaway are also responsible for replenishing the case- and item-picking areas.
At the same time, other workers are busy filling replenishment orders from stores. The average replenishment order consists of about 1,000 SKUs, which means items have to be picked from storage locations throughout the 735,000square-foot DC. To keep travel to a minimum, order pickers are generally assigned to specific zones. In the case pulling areas, workers pull cartons onto pallets with pallet jacks. In the less-than-case areas, they pull loose products into totes for their journey to stores. Once picking is completed, workers build full pallets loads to take to the shipping dock, where they floor-load the store-bound trailers.
Along with filling store replenishment orders, workers at the Coppell DC also fill orders placed by individual consumers online or over the phone. These orders are handled separately in a special section of the DC.
When it came to setting performance goals for all these activities, the process used in the past was haphazard at best. Managers had no real way of knowing how much time should be allotted to each task, says Parra. "What we found ourselves doing was setting our goals based on what we did," she says. "So if history said we could do 92 picks per hour, our goal might be 95."
As the DC prepared to launch the labor management program, however, it became clear that it would need a more rigorous approach. So once the Container Store had chosen a software package (a labor management system from RedPrairie that's tied to its Catalyst WMS), the vendor sent an engineer to the Texas facility for three months of observation. "The engineer optimized the process by writing down the flow, step by step," says Parra. "We did the observations to make sure what we defined as standard was exactly what we were performing in real life."
Among other benefits, the detailed workflow analysis allowed the DC to set better calibrated standards for order picking, a task whose demands vary wildly according to a product's weight, its accessibility, and the distance the worker must travel. "Engineered labor standards take all those variables into consideration," says Parra. "The standards take into account how much an item weighs, if it's a hefty box as opposed to a skimpy one."
From those observations, the engineer developed metrics for key activities, including store replenishment and fulfillment. (See accompanying box for a complete list of metrics.) Implementation of the software began in the spring of 2005 and took six months to complete. The DC currently uses the labor software to measure performance in its outbound operations. It plans to introduce the program to its inbound operations this spring.
Bringing order to chaos
Asked how the new system is working out, Parra responds—fittingly enough—with an organizational analogy. "It's like reorganizing your closets or redoing your room to become more productive," she says. "You've cleared out the chaos. Managers can manage better because they have better visibility and can see what's happening from an operations standpoint."
That improved visibility has also given the retailer a better handle on its work-force needs, she adds. "We can better plan labor if we know what our current labor can do."
But perhaps more importantly, the labor management system has allowed the workers to take responsibility for getting the job done. They no longer have to rely on progress reports from supervisors. A glance at the scoreboards gives them the information they need to calibrate their own performance throughout the day. "It's not a management tool to figure out what people aren't doing their part," Parra emphasizes. "It's a tool for our employees."
So far, at least, workers seem to be making good use of that tool. The Container Store has seen improvements in performance against three of its metrics: direct labor hours per truck (a metric used for store replenishment), completed tasks per working hour (a measure of putaway performance), and payroll dollars per order requisition (a metric tied to the fulfillment of online and phone orders).
Better yet, at a time when U.S. Labor Department figures show that productivity growth has stalled among non-farm businesses, the retailer's DC is bucking the trend. Since deploying the labor management software, the company has seen its direct labor productivity jump by 7 percent.
Nearly one-third of American consumers have increased their secondhand purchases in the past year, revealing a jump in “recommerce” according to a buyer survey from ShipStation, a provider of web-based shipping and order fulfillment solutions.
The number comes from a survey of 500 U.S. consumers showing that nearly one in four (23%) Americans lack confidence in making purchases over $200 in the next six months. Due to economic uncertainty, savvy shoppers are looking for ways to save money without sacrificing quality or style, the research found.
Younger shoppers are leading the charge in that trend, with 59% of Gen Z and 48% of Millennials buying pre-owned items weekly or monthly. That rate makes Gen Z nearly twice as likely to buy second hand compared to older generations.
The primary reason that shoppers say they have increased their recommerce habits is lower prices (74%), followed by the thrill of finding unique or rare items (38%) and getting higher quality for a lower price (28%). Only 14% of Americans cite environmental concerns as a primary reason they shop second-hand.
Despite the challenge of adjusting to the new pattern, recommerce represents a strategic opportunity for businesses to capture today’s budget-minded shoppers and foster long-term loyalty, Austin, Texas-based ShipStation said.
For example, retailers don’t have to sell used goods to capitalize on the secondhand boom. Instead, they can offer trade-in programs swapping discounts or store credit for shoppers’ old items. And they can improve product discoverability to help customers—particularly older generations—find what they’re looking for.
Other ways for retailers to connect with recommerce shoppers are to improve shipping practices. According to ShipStation:
70% of shoppers won’t return to a brand if shipping is too expensive.
51% of consumers are turned off by late deliveries
40% of shoppers won’t return to a retailer again if the packaging is bad.
The “CMA CGM Startup Awards”—created in collaboration with BFM Business and La Tribune—will identify the best innovations to accelerate its transformation, the French company said.
Specifically, the company will select the best startup among the applicants, with clear industry transformation objectives focused on environmental performance, competitiveness, and quality of life at work in each of the three areas:
Shipping: Enabling safer, more efficient, and sustainable navigation through innovative technological solutions.
Logistics: Reinventing the global supply chain with smart and sustainable logistics solutions.
Media: Transform content creation, and customer engagement with innovative media technologies and strategies.
Three winners will be selected during a final event organized on November 15 at the Orange Vélodrome Stadium in Marseille, during the 2nd Artificial Intelligence Marseille (AIM) forum organized by La Tribune and BFM Business. The selection will be made by a jury chaired by Rodolphe Saadé, Chairman and CEO of the Group, and including members of the executive committee representing the various sectors of CMA CGM.
The global air cargo market’s hot summer of double-digit demand growth continued in August with average spot rates showing their largest year-on-year jump with a 24% increase, according to the latest weekly analysis by Xeneta.
Xeneta cited two reasons to explain the increase. First, Global average air cargo spot rates reached $2.68 per kg in August due to continuing supply and demand imbalance. That came as August's global cargo supply grew at its slowest ratio in 2024 to-date at 2% year-on-year, while global cargo demand continued its double-digit growth, rising +11%.
The second reason for higher rates was an ocean-to-air shift in freight volumes due to Red Sea disruptions and e-commerce demand.
Those factors could soon be amplified as e-commerce shows continued strong growth approaching the hotly anticipated winter peak season. E-commerce and low-value goods exports from China in the first seven months of 2024 increased 30% year-on-year, including shipments to Europe and the US rising 38% and 30% growth respectively, Xeneta said.
“Typically, air cargo market performance in August tends to follow the July trend. But another month of double-digit demand growth and the strongest rate growths of the year means there was definitely no summer slack season in 2024,” Niall van de Wouw, Xeneta’s chief airfreight officer, said in a release.
“Rates we saw bottoming out in late July started picking up again in mid-August. This is too short a period to call a season. This has been a busy summer, and now we’re at the threshold of Q4, it will be interesting to see what will happen and if all the anticipation of a red-hot peak season materializes,” van de Wouw said.
The report cites data showing that there are approximately 1.7 million workers missing from the post-pandemic workforce and that 38% of small firms are unable to fill open positions. At the same time, the “skills gap” in the workforce is accelerating as automation and AI create significant shifts in how work is performed.
That information comes from the “2024 Labor Day Report” released by Littler’s Workplace Policy Institute (WPI), the firm’s government relations and public policy arm.
“We continue to see a labor shortage and an urgent need to upskill the current workforce to adapt to the new world of work,” said Michael Lotito, Littler shareholder and co-chair of WPI. “As corporate executives and business leaders look to the future, they are focused on realizing the many benefits of AI to streamline operations and guide strategic decision-making, while cultivating a talent pipeline that can support this growth.”
But while the need is clear, solutions may be complicated by public policy changes such as the upcoming U.S. general election and the proliferation of employment-related legislation at the state and local levels amid Congressional gridlock.
“We are heading into a contentious election that has already proven to be unpredictable and is poised to create even more uncertainty for employers, no matter the outcome,” Shannon Meade, WPI’s executive director, said in a release. “At the same time, the growing patchwork of state and local requirements across the U.S. is exacerbating compliance challenges for companies. That, coupled with looming changes following several Supreme Court decisions that have the potential to upend rulemaking, gives C-suite executives much to contend with in planning their workforce-related strategies.”
Stax Engineering, the venture-backed startup that provides smokestack emissions reduction services for maritime ships, will service all vessels from Toyota Motor North America Inc. visiting the Toyota Berth at the Port of Long Beach, according to a new five-year deal announced today.
Beginning in 2025 to coincide with new California Air Resources Board (CARB) standards, STAX will become the first and only emissions control provider to service roll-on/roll-off (ro-ros) vessels in the state of California, the company said.
Stax has rapidly grown since its launch in the first quarter of this year, supported in part by a $40 million funding round from investors, announced in July. It now holds exclusive service agreements at California ports including Los Angeles, Long Beach, Hueneme, Benicia, Richmond, and Oakland. The firm has also partnered with individual companies like NYK Line, Hyundai GLOVIS, Equilon Enterprises LLC d/b/a Shell Oil Products US (Shell), and now Toyota.
Stax says it offers an alternative to shore power with land- and barge-based, mobile emissions capture and control technology for shipping terminal and fleet operators without the need for retrofits.
In the case of this latest deal, the Toyota Long Beach Vehicle Distribution Center imports about 200,000 vehicles each year on ro-ro vessels. Stax will keep those ships green with its flexible exhaust capture system, which attaches to all vessel classes without modification to remove 99% of emitted particulate matter (PM) and 95% of emitted oxides of nitrogen (NOx). Over the lifetime of this new agreement with Toyota, Stax estimated the service will account for approximately 3,700 hours and more than 47 tons of emissions controlled.
“We set out to provide an emissions capture and control solution that was reliable, easily accessible, and cost-effective. As we begin to service Toyota, we’re confident that we can meet the needs of the full breadth of the maritime industry, furthering our impact on the local air quality, public health, and environment,” Mike Walker, CEO of Stax, said in a release. “Continuing to establish strong partnerships will help build momentum for and trust in our technology as we expand beyond the state of California.”