It's widely assumed that a union work force won't accept engineered labor standards. But if you work within the contract and bring the union in from the start, you might be surprised.
Contributing Editor Toby Gooley is a writer and editor specializing in supply chain, logistics, and material handling, and a lecturer at MIT's Center for Transportation & Logistics. She previously was Senior Editor at DC VELOCITY and Editor of DCV's sister publication, CSCMP's Supply Chain Quarterly. Prior to joining AGiLE Business Media in 2007, she spent 20 years at Logistics Management magazine as Managing Editor and Senior Editor covering international trade and transportation. Prior to that she was an export traffic manager for 10 years. She holds a B.A. in Asian Studies from Cornell University.
Would you like to see a double-digit increase in productivity in your warehouse or distribution center? That's what you can expect if you implement engineered labor standards in those facilities. Engineered standards establish the most efficient way to perform individual tasks, and they provide a basis for measuring productivity and identifying inefficiencies.
Sounds great, you say, but there's just one problem: The employees in your facilities are unionized, and they're not about to let management tell them exactly how to do their jobs or measure their individual performance.
That's the conventional wisdom, but it isn't necessarily true. Engineered labor standards have in fact been successfully implemented in many unionized warehouses and DCs. The key to getting labor on board with engineered standards, experts say, is to be consistent, maintain clear and honest communication, and respect both rules and people.
BYO engineer
Engineered labor standards specify productivity expectations for specific tasks. Typically developed by industrial engineers, they are based on a combination of on-site observations, software calculations, benchmarking, and validations through actual practice. The most common standards are for order picking and selection, followed by fork-truck operations, putaway and replenishment, and receiving and loading, says Charles Zosel, vice president, optimized labor performance for the consulting firm TZA.
The first consideration for anyone who plans to implement engineered standards in a union warehouse is what, if anything, the union contract says on the subject, says Zosel. Some contracts prohibit the use of engineered standards, while others allow them but contain provisions regarding how standards may be implemented and what rights the union has to contest or influence them.
Many times, unions will want to send their own industrial engineers to monitor an implementation. "Typically, union engineers communicate with local union representatives and companies during the development of labor standards," said Denny Toland, lead industrial engineer for the International Brotherhood of Teamsters Warehouse Division, in an e-mail. When requested by a local union representative, union engineers will perform an audit of a labor standard to determine whether the measured requirement is reasonable, he said.
If your business is specialized, you may need to explain what's unique or different about it to union engineers. "It can be difficult if they don't have a good understanding of your particular operation," says Ed Borger, vice president of operations for VWR Scientific Products, a distributor of laboratory chemicals and equipment. In-house industrial engineers developed VWR's labor standards; the company also uses labor management software from Manhattan Associates to measure performance against those standards.
Because some of VWR's products are hazardous, special training is required for warehouse employees, including members of the International Brotherhood of Teamsters who work at three of the company's five distribution centers. An in-house environmental health and safety team trains them and other workers in the proper handling of hazardous materials. Meanwhile, Borger works with the union to be sure the complex program conforms with contracts and agreements.
Play it straight
Unions are not opposed to engineered labor standards in principle. "We understand that management utilizes labor standards as a means to optimize efficiencies and cost control, and will work with the company to ensure that acceptable and reasonable standards are adopted," Toland said, adding that union members take pride in being highly productive.
Nevertheless, standards may initially be met with suspicion. That's entirely understandable, says Borger of VWR. "You have the same people often doing the same thing for years. They are very close to the work, and they think they are doing it the best possible way until you come in with a new process. It's difficult to accept that there's a better way of doing your job."
What can you do, then, to ensure that a union work force will accept and even embrace engineered standards? "Communication between the union and management is key to the successful implementation of labor standards," said Toland. "When all views are considered— from the union members and management representatives—it allows everyone to be part of the process. This typically leads to broader acceptance of the resulting labor standards by both parties." He notes that creating production committees that include representatives of both labor and management can be an effective means of fostering communication.
Zosel sums up the communication mantra this way: Be open, honest, truthful, straightforward, and transparent. Meet early and often, give the union updates on where things stand, and be open about the difficulties you're experiencing."Say exactly what you're going to do, follow through, and be consistent," he adds.
But communication alone doesn't guarantee success. It's equally important to involve employees and their union reps in developing, testing, and validating the standards. That collaborative approach raises the chances that employees or union engineers will find any problems or mistakes so they can be corrected. "The goal is to have a productivity target that's right and fair," Zosel says. "If they find something that's not right, we need to get it fixed. They understand that we want them to find things that are not right."
Even when all parties are working well together, managers may encounter some resistance. Borger has found that the more variable the task, the more difficult it is to gain acceptance for the associated standard. For example, it has not been easy to develop standards for receiving VWR's tens of thousands of items, which arrive in some 90 different units of measure in a wide range of pallet configurations and product mixes.
A common source of tension is applying identical standards and measurements to every site. There are a lot of subtleties when engineered standards are involved, Borger says. "Don't assume that the people will react the same way or the process will be better because it's your second or third [standards implementation]," he warns. "Start new at each location."
Zosel cautions against making assumptions about what will work simply on the basis of whether the work force is unionized or not. He cites the example of posting performance results: Do you do that publicly on a bulletin board, or do you report performance privately to each employee? "Some union and non-union facilities don't post, and some union and non-union sites do. It's more a matter of the company culture or the union culture," he says.
Clarity and consistency
Although engineered labor standards may initially be greeted with skepticism, a well-designed system will produce benefits for both labor and management. "One of the biggest benefits of fair and accurate standards is that they not only define what management can expect of labor, they also define what workers can expect of management," says Zosel.
That approach has paid off for VWR, which reports 25- to 30-percent productivity improvements in the DCs where the company applies engineered labor standards. Borger sees more opportunities for improvement, thanks to the information he now has about the labor costs associated with particular products. He expects the union will continue to work with VWR to find further efficiencies.
"Unions have the same issues as management in terms of performance," he says. "When you agree and align around what's expected, you get clarity and consistency. You get both sides on the same page, and you take a lot of 'noise' out of the system."
Congestion on U.S. highways is costing the trucking industry big, according to research from the American Transportation Research Institute (ATRI), released today.
The group found that traffic congestion on U.S. highways added $108.8 billion in costs to the trucking industry in 2022, a record high. The information comes from ATRI’s Cost of Congestion study, which is part of the organization’s ongoing highway performance measurement research.
Total hours of congestion fell slightly compared to 2021 due to softening freight market conditions, but the cost of operating a truck increased at a much higher rate, according to the research. As a result, the overall cost of congestion increased by 15% year-over-year—a level equivalent to more than 430,000 commercial truck drivers sitting idle for one work year and an average cost of $7,588 for every registered combination truck.
The analysis also identified metropolitan delays and related impacts, showing that the top 10 most-congested states each experienced added costs of more than $8 billion. That list was led by Texas, at $9.17 billion in added costs; California, at $8.77 billion; and Florida, $8.44 billion. Rounding out the top 10 list were New York, Georgia, New Jersey, Illinois, Pennsylvania, Louisiana, and Tennessee. Combined, the top 10 states account for more than half of the trucking industry’s congestion costs nationwide—52%, according to the research.
The metro areas with the highest congestion costs include New York City, $6.68 billion; Miami, $3.2 billion; and Chicago, $3.14 billion.
ATRI’s analysis also found that the trucking industry wasted more than 6.4 billion gallons of diesel fuel in 2022 due to congestion, resulting in additional fuel costs of $32.1 billion.
ATRI used a combination of data sources, including its truck GPS database and Operational Costs study benchmarks, to calculate the impacts of trucking delays on major U.S. roadways.
There’s a photo from 1971 that John Kent, professor of supply chain management at the University of Arkansas, likes to show. It’s of a shaggy-haired 18-year-old named Glenn Cowan grinning at three-time world table tennis champion Zhuang Zedong, while holding a silk tapestry Zhuang had just given him. Cowan was a member of the U.S. table tennis team who participated in the 1971 World Table Tennis Championships in Nagoya, Japan. Story has it that one morning, he overslept and missed his bus to the tournament and had to hitch a ride with the Chinese national team and met and connected with Zhuang.
Cowan and Zhuang’s interaction led to an invitation for the U.S. team to visit China. At the time, the two countries were just beginning to emerge from a 20-year period of decidedly frosty relations, strict travel bans, and trade restrictions. The highly publicized trip signaled a willingness on both sides to renew relations and launched the term “pingpong diplomacy.”
Kent, who is a senior fellow at the George H. W. Bush Foundation for U.S.-China Relations, believes the photograph is a good reminder that some 50-odd years ago, the economies of the United States and China were not as tightly interwoven as they are today. At the time, the Nixon administration was looking to form closer political and economic ties between the two countries in hopes of reducing chances of future conflict (and to weaken alliances among Communist countries).
The signals coming out of Washington and Beijing are now, of course, much different than they were in the early 1970s. Instead of advocating for better relations, political rhetoric focuses on the need for the U.S. to “decouple” from China. Both Republicans and Democrats have warned that the U.S. economy is too dependent on goods manufactured in China. They see this dependency as a threat to economic strength, American jobs, supply chain resiliency, and national security.
Supply chain professionals, however, know that extricating ourselves from our reliance on Chinese manufacturing is easier said than done. Many pundits push for a “China + 1” strategy, where companies diversify their manufacturing and sourcing options beyond China. But in reality, that “plus one” is often a Chinese company operating in a different country or a non-Chinese manufacturer that is still heavily dependent on material or subcomponents made in China.
This is the problem when supply chain decisions are made on a global scale without input from supply chain professionals. In an article in the Arkansas Democrat-Gazette, Kent argues that, “The discussions on supply chains mainly take place between government officials who typically bring many other competing issues and agendas to the table. Corporate entities—the individuals and companies directly impacted by supply chains—tend to be under-represented in the conversation.”
Kent is a proponent of what he calls “supply chain diplomacy,” where experts from academia and industry from the U.S. and China work collaboratively to create better, more efficient global supply chains. Take, for example, the “Peace Beans” project that Kent is involved with. This project, jointly formed by Zhejiang University and the Bush China Foundation, proposes balancing supply chains by exporting soybeans from Arkansas to tofu producers in China’s Yunnan province, and, in return, importing coffee beans grown in Yunnan to coffee roasters in Arkansas. Kent believes the operation could even use the same transportation equipment.
The benefits of working collaboratively—instead of continuing to build friction in the supply chain through tariffs and adversarial relationships—are numerous, according to Kent and his colleagues. They believe it would be much better if the two major world economies worked together on issues like global inflation, climate change, and artificial intelligence.
And such relations could play a significant role in strengthening world peace, particularly in light of ongoing tensions over Taiwan. Because, as Kent writes, “The 19th-century idea that ‘When goods don’t cross borders, soldiers will’ is as true today as ever. Perhaps more so.”
Hyster-Yale Materials Handling today announced its plans to fulfill the domestic manufacturing requirements of the Build America, Buy America (BABA) Act for certain portions of its lineup of forklift trucks and container handling equipment.
That means the Greenville, North Carolina-based company now plans to expand its existing American manufacturing with a targeted set of high-capacity models, including electric options, that align with the needs of infrastructure projects subject to BABA requirements. The company’s plans include determining the optimal production location in the United States, strategically expanding sourcing agreements to meet local material requirements, and further developing electric power options for high-capacity equipment.
As a part of the 2021 Infrastructure Investment and Jobs Act, the BABA Act aims to increase the use of American-made materials in federally funded infrastructure projects across the U.S., Hyster-Yale says. It was enacted as part of a broader effort to boost domestic manufacturing and economic growth, and mandates that federal dollars allocated to infrastructure – such as roads, bridges, ports and public transit systems – must prioritize materials produced in the USA, including critical items like steel, iron and various construction materials.
Hyster-Yale’s footprint in the U.S. is spread across 10 locations, including three manufacturing facilities.
“Our leadership is fully invested in meeting the needs of businesses that require BABA-compliant material handling solutions,” Tony Salgado, Hyster-Yale’s chief operating officer, said in a release. “We are working to partner with our key domestic suppliers, as well as identifying how best to leverage our own American manufacturing footprint to deliver a competitive solution for our customers and stakeholders. But beyond mere compliance, and in line with the many areas of our business where we are evolving to better support our customers, our commitment remains steadfast. We are dedicated to delivering industry-leading standards in design, durability and performance — qualities that have become synonymous with our brands worldwide and that our customers have come to rely on and expect.”
In a separate move, the U.S. Environmental Protection Agency (EPA) also gave its approval for the state to advance its Heavy-Duty Omnibus Rule, which is crafted to significantly reduce smog-forming nitrogen oxide (NOx) emissions from new heavy-duty, diesel-powered trucks.
Both rules are intended to deliver health benefits to California citizens affected by vehicle pollution, according to the environmental group Earthjustice. If the state gets federal approval for the final steps to become law, the rules mean that cars on the road in California will largely be zero-emissions a generation from now in the 2050s, accounting for the average vehicle lifespan of vehicles with internal combustion engine (ICE) power sold before that 2035 date.
“This might read like checking a bureaucratic box, but EPA’s approval is a critical step forward in protecting our lungs from pollution and our wallets from the expenses of combustion fuels,” Paul Cort, director of Earthjustice’s Right To Zero campaign, said in a release. “The gradual shift in car sales to zero-emissions models will cut smog and household costs while growing California’s clean energy workforce. Cutting truck pollution will help clear our skies of smog. EPA should now approve the remaining authorization requests from California to allow the state to clean its air and protect its residents.”
However, the truck drivers' industry group Owner-Operator Independent Drivers Association (OOIDA) pushed back against the federal decision allowing the Omnibus Low-NOx rule to advance. "The Omnibus Low-NOx waiver for California calls into question the policymaking process under the Biden administration's EPA. Purposefully injecting uncertainty into a $588 billion American industry is bad for our economy and makes no meaningful progress towards purported environmental goals," (OOIDA) President Todd Spencer said in a release. "EPA's credibility outside of radical environmental circles would have been better served by working with regulated industries rather than ramming through last-minute special interest favors. We look forward to working with the Trump administration's EPA in good faith towards achievable environmental outcomes.”
Editor's note:This article was revised on December 18 to add reaction from OOIDA.
A Canadian startup that provides AI-powered logistics solutions has gained $5.5 million in seed funding to support its concept of creating a digital platform for global trade, according to Toronto-based Starboard.
The round was led by Eclipse, with participation from previous backers Garuda Ventures and Everywhere Ventures. The firm says it will use its new backing to expand its engineering team in Toronto and accelerate its AI-driven product development to simplify supply chain complexities.
According to Starboard, the logistics industry is under immense pressure to adapt to the growing complexity of global trade, which has hit recent hurdles such as the strike at U.S. east and gulf coast ports. That situation calls for innovative solutions to streamline operations and reduce costs for operators.
As a potential solution, Starboard offers its flagship product, which it defines as an AI-based transportation management system (TMS) and rate management system that helps mid-sized freight forwarders operate more efficiently and win more business. More broadly, Starboard says it is building the virtual infrastructure for global trade, allowing freight companies to leverage AI and machine learning to optimize operations such as processing shipments in real time, reconciling invoices, and following up on payments.
"This investment is a pivotal step in our mission to unlock the power of AI for our customers," said Sumeet Trehan, Co-Founder and CEO of Starboard. "Global trade has long been plagued by inefficiencies that drive up costs and reduce competitiveness. Our platform is designed to empower SMB freight forwarders—the backbone of more than $20 trillion in global trade and $1 trillion in logistics spend—with the tools they need to thrive in this complex ecosystem."