Ben Ames has spent 20 years as a journalist since starting out as a daily newspaper reporter in Pennsylvania in 1995. From 1999 forward, he has focused on business and technology reporting for a number of trade journals, beginning when he joined Design News and Modern Materials Handling magazines. Ames is author of the trail guide "Hiking Massachusetts" and is a graduate of the Columbia School of Journalism.
Peak season is upon us, and warehouse managers everywhere are revving up their fulfillment operations for the crush of holiday orders. The effort to slot, sort, and ship all that merchandise calls for a classic "all hands on deck" approach, including the hiring of extra workers to get the job done.
But for businesses planning for the 2019 peak, there's one major problem—the U.S. economy is in the midst of a historic labor shortage that's making it difficult for many DCs to find enough workers to fill their shifts. The U.S. Labor Department reported last month that the nation's unemployment rate had sunk to 3.5% in September, a nearly 50-year low.
At the same time, the demand for labor has never been higher. Burgeoning e-commerce demand is changing the nature of fulfillment work. In addition to filling the traditional bulk store-replenishment orders, warehouses today are increasingly called on to pack and ship individual consumer orders—a more labor-intensive process. And consumers accustomed to next-day delivery service expect those orders to arrive at lightning speed.
Caught between those two trends, warehouse and DC managers are turning to a number of unconventional approaches. Some are offering part-time shifts in a bid to tap nontraditional labor pools, like college students or stay-at-home parents working at night. Others are experimenting with flexible schedules, like four-day workweeks with 10-hour shifts. Still others are experimenting with creative ways to apply an old tool—their labor management software (LMS).
MORE CARROT, LESS STICK
Since its introduction decades ago, labor management software has become a standard tool for managing human resources within a warehouse or DC, offering companies a neutral method of tracking the work output of their employees. While the methodology hasn't changed much over the years, companies today are using the data collected by the software in new and different ways.
For example, in the not-so-distant past, employers commonly used their LMS data to identify underperforming workers so they could essentially cull the herd. "It used to be that every month, businesses would get rid of their bottom 10% and replace them with new people," says Peter Schnorbach, senior director for product management at Manhattan Associates, a developer of LMS and other supply chain software. "That doesn't work anymore, because you can't replace them."
Nowadays, the focus has shifted from performance improvement to employee retention. Among other things, that means warehouse and DC leaders are more likely to be using their LMS data to identify the top performers than the laggards. It's all part of a push to boost "employee engagement"—and by extension, retention. Workers identified as top performers are often rewarded with perks like prime parking spots, lunch with a top manager, or extra compensation. One Manhattan Associates customer brings a large wheel into its DC once a month, calls its top performers up to the stage, and lets them take a roulette-style spin to win various prizes, like the TV show "Wheel of Fortune."
But identifying those top performers isn't always as cut-and-dried as it might sound. In many warehouse operations, no two tasks are exactly alike, making it tough to draw apples-to-apples comparisons. For instance, it would be unfair to compare two workers on the basis of orders picked per hour if Worker A collected them all from a single aisle, while Worker B was forced to travel throughout an 800,000-square-foot DC.
In a bid to correct such inequities, a number of companies have begun adding warehouse "telematics" data— data collected remotely from forklifts and other warehouse equipment—to the mix, analyzing it along with the standard worker productivity measures.
"Everything is creating data these days," says Derrick Miller, enterprise solutions manager at The Raymond Corp., a lift truck vendor that also provides fleet management and labor management software. "LMS has traditionally been only about tracking how many pallets Carl touched, or how many crates Susan lifted. But you can also generate data from lift trucks and conveyor systems, or even track when employees use shrink-wrap machines."
By analyzing telematics data, warehouses can generate a richer, more detailed profile of their workers' activities than they can with basic performance measures. And more to the point, perhaps, this approach allows for a more nuanced comparison of workers' performance by factoring in variables like how far they traveled, how much weight they hefted, or how many locations they visited.
"People think of an LMS as an accountability tool only, to find underperformers and to drive margins, but that was before the labor crisis," Miller says. "Now, it can be used for rewarding people, giving them incentives, and retaining them."
SHIFTING LABOR LANDSCAPE
The recent shift marks the latest stage in labor management systems' ongoing evolution to meet changing business challenges, says Michael Wohlwend, managing principal with Alpine Supply Chain Solutions, a Chicago-based consulting firm.
In the early '90s, many companies used their LMS platforms to track workers' performance against "engineered labor standards" in an effort to gain leverage against unions that were pushing for less-stringent metrics, he says. Then in the late '90s, managers started using LMS software more strategically, implementing "pay for performance" programs that offered workers incentives to meet specific performance goals.
Today, warehouses are using their LMS systems—often in conjunction with their warehouse management systems (WMS)—to respond to a new challenge: meeting strict order-shipping deadlines. Many e-retailers now promise same-day shipping for all orders placed by, say, 5 p.m. However, fulfilling those promises often results in a last-minute scramble to get orders out the door, forcing managers to shift worker assignments on the fly. During these crunches, performance data from an LMS can help managers quickly identify the workers best suited to the tasks at hand, Wohlwend says.
If economic trends hold, the U.S. labor crisis won't be resolved anytime soon. But even in an age of increasing automation, most warehouses still rely on human workers to handle the growing fulfillment workload. And to help keep these valuable assets on board, more and more DCs are leveraging the data-collection and analysis capabilities of their trusty LMS platforms.
Supply chain risk analytics company Everstream Analytics has launched a product that can quantify the impact of leading climate indicators and project how identified risk will impact customer supply chains.
Expanding upon the weather and climate intelligence Everstream already provides, the new “Climate Risk Scores” tool enables clients to apply eight climate indicator risk projection scores to their facilities and supplier locations to forecast future climate risk and support business continuity.
The tool leverages data from the United Nations’ Intergovernmental Panel on Climate Change (IPCC) to project scores to varying locations using those eight category indicators: tropical cyclone, river flood, sea level rise, heat, fire weather, cold, drought and precipitation.
The Climate Risk Scores capability provides indicator risk projections for key natural disaster and weather risks into 2040, 2050 and 2100, offering several forecast scenarios at each juncture. The proactive planning tool can apply these insights to an organization’s systems via APIs, to directly incorporate climate projections and risk severity levels into your action systems for smarter decisions. Climate Risk scores offer insights into how these new operations may be affected, allowing organizations to make informed decisions and mitigate risks proactively.
“As temperatures and extreme weather events around the world continue to rise, businesses can no longer ignore the impact of climate change on their operations and suppliers,” Jon Davis, Chief Meteorologist at Everstream Analytics, said in a release. “We’ve consulted with the world’s largest brands on the top risk indicators impacting their operations, and we’re thrilled to bring this industry-first capability into Explore to automate access for all our clients. With pathways ranging from low to high impact, this capability further enables organizations to grasp the full spectrum of potential outcomes in real-time, make informed decisions and proactively mitigate risks.”
According to New Orleans-based LongueVue, the “strategic rebranding” brings together the complementary capabilities of these three companies to form a vertically integrated flexible packaging leader with expertise in blown film production, flexographic printing, adhesive laminations, and converting.
“This unified platform enables us to provide our customers with greater flexibility and innovation across all aspects of packaging," Joe Piccione, CEO of Innotex, said in a release. "As we continue to evolve and adapt to the changing needs of the industry, we look forward to delivering exceptional solutions and service."
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Stampin’ Up!’s Riverton, Utah, distribution center
What happens when your warehouse technology upgrade turns into a complete process overhaul? That may sound like a headache to some, but for leaders at paper crafting company Stampin’ Up! it’s been a golden opportunity—especially when it comes to boosting productivity. The Utah-based direct marketing company has increased its average pick rate by more than 70% in the past year and a half. And it’s all due to a warehouse management system (WMS) implementation that opened the door to process changes and new technologies that are speeding its high-velocity, high-SKU (stock-keeping unit) order fulfillment operations.
The bottom line: Stampin’ Up! is filling orders faster than ever before, with less manpower, since it shifted to an easy-to-use voice picking system that makes adapting to seasonal product changes and promotions a piece of cake. Here’s how.
FACING UP TO CHANGE
Stampin’ Up!’s business increased rapidly in 2020, when pandemic-era lockdowns sparked a surge in online orders for its crafting and scrapbooking supplies—everything from rubber stamps to specialty papers, ink, and embellishments needed for home-based projects. At around the same time, company leaders learned that the WMS in use at its main distribution center (DC) in Riverton, Utah, was nearing its end-of-life and would have to be replaced. That process set in motion a series of changes that would upend the way Stampin’ Up! picked items and filled orders, setting the company on a path toward continuous improvement.
“We began a process to replace the WMS, with no intent to do anything else,” explains Rich Bushell, the company’s director of global distribution services. “But when we started to investigate a new WMS, we began to look at the larger picture. We saw problems within our [picking] system. Really, they were problems with our processes.”
Stampin’ Up! had hired global supply chain consulting firm Argon & Co. to help with the WMS selection and implementation, and it was that process that sparked the change. Argon & Co. Partner Steve Mulaik, who worked on the project, says it quickly became clear that Stampin’ Up!’s zone-based pick-and-pass fulfillment process wasn’t working well—primarily because pickers spent a lot of idle time waiting for the next order. Under the old system, which used pick-to-light technology, workers stood in their respective zones and made picks only from their assigned location; when it came time for a pick, the system directed them where to make that pick via indicator lights on storage shelves. The workers placed the picked items directly into shipping boxes that would be passed to the next zone via conveyor.
“The business problem here was that they had a system that didn’t work reliably,” Mulaik explains. “And there were periods when [workers] would have nothing to do. The workload was not balanced.”
This was less than ideal for a DC facing accelerating demand for multi-item orders—a typical Stampin’ Up! order contains 17 to 21 items per box, according to Bushell. In a bid to make the picking process more flexible, Mulaik suggested eliminating the zones altogether and changing the workflow. Ultimately, that would mean replacing the pick-to-light system and revamping the pick-and-pass process with a protocol that would keep workers moving and orders flowing consistently.
“We changed the whole process, building on some academic work from Georgia Tech along with how you communicate with the system,” Mulaik explains. “Together, that has really resulted in the significant change in productivity that they’ve seen.”
RIGHTING THE SHIP
The Riverton DC’s new solution combines voice picking technology with a whole new process known as “bucket brigade” picking. A bucket brigade helps distribute work more evenly among pickers in a DC: Pickers still work in a production-line fashion, picking items into bins or boxes and then sending the bins down the line via conveyor. But rather than stop and wait for the next order to come to them, pickers continue to work by walking up to the next person on the line and taking over that person’s assignment; the worker who is overtaken does the same, creating a process in which pickers are constantly filling orders and no one is picking from the same location.
Stampin’ Up! doesn’t follow the bucket brigade process precisely but has instead developed its own variation the company calls “leapfrog.” Instead of taking the next person’s work, pickers will move up the line to the next open order after completing a task—“leapfrogging” over the other pickers in the line to keep the process moving.
“We’re moving to the work,” Bushell explains. “If your boxes are full and you push them [down the line], you just move to the open work. The idea is that it takes the zones away; you move to where the next pick is.”
The voice piece increases the operation’s flexibility and directs the leapfrog process. Voice-directed picking allows pickers to listen to commands and respond verbally via a headset and handheld device. All commands filter through the headset, freeing the worker’s eyes and hands for picking tasks. Stampin’ Up! uses voice technology from AccuSpeechMobile with a combination of company-issued Android devices and Bluetooth headsets, although employees can use their own Bluetooth headsets or earbuds if they wish.
Mulaik and Bushell say the simplicity of the AccuSpeechMobile system was a game-changer for this project. The device-based system requires no voice server or middleware and no changes to a customer’s back-end systems in order to operate. It uses “screen scrape” technology, a process that allows the collection of large volumes of data quickly. Essentially, the program translates textual information from the device into audible commands telling associates what to pick. Workers then respond verbally, confirming the pick.
“AccuSpeech takes what the [WMS] says and then says it in your ear,” Bushell explains. “The key to the device is having all the data needed to make the pick shown on the screen. However, the picker should never—or rarely—need to look at the screen [because] the voice tells them the info and the commands are set up to repeat if prompted. This helps increase speed.
“The voice piece really ties everything together and makes our system more efficient.”
And about that system: Stampin’ Up! chose a WMS from technology provider QSSI, which directs all the work in the DC. And the conveyor systems were updated with new equipment and controls—from ABCO Systems and JR Controls—to keep all those orders moving down the line. The company also adopted automated labeling technology and overhauled its slotting procedure—the process of determining the most efficient storage location for its various items—as part of the project.
MISSION ACCOMPLISHED
Productivity improvement in the DC has been the biggest benefit of the project, which was officially completed in the spring of 2023 but continues to bear fruit. Prior to the change, Stampin’ Up! workers averaged 160 picks per hour, per person. That number rose to more than 200 picks per hour within the first few months, according to Bushell, and was up to 276 picks per hour as of this past August—a more than 70% increase.
“We’ve seen some really good gains,” Bushell says, adding that the company has reduced its reliance on both temporary and full-time staff as well, the latter mainly through attrition. “Overall, we’re 20% to 25% down on our labor based on the change …. And it’s because we’re keeping people busy.”
Quality has stayed on par as well, something Bushell says concerned him when switching from the DC’s previous pick-to-light technology.
“You have very good quality with pick-to-light, so we [worried] about opening the door to errors with pick-to-voice because a human is confirming each pick,” he says. “But we average about one error per 3,300 picks. So the quality is really good.”
On top of all that, Bushell says employees are “really happy” with the new system. One reason is that the voice system is easy to learn—so easy, anyone can do it. Stampin’ Up! runs frequent promotions and special offers that create mini spikes in business throughout the year; the new system makes it easy to get the required temporary help up to speed quickly or recruit staff members from other departments to accommodate those spikes.
“We [allocate] three days of training for voice, but it’s really about an hour,” Bushell says, adding that some of the employees from other departments simply enjoy the change of pace and the exercise of working on the “leapfrog” bucket brigade. “I have people that sign up every day to come pick.”
Not only has Stampin’ Up! reduced downtime and expedited the picking of its signature rubber stamps, paper, and crafting supplies, but it’s also blazing a trail in fulfillment that its business partners say could serve as a model for other companies looking to crank up productivity in the DC.
“There are a lot of [companies] that have pick-and-pass systems today, and while those pick-and-pass systems look like they are efficient, those companies may not realize that people are only picking 70% of the time,” Mulaik says. “This is a way to reduce that inactivity significantly.
“If you can get 20% of your productivity back—that’s a big number.”
With its new AutoStore automated storage and retrieval (AS/RS) system, Toyota Material Handling Inc.’s parts distribution center, located at its U.S. headquarters campus in Columbus, Indiana, will be able to store more forklift and other parts and move them more quickly. The new system represents a major step toward achieving TMH’s goal of next-day parts delivery to 98% of its customers in the U.S. and Canada by 2030, said TMH North America President and CEO Brett Wood at the launch event on October 28. The upgrade to the DC was designed, built, and installed through a close collaboration between TMH, AutoStore, and Bastian Solutions, the Toyota-owned material handling automation designer and systems integrator that is a cornerstone of the forklift maker’s Toyota Automated Logistics business unit. The AS/RS is Bastian’s 100th AutoStore installation in North America.
TMH’s AutoStore system deploys 28 energy-efficient robotic shuttles to retrieve and deliver totes from within a vertical storage grid. To expedite processing, artificial intelligence (AI)-enhanced software determines optimal storage locations based on whether parts are high- or low-demand items. The shuttles, each independently controlled and selected based on shortest distance to the stored tote, swiftly deliver the ordered parts to four picking ports. Each port can process up to 175 totes per hour; the company’s initial goal is 150 totes per hour, with room to grow. The AS/RS also eliminates the need for order pickers to walk up to 10 miles per day, saving time, boosting picking accuracy, and improving ergonomics for associates.
The upgrades, which also include a Kardex vertical lift module for parts that are too large for the AS/RS and a spiral conveyor, will more than triple storage capacity, from 40,000 to 128,000 storage positions, making it possible for TMH to increase its parts inventory. Currently the DC stores some 55,000 stock-keeping units (SKUs) and ships an average of $1 million worth of parts per day, reaching 80% of customers by two-day ground delivery. A Sparck Technologies CVP Impack fit-to-size packaging machine speeds packing and shipping and is expected to save up to 20% on the cost of packing materials.
Distribution, manufacturing expansion on the agenda
The Columbus parts DC currently serves all of the U.S. and Canada; inventory consists mostly of Toyota’s own parts as well as some parts for Bastian Solutions and forklift maker The Raymond Corp., which is part of TMH North America. To meet the company’s goal of next-day delivery to virtually all parts customers, TMH is exploring establishing up to five additional parts DCs. All will be TMH-designed, owned, and operated, with varying levels of automation to meet specific needs, said Bret Bruin, vice president, aftermarket sales and operations, in an interview.
Parts distribution is not the only area where TMH is investing in expanded capacity. With demand for electric forklifts continuing to rise, the company recently broke ground for a new factory on the expansive Columbus campus that will benefit both Toyota and Raymond. The two OEMs—which currently have only 5% overlap among their customers—already manufacture certain forklift models and parts for each other, said Wood in an interview. Slated to open in 2026, the $100 million, 295,000-square-foot factory will make electric-powered forklifts. The lineup will include stand-up rider trucks, currently manufactured for both brands by Raymond in Greene, New York. Moving production to Columbus, Wood said, will not only help both OEMs keep up with fast-growing demand for those models, but it will also free up space and personnel in Raymond’s factory to increase production of orderpickers and reach trucks, which it produces for both brands. “We want to build the right trucks in the right place,” Wood said.
Editor's note:This article was revised on November 4 to correct the types of equipment produced in Raymond's factory.
“The latest data continues to show some positive developments for the freight market. However, there remain sequential declines nationwide, and in most regions,” Bobby Holland, U.S. Bank director of freight business analytics, said in a release. “Over the last two quarters, volume and spend contractions have lessened, but we’re waiting for clear evidence that the market has reached the bottom.”
By the numbers, shipments were down 1.9% compared to the previous quarter while spending dropped 1.4%. This was the ninth consecutive quarterly decrease in volume, but the smallest drop in more than a year.
Truck freight conditions varied greatly by region in the third quarter. In the West, spending was up 4.4% over the previous quarter and volume increased 1.1%. Meanwhile, in the Southeast spending declined 3.3% and shipments were down 3.0%.
“It’s a positive sign that spending contracted less than shipments. With diesel fuel prices lower, the fact that pricing didn’t erode more tells me the market is getting healthier,” Bob Costello, senior vice president and chief economist at the American Trucking Associations (ATA), said in the release.
The U.S. Bank Freight Payment Index measures quantitative changes in freight shipments and spend activity based on data from transactions processed through U.S. Bank Freight Payment, which processes more than $42 billion in freight payments annually for shippers and carriers across the U.S. The Index insights are provided to U.S. Bank customers to help them make business decisions and discover new opportunities.