In order to increase their competitive advantage today, transportation and logistics providers must successfully address the diverse demands of a constantly-changing environment. For example, customers are demanding faster turnarounds, shorter lead times and up-to-the-minute order and shipment information. Yet despite significant increases in operational costs, especially labor, customers still expect unprecedented levels of flexibility and responsiveness. Clearly, the balance of power is tilted in favor of the customers, forcing transportation and logistics providers to continue to attempt to do more with less.
All of this adds up to a scenario where maximizing customer satisfaction and loyalty must be at the top of your list of business goals. One way to achieve these objectives is to focus on pursuing the “perfect order.”
Yet the question remains: What is the perfect order? Once an internal metric for supply chain operations and logistics companies, this concept has now evolved into the idea of delivering a perfect experience for your customers plus an ever-expanding network of partners and vendors.
Achieving the perfect order is extremely challenging, yet many of today’s most innovative transportation and logistics providers are successfully doing so with workforce management technology. The workforce is the single largest component to delivering the perfect order, and by automating manual processes and focusing on the workforce itself, transportation and logistics providers are successfully uncovering hidden constraints, maximizing performance, controlling labor costs and gaining a powerful new competitive edge.
Let’s face it: Transportation companies and logistics providers are facing more margin pressures than ever before. Capacity constraints, new competitive pressures and rising operational costs (such as energy, equipment and labor costs) all require even more focus in regard to achieving and maintaining efficiency. At the same time, transportation and logistics companies are attempting to differentiate by providing more value-added services (such as accelerated delivery, kitting, or custom packaging), but this adds cost and complexity to the order process.
With all of these forces seeming to work against you today, it is difficult to make sure you’re hitting your perfect order targets for both your customers and your bottom line.
Focus on the Workforce
As logistics companies look to strike this balance, many tend to overlook one area for improvement — their workforce. With such a significant impact on operational performance and profitability, the frontline workforce is perhaps the biggest component to delivering perfect orders. Touching almost every step in the order process — from order capture, shipping, transport, delivery, support, to the reverse logistics cycle — people matter.
Your employees are critical to your success, but are you fully maximizing this valuable asset? Or to put it another way, neglecting to optimize your workforce could mean missing out on what could be your single greatest opportunity to impact profits and service levels. For example, reducing controllable costs, such as labor, is the most powerful way to increase profitability. In labor-intensive industries like transportation and logistics – where labor is often more than 50 percent of total operating expenses – the ability to deliver perfect orders profitably depends entirely on the performance of your people. For this reason, effective workforce management is the ideal place to begin.
Workforce management technology helps curb labor costs by improving how you track and control labor expenses throughout your organization. It begins by automating manual, error-prone processes, such as timekeeping and payroll. Also, workforce management helps to further control costs by providing visibility into where cost inflation is occurring — whether it’s in the form of excess overtime, unplanned absences, or idle time. Once any of these issues are identified, you can address them precisely and effectively by flexing your workforce to maintain service levels when unplanned absences or last-minute orders occur.
Uncovering Hidden Capacity
The key to increasing productivity and throughput is to have real-time visibility into what’s happening on the warehouse floor — the tasks and subtasks that are conducted by both people and equipment — so that non-productive time can be identified and underutilized labor can be put to good use.
Yet many organizations are missing a significant opportunity to utilize labor as a flexible, strategic asset. They simply don’t have this kind of visibility into their workforce, or the true status of the task — such as how much is complete or how much time remains. Additionally, many don’t know how much time is being lost due to non-productive activities.
Fortunately, there is some good news. With a workforce management solution, you have the capability to uncover hidden capacity and costs in your operations.
Identifying Hidden Capacity
What if you could increase productivity while still containing costs? For example, finding just two to five percent of additional productivity per employee per day can generate huge value to your overall organization.
It adds up quickly. For example, consider the case where an employee earning $20 an hour attends a team meeting that runs long and returns late from a break, creating just 12 minutes of “lost time” that particular day. At just three percent of an eight-hour shift, those 12 minutes may not seem significant. But multiply those 12 minutes a day by 1,000 workers, and it adds up to more than $1.1 million a year. Or to think of it another way: More than $1 million in unallocated wages that return zero value to your organization or your customers.
This is just one example, but it shows the importance of having visibility into these types of costs and lost time. It also demonstrates how finding untapped pockets of productivity in your workforce can help you achieve greater capacity and higher efficiency. In turn, this could make all the difference in the ability to take on new business or provide more value-added services.
Uncovering Hidden Costs
Transportation and logistics organizations have complete knowledge of their labor costs — all they have to do is look at their payroll. But knowing the total expenditure only goes so far. This awareness doesn’t provide visibility into how things like overtime and employee absenteeism impact the budget, or give insight into the true costs of delivering an order.
In fact, more accurate labor costing and better cost control can be a true competitive differentiator. Managers see how labor is tracking to budgets and any variances to help keep costs on target. And with deeper workforce performance visibility, you and your executive team can gain insight into how those paid work hours are being allocated, and how those dollars can work harder for the organization.
By uncovering hidden constraints and improving your control over labor costs, workforce management can help you make sure you’re hitting your perfect order targets — both for your customers and your bottom line.
Minimizing Idle Time
We all know the old saying, “idle hands are the devil’s workshop.” It’s true – the key to enhancing profitability is getting the most out of any resource, especially labor. But without real-time reporting or other ways to see employees’ time, managers and executives often have a hard time identifying available resources in time to influence real results.
Workforce management technology helps an operation identify best-fit, best-cost workers to reallocate across the floor. It also helps identify pockets of available capacity, so you can minimize idle time and leverage existing resources and improve efficiency with no additional labor expense.
With detailed insight into the relationship between existing resources, their associated costs and productivity, you can easily make adjustments to increase operational efficiency and drive bottom-line results.
The Perfect Solution
The concept of the perfect order has changed, but have your workforce management strategies evolved to keep pace? As customer expectations continue to rise and evolve, innovative logistics providers must continue to find proven ways to increase productivity while controlling costs. By helping uncover hidden capacity and costs, workforce management is the “perfect solution” for delivering on the potential of the perfect order — helping today’s logistics companies compete and win in the 21st-century marketplace.