Reprinted from MODERN MATERIALS HANDLING, July, 2006
DSC Logistics: Finance and Operations Working Together
“DSC Logistics is at the beginning of a period of exciting change,” says JoAnn Lilek, chief financial officer for the third party logistics provider.
That change is the workforce performance management system DSC recently implemented in a facility in McDonough, Georgia, the first of its sites to go live on the system.
While workforce performance management may not seem like the kind of system that would concern a CFO, Lilek believes that one of the roles of a CFO is to help an organization realize opportunities based on the resources needed to generate a return.
Workforce performance management is one of those opportunities. “Mistakes cost time and money,” says Lilek. “Anything that enables us to execute flawlessly is important because we are so transaction based.”
What’s more, a 3PL delivers value to its customers by continually lowering costs over time. Workforce performance management plays a role there as well. By implementing measurable engineered labor standards, DSC has a better understanding of its costs at the start of a contract, and can collaborate with its customers to lower those costs over time.
Realizing the value from those opportunities identified by the CFO, however, isn’t possible without operations managers and personnel like Sam Boyle, facility manager at the McDonough distribution center.
Prior to workforce performance management, Boyle measured productivity in his facility strictly by the number of cases per hour. But given the number of customers in the building and the variation of their products, that wasn’t a true measure of productivity. “During a day we pick everything from 300-lb bulk bins to surgical caps that weigh four or five pounds per case,” Boyle says.
Engineered standards take those variations into account when determining the amount of labor needed to fill orders. And the discipline of creating those standards revealed new ways to perform old tasks.
“We used to have pickers do everything, including case picking, pallet picking and replenishment of their own product,” says Boyle. “The preferred method now includes a dedicated pallet picker, a case picker and someone doing replenishment. Through observation and measurement, we learned it was more efficient to do it that way.”
DSC uses the real-time reporting capabilities of the system in three ways.
During a shift managers can monitor the performance of the facility to determine how they’re performing throughout the facility. That allows supervisors to adapt if one area is falling behind.
Meanwhile, performance information is provided to employees at least once a day.
And now that they have engineered standards, DSC can run future orders through the system to see how many hours of labor will be needed to fill those orders.
The required hours can be compared against the productivity goals for the facility. Or they can be used to prepare bids for new work for potential customers.
While the system has only been running a few months, the combination of engineered standards and performance against historical reports, we’re already seeing an increase in throughput per labor hour and a significant payroll savings,” says Boyle.
Those improvements are good news to the CFO. “With workforce performance management we’ll be able to grow our top line revenue because we can better identify cost saving measures as we make proposals,” says Lilek. “The bottom line will benefit because the system allows us to insure that the right number of people are working in operations every day.”
© Copyright MMH. July 2006. All rights reserved.
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