Leveraging Labor Management to
Achieve a Rapid ROI
Agenda
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MBM History
The Situation
The Decision
The Strategy
enVista’s M3 approach
ROI Before Go Live
Implementation
Results
Lessons Learned
Company History
• Founded in 1947 by J.R.
Wordsworth, MBM
Corporation, remains a
privately held, financially
strong, family company.
• Over the years, MBM has
grown to become one of the
nation’s largest privately held
companies in the United
States with approximately $6
Billion in annual sales
• The 3rd generation of
the Wordsworth Family
is activity involved in
the company’s
continuing success.
MBM’s “Family” of Customers
MBM Corporation - History
• Beginning with its first Distribution Center in Rocky Mount, NC, today
MBM Corporation operates 33 centers strategically located
throughout the Continental United States to best service our current
customer base
The Situation
• MBM currently operates on a “Home Grown” (AS400)
Warehousing System at all of our Distribution Centers
• Two different forms
• One Third of the Distribution Centers have a “Home
Grown” Reserve Inventory System in conjunction with a
Voice Selection System – Psion / Vocollect
• The remaining DC’s operate on a system where
selection is done via Labels, and inventory locations are
limited to the Primary Pick Slot (Overstock Locations are
not known)
• MBM’s Need – Determine if a B.o.B. WMS and/or LMS had a
viable ROI, Payback, and base functionality to achieve a rapid
return.
The Decision
• Through a competitive bidding process MBM selected enVista
Corporation to do a thorough analysis of MBM’s current
capabilities, with regards to both WMS and LMS
• As part of the initial engagement, enVista provided MBM with a
projected ROI on 3rd WMS and LMS, along with a ROI on MBM’s
Development of various missing pieces within MBM’s home grown
system
• Based on the findings from enVista, it was determined to hold on a
3rd party WMS while making some changes to MBM’s existing
system, however it was also decided to engage LMS vendors in
their offerings.
• MBM Selected MANH for a system-wide rollout of Labor
Management
Strategy for Implementation
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Working with enVista, MBM developed a three pronged approach to the
rollout of MANH Labor Management (Lead, Coach Follow)
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Site #1
• Utilize MANH Engineering as “Lead” in engineering process
• enVista Engineering to “watch and learn” MANH best practices
• Work with MANH on Change Management portion of DC Training
Site #2
• Shift from MANH Engineering to enVista Engineering
• MANH plays key role in answering questions of both enVista and MBM
• MANH still active in process
• enVista begins to pickup “Lead” as Project Manager
Site #3 - #10
• enVista Trains MBM Industrial Engineer to take charge of longer term
project
Site #10 - #33
• MBM Industrial Engineering Team responsible for all engineering and
technical configuration
LMS Implementation Timeline
DC
City/State
Voice
Status 2012-Q1 2012-Q2 2012-Q3 2012-Q4 2013-Q1 2013-Q2 2013-Q3 2013-Q4
DC07-RMT
Rocky Mount, NC
N
Done
DC05-COL
Columbus, OH
Y
Done
DC08-LWS
Lewisville, TX
N
Done
DC09-ORL
Orlando, FL
N
Done
DC23-FRK
Frankfort, KY
N
Done
DC52-PLS
Pleasanton, CA
N
Done
DC20-MAC Macon, GA
N
Done
DC06-LK1
Lakeland, FL
Y
Done
DC63-FTW
Ft. Worth, TX
Y
Done
DC16-TAY
Taylorville, IL
Y
Done
DC12-BAT
Battleboro, NC
N
Done
DC30-ONT
Ontario, CA
N
In Progess
DC03-MNT Montgomery AL
Y
In Progess
DC61-RAN
Rancho Cucamonga, CA
N
In Progess
DC04-RIV
Riverside, CA
N
DC31-MAN Manteca, CA
N
DC27-ABD
Aberdeen, MD
Y
DC02-OKC
Oklahoma City, OK
Y
DC70-FUL
Fullerton, CA
N
DC59-LAN
Lancaster, PA
N
DC13-LGR
La Grange, GA
N
DC15-SAL
Salisbury, NC
N
Labor Performance
Management
Consist of Three
Primary Areas:
Methods
Lean
Process
Improvement
Team
Measurement
Motivation
The Performance Cycle
The Performance Cycle (Performance, Feedback, Reward and Effort)
explains why our M3 program enables companies to significantly improve
performance
Non-monetary Rewards
and Recognition
Self-motivated Associates
Less Management Supervision
Monetary Bonuses
High Performance Work Teams
and Levels of Productivity
THE PERFORMANCE
Develop Management Team
CYCLE
Develop Preferred Methods
Perform Follow-up
Coaching
Establish Performance Goals & Metrics
Train Associates to follow Best Practices
Implement Tracking Tools
Provide Timely Feedback
M3 Keys to Success
1.
2.
3.
4.
Involve employees early in the process
Tap into employee discretionary effort
Self-managed teams can uncover hidden efficiencies
Employees respond best to continuous positive
reinforcement (Appreciative Inquiry)
5. Optimal work methods have to be developed
6. Engineering standards help define the opportunity
7. Continuous improvement will not be achieved without a
measurement system in place
8. Employees respond well to incentives
9. Include a detailed accountability plan
10. Communicate at all levels
Achieving ROI Before
Implementation
• Start Up Meetings / Stretch and Flex
• Have a pre-defined length for this meeting
• Breaks and Lunches
• Breaks are 15 minutes in length while Lunches are 30
minutes in length
• End of Shift Cleaning
• Are you getting your Money’s Worth given the time you are
providing?
Achieving ROI Before
Implementation
• Slotting
• While your slotting may have made a great deal of sense 5
years ago, does it still make sense today?
• “MBWA” – Management by Walking Around
• Let the employees see their manager on the floor throughout
the shift
• Observations – DC Vitamin Pills – One-A-Day
• Begin doing standardized observations prior to LMS in order
to correcting bad habits.
One Second Labeling
• Prior to LMS, associates apply label after picking the case (wasted
motion).
• By implementing a LEAN process, associates are required to
apply the label as they pick which saves one second per case.
• What does that mean in potential $$ Savings?
Jan Avg
Wkly
Mins / Hrs /
DC#/Name
Cases
Week Week
DIVISION I 1,044,166 17,403 290.05
$16.00
53
$4,640.74 $245,959.16
DIVISION II
823,422 13,724 228.73
$3,659.65 $193,961.51
DIVISION III 1,128,778 18,813 313.55
$5,016.79 $265,889.81
MBM Corp
2,996,365 49,939 832.32 $13,317.18 $705,810.48
Assessment
• MBM Sr. Management and Operations Training
• Build Coordinate Map of DC – 2 Days
• Vehicle Timings – 1 Day
• View Operational Segments – 1 Week
• Unloading
• Receiving
• Put-away
• Replenishment
• Selection
• Loading
• Meet with DC Management on Any Pre Implementation
Changes
• Identify Pre Implementation ROI
• Gain Top-Down DC Buy-in
Week 1
• Engineering
• Review Existing Processes
• Documenting each Step
• Create LEAN Process
• Determine Value Add and Non Value Add Activities
• Implement Best Practices
• Eliminate Waste (Non Value Add – Non Required)
• Develop SOPs for each Process
Week 2
• Develop Frequencies
• Pre-Determined Time Elements
• Obtain Travel Distance for Elements
• Take Preliminary Time Studies
• Time and Motion Elements
• Develop ELS File
• Input Frequencies, Distances
• Develop New Elements (if needed)
• Configuration of Standards in LM System
• UOMs, Elements, Activity, Travel Adjustment
Week 3
• Test Configuration
• Custom UOM, Travel, Reflective Standards
• Take Preliminary Time Studies
• Determine if Elements need to be Adjusted
• Update System and ELS File
• Training
• Supervisor/Leadership Training
• Change Management Training
• Questionnaires/Opinions
• Observation with Supervisors
Week 4
• Validation of Standards
• Has to be +/- 5 percent
• Delay Timings
• Update PF&D
• Observations with Supervisors
• Sign Off from enVista on Standards
• MBM DC Management then Responsible to Observe and Approve
Standards
• 1 – 2 weeks
After Implementation
• Six Week Ramp Up
• Once Standard has been Approved
• Observations Critical
• All Employees need to be at 100%
• Post Ramp Up
• HR Discipline Policy Enforced
• Incentives Begin
Results of LMS
• Achieving 10% Reduction in Labor Cost
• Could see Higher Return but MBM is not Currently Holding
Employees to HR Policy
• 5 LMS DCs are in the Top 10 DCs
• Variable Cost Report
• Improvement Report
• Thru-put Improvement Report
• Sustained Improve for Subsequent Years
• Standardization of Processes
• Uncovered Additional Areas for Improvement
• Purchasing
• AS400 Inconsistencies
• Incorrect Weight and Volume Measurements
Benefits Outside of Scope
• Forecast business requirement for new DC
• Identify overspend on specific areas within labor pool
• Identify overspend caused by high volume (congestion)
• Relate to DC management how non-value activities impact bottom
line performance
• Lost Time Report
• Excessive Event Adjustments
• Poorly Directed Work
Identifying ‘Low Hanging Fruit’
• Employees who miss standard on events or receive event
adjustments to compensate for unanticipated occurrences are
identified through customized reporting.
• Every non-standard event is evaluated for business need,
including start-up, breaks, and clean-up time.
• Events where an employee misses standard by at least 10
minutes are flagged for evaluation.
• A ‘What-if’ analysis is created to illustrate the cost difference of
these missed opportunities.
Lost Time Report
‘What – if’ Analysis
• The highlighted Lost Time Events fall into 1 of 3 categories:
1. Start of Day
• Make sure your employees go to work immediately after
start-up meeting.
2. Around Breaks/Lunches
• Ensure that employees take breaks and lunches at the
scheduled time.
3. End of Day
• Make certain folks don’t slack off on their final
assignment for the night.
Lessons Learned
• Change Management – Spend as much time as possible
• Getting Management to truly embrace the change
• Understanding how small but repetitive mistakes add up
• Knowledge transfer is crucial in “Lead – Coach – Follow”
• Need buy-in from multiple departments from across the
organization
• Purchasing
• IT
• Transportation
• Work with clients to find solutions to problems outside of
LMS
• Delay Increases as Volume Increases
• Have an member of IT staffed on the LMS project
Lessons Learned
• Empower employees when determining preferred methods
• Slotting, Staging, etc.
• Be creative with observations
• Make a believer out of the most resistant employee to gain
buy in from employees
• Be sure to get all relevant information before meeting
• Video and Group Observation
• Accountability goes all the way to the “Top”
• Managers need to set expectations and hold associates
accountable to standards
• Most people perform to the expectation as they understand it
• Find ways to reduce “event adjustments”
• Event Adjustments cost MONEY!!!!
Questions