Labor Management: A powerful ally for your warehouse management
Warehouse management is an exercise in organisation. You need to allocate products to a spot that is optimally suited to their attributes. And more importantly: when an order comes in from a customer, you must retrieve the products efficiently, safely and quickly. That’s a core task of every warehouse.
Companies often rely on specialised software for assistance, such as SAP Warehouse Management, a market leader dedicated to the flawless execution of these tasks, tailored to the needs of practically every warehouse.
People obviously play a vital role in the whole process. They unload trucks, deconsolidate cargo and put products in the warehouse. They pick, kit, pack and ship, with or without the help of machines to make the work more manageable.
Traditional warehouse management software often overlooks resource planning. However, in recent years employee planning has been even more challenging than before. Due to the pandemic, many warehouses were understaffed. Efficient planning was more than ever necessary to keep things running smoothly.
In addition, you also need to motivate people and reward them correctly for their performance. That improves continuity and benefits the working environment in general. Knowing that everyone is being graded equally and objectively enhances the overall dynamic and makes performance reviews much more effective.
SAP Labor Management (LM) can help you with all these challenges. Yet it is not widely implemented. However, I am convinced that it can be an asset and a powerful ally for your warehouse management. Therefore, in this blog, I highlight some points that make it worthwhile to consider implementation.
5 Reasons to implement Labor Management
1: It’s included in your licence
SAP EWM is an excellent software for capturing and modelling warehouse processes. If you don’t use it yet, I encourage you to explore its capabilities. Check https://www.sap.com/products/extended-warehouse-management.html.
Labor Management is available as a component of the ‘advanced’ version of SAP EWM. It uses the objects and concepts of the normal day-to-day EWM processes. In addition to the standard setup, you have to set up the master data. You need to register the warehouse workers as business partners. And you have to maintain the Engineered Labor Standards, which provide an estimation of the time required for each step in the process.
2: Avoid surprises and plan ahead
LM has several functionalities, but the main problem it solves is planning. Both long and short term planning are possible. LM will use different methods to obtain the desired results.
Long-term planning uses ‘preprocessing’ to estimate the future workload based on incoming and outgoing deliveries or cycle counts. On the other hand, short-term planning uses more detailed information about the warehouse tasks that need to be carried out. This is where you create a planned workload.
You not only get an estimate of the duration of the tasks, but you can also run simulations. You can calculate the planning target using different formulas and parameters. For example, you can see how an additional resource, or the weight category of a load affects the planning.
Once you have created the warehouse tasks, you can start planning in detail, down to the workload level for a specific activity area or warehouse worker.
3: Evaluation and reporting
LM is not only an excellent tool for planning the workload in the warehouse. It also proves extremely valuable after the work has been completed. To continuously improve efficiency, it is essential that you can easily evaluate the work done.
What makes this feature so great, is its simplicity. Do you want to compare planned duration with reality? No configuration work is required for that. LM can even go a step further and calculate a planned duration that, for example, takes into account the speed of a resource for picking.
This capacity should not be underestimated. Labour costs weigh heavily on the total cost of running a warehouse. Efficient use of resources is therefore essential. LM enables you to evaluate which activity areas are underperforming, which processors are less efficient, etc. LM identifies areas for improvement and provides the opportunity to reward the most productive warehouse workers. You can even automate the bonus payment through an interface with an HR system.
Recording the metrics is not enough: you also want them to be easily retrievable and regularly monitored. With LM, you can consult the metrics from a central warehouse monitor. You can also use dashboards to calculate your customised KPIs.
4: Flexibility and individuality
Using a system like this might make you think of a cold and robotic approach to warehouse workers. The opposite is true. LM allows for a great deal of customisation when recording the metrics.
Perhaps you only want to track high priority warehouse processes or high-value goods. By using formulas and conditions, you can easily determine your scope.
Picking, packing and kitting are only part of the work in the warehouse. Meeting or cleaning may not be core tasks, but they are essential for keeping the warehouse running smoothly. These indirect labour tasks can also be registered and prepared. When the job is finished, the warehouse worker can tick it off the list, knowing that his work has not gone unnoticed.
In LM, you can also take your employees’ experience into account. A new warehouse worker or someone starting a new task will not have the same experience as a seasoned person. It is important that you have some room for manoeuvre when assessing performance and that you can also take this into account in your planning. You can adjust the skill level in the employee’s profile and let it evolve.
LM also considers personal needs, fatigue due to work-related stress or weather conditions, and unavoidable delays due to maintenance, cleaning, or machine breakdowns. In countries with warmer climates, the summer temperatures can be so hot that productivity is affected. Based on the PFD factor, you can adjust the planned duration.
Mature warehouses that score well on several benchmarks can even take into account the horizontal and vertical moving time. This gives the warehouse manager a lot of support in planning the activities, and a good view of the warehouse workers who literally go the extra mile.
In addition to the extensive customisation possibilities, SAP BRFplus and a range of BAdIs and BAPIs enable you to better meet the customer’s requirements.
And 5: Shift management
Once you have a program to plan the workload in your warehouse and assess its performance, you will also need tools to schedule the workforce and have them carry out your planning.
SAP LM also offers a solution for this requirement with the Shift Management and Time & Attendance modules. First, you design a general schedule with specific shift patterns, including start times, end times and breaks. Then you assign the shift patterns to the warehouse workers.
This has an additional advantage. You can use the notion of ‘shift’ to add an extra layer of analysis to your reports. You can calculate the productive work capacity at a specific time, or the performance of any shift.
The Time & Attendance module is complementary to Shift Management. Its primary purpose is to record the clock-in and clock-out times of employees. Furthermore, you can have indirect work activities entered automatically. Suppose, for example, that every shift starts with a briefing. Time & Attendance adds that automatically. You can also apply that to other recurring tasks, such as returning a forklift truck to its parking and charging location.
Afterthoughts and remarks
SAP Labor Management is a very comprehensive package. It covers every element of work planning and organisation in a warehouse – from estimating how many resources you will need in a specific warehouse area based on the workload, to clocking out at the end of a shift.
The system is rich in functionality and has its strengths and weaknesses.
The analytical capability and comprehensive KPI reporting is excellent news for many warehouse managers. You get data from LM that you cannot get from any other system. Of course, you need to spend time setting up the process steps, but from then on, the system is woven into all warehouse tasks. Want to see how much time it will take to execute a workload? Go to the planning task, enter the process steps and execute. You notice that you can’t handle the workload in a particular warehouse zone? Add a resource from another area and run a simulation. This way, you make well-considered decisions as a warehouse manager.
Another strong point: you can assess performance as soon as the work is done. Looking at the effective time to execute a warehouse order is beneficial. However, comparing it to the norm is more meaningful. In addition, a warehouse order may contain tasks including bins some distance away, or tasks that are more complicated and require more steps. LM offers an objective way to do this exercise and make a balanced evaluation.
About Shift Management, my opinion is more nuanced. It is a valuable component that meets its purpose. However, I do not think it is geared for the complexity of long-term resource planning. There is a good chance that your company already uses an application to plan shifts. Today, however, SAP LM cannot integrate with external planning tools. If this is not a problem for you, it may well be a good solution tightly integrated with your existing processes.
There is one more thing I would like to share. You need to collect a list of timings for each process and each step you want to track. I would not recommend you to combine a new implementation of EWM with the deployment of LM. First, make sure that your processes are well in place. LM is more oriented towards systems that have already been optimised after the initial go-live. Once everything is up and running, and the training is completed, you can set accurate benchmarks. LM can then be an incentive to implement improvements in the warehouse layout, processes, and set-up.
You will also need to register your warehouse workers as processors. You can create them manually or load them into the system as business partners. This master data is essential for registering the workload and the processing time.
To conclude: if you are running a warehouse and are looking into ways to optimize your resource planning and gaining insight in the performances of your warehouse workers then consider SAP Labor Management to help you with this task.
A case to illustrate and clarify
Compared to other modules in SAP or parts of EWM, you will find very little information or examples relating to Labor Management. That is why I want to describe the steps you can take in LM. In a couple of follow-up posts, I will go into more depth about what you can set up and calculate in each section. I will focus on the less intuitive parts that I also found myself struggling with.
We want to estimate the number of warehouse workers needed to pick the following deliveries, containing 52 items.
We set up the planned duration for our delivery object based on 10 minutes per line item to be picked. As an additional requirement, we add that it must be delivered to warehouse 2510 and that ‘YOPI-Picking’ should be used as a warehouse process step.
You can use a formula to calculate a planning goal.
Let’s assume that a picker is productive for 6 hours (360 minutes) in a shift. If you divide the previously mentioned planned workload by this value, you can estimate how many FTEs you will need to carry out the picking in this scenario.
In transaction /SCWM/PL, we can execute the planning with pre-processing within a defined period:
As indicated in the ‘Results’ field, you would require 1.4 pickers to complete the job based on the planned duration (520 min) from pre-processing.
On top of that, we could simulate another scenario using another formula that operates on weight brackets:
2: Planned workload of warehouse tasks
Once you have created the warehouse tasks, EWM will use the Engineered Labor Standards to calculate the duration.
In this case, the setup is as follows (Turn is executed twice):
If we now open our planning tool (/SCWM/PL) and we leave out the items that require pre-processing, you will get the following result for the warehouse order created:
It will also be added to the warehouse order:
3: Shift assignment
We can also look at how a shift would play a role in this process.
We can assign a shift to a processor; this information will be used later in the upcoming documents:
The warehouse worker then clocks in at the start of his workday with the Time and Attendance module:
4: Executed workload
As soon as the planned workload is completed with the scanner, the planned workload document will disappear. A new document is created: the Executed Workload. This contains the adjusted planned duration, the actual duration and the efficiency – a derivation from the first two values. In this case the efficiency displayed is 76.73% only, because the work has been executed slightly slower than planned.
If the processor is assigned to a shift, the Executed Workload document will also contain shift information:
Questions and upcoming posts!
I hope this has provided some insights into the possibilities of Labor Management in SAP EWM.
Should you be interested in getting more information, do not hesitate to reach out to me in the comment section.
As promised I will create some follow-up posts where I will do a deep-dive into each of the modules within Labor Management. I will focus more on the configuration and customizing possibilities there.
The first one about Pre-Processing is already lined up.