Category Archives: Labor Management

Would your Distribution Center Win Best in Design?

As Steve Jobs once said, “Design is not what it looks like. Design is how it works.” So when we ask, would your distribution center or warehouse win best in design, the real question becomes, is your facility designed to succeed in meeting your 2017 objectives?

Clearly the designing phase of establishing a production system is the most important since most of the strategic and tactical decisions take place during this phase. While several academic studies seek to find a one size fits all solution to warehouse design, each industry and facility offers unique opportunities and challenges.

Despite the necessity to create custom designs to meet specific objectives, a general guideline keeps management on task when making crucial decisions. As reported by MHLnews.com (Material Handling & Logistics), there are seven essential steps in redesigning a warehouse.

  1. Identify and Document Areas for Improvement
  2. Gather Facility Information and Data
  3. Analyze Collected Data
  4. Develop a Thorough Plan
  5. Plan the Implementation Process
  6. Conduct a Post-Project Review

Throughout our 10 years in partnering with operational facilities, we have seen over and over how the smallest adjustments of motion or placement can dramatically impact bottom line results. Conversely, we have seen how the refusal to “switch things around” stifles a company’s ability to meet their objectives.

At one large distribution center for SONY, we found by rethinking the production flow we could not only improve productivity but improve space utilization by 30% saving the need for outside overflow space.

 

nGROUP Executives will be attending the RILA conference February 12-15. If you would like to schedule an appointment during the conference to discuss 2017 facility design trends, our contact information is below or simply respond to this email. Don’t want to wait until February? Give us a call for a brief phone conversation prior to the conference. See you in Orlando.  

About nGROUP As an on-site insourcing partner, nGROUP works with companies in a consulting or vested partnership relationship. For over 10 years, the nGROUP Performance System has been adopted by executives and managers in labor intensive industries to meet and exceed corporate objectives. NPS consistently outperforms other methods, increasing productivity, quality, and morale, and reducing labor costs by a minimum of 10-25%.

New Year, New Energy: Positive Change Requires Positive Energy

New Year, New Energy: Positive Change Requires Positive Energy
Are you heading into 2017 with new challenges and aggressive corporate objectives? If so, you have probably completed detailed research, developed strategies, and lead countless meetings in preparation to facilitate change in your labor-intensive operations. But have you given thought to how you are going to create the energy necessary for change to truly take place – not just on paper – but in the minds and habits of your workforce? In other words, positive and lasting change requires positive and lasting energy to be accepted and adopted at an individual level.
In order to gain the best performance possible from your labor force you must align their motivation with your objectives.   This means that workers must be clear about the company’s objective – crystal clear – and that those goals are part of your production benchmarks that are monitored and shared with the workers DAILY!
Whether you share production reports daily in a meeting or create a powerful display on your production floor, the communication and the vibe you put forward must be individualized to the worker – crediting them as individuals or praising the performance of their shift over another. There is one clear way to know if you are motivating your workforce. If you were the proverbial fly on the wall in the break room, would you hear your workers discussing their performance?
When we first partner at a new facility, we often see the remains of production performance charts that are intended to motivate the floor workers. Too often managers capture data sporadically and worse they don’t share the data with the workers on a consistent basis. News flash – only the workers can affect the outcome of your goals. It is the “duty” of the manager or supervisor to create the energy that motivates the worker. This requires constant monitoring of performance, necessary adjustments that are preventing success, and above all – holding the workforce accountable in a positive, productive manner.
The last consideration for creating a high energy workforce that exceeds your expectations, is to reward your workforce with both praise and pay using a cost per unit model.   In facilities where the nGROUP performance system is utilized, ‘Pay for Excellence’ reinforces that each teammate is an essential part of the team, and is rewarded with incentive pay for their excellent performance. Above all our approach is to create positive, encouraging goal-oriented environments and coach teammates how to work smarter to achieve greater success for themselves and your company.
nGROUP Executives will be attending the RILA conference February 12-15. If you would like to schedule an appointment to discuss 2017’s trend setting labor production methods during the conference, please contact Vice President Ryan Cates at rcates@ngroup.biz. Don’t want to wait until February? Give us a call for a brief phone conversation prior to the conference. See you in Orlando.  
About nGROUP
As an on-site insourcing partner,
nGROUP works with companies in a vested partnership relationship. For over 10 years, the nGROUP Performance System has been adopted by executives and managers in labor intensive industries to meet and exceed corporate objectives. NPS consistently outperforms other methods, increasing productivity, quality, and morale, and reducing labor costs by a minimum of 10-25%.

2017 Supply Chain Trends

Achieve More By Doing Less

Often our New Year resolutions have more to do with our personal lifestyle choices than it does our business related choices. Regardless, the objective is the same – to implement and reap the benefits of positive change.   As we begin the New Year, have you considered how to facilitate positive change for your labor-intensive operations?

In the weeks leading up to the Retail Supply Chain Conference, we are going to share some information about implementing process improvements based on the latest trends and technology. Below is a list of topics that we will explore. We hope this information provides useful information that results in not just meeting 2017 expectations – but exceeding those expectations.

  • New Year, New Energy: Positive change requires positive energy. How are you going to create positive energy amongst your managers and workers?
  • Distribution Center Design: Would your facility win best design and what would it look like?
  • Human Ergonomics: Have you observed the efficiency of your worker’s movements on a granular level?
  • On-Trend or Trend-Setting: Is your distribution center poised to implement acceptable improvements or are you seeking to go beyond the range of acceptability?
  • Finding the Right Fit: What is out of date in your warehouse? Is there a better fit or an improved flow that you can implement during 2017? Does you labor supplier still meet your needs? Can you do less to achieve more?

We look forward to seeing you at the 2017 Retail Supply Chain Conference in Orlando and

Happy New Year!

Logistic Companies Adopt Web Based Business Models

One of the benefits of attending this year’s Council of Supply Chain Management Professional’s Conference (CSCMP) was learning about trends that are on the horizon in the world of logistics. One such change is how technology is enabling companies to connect based on need and availability.

On a basic level, business models such as Uber and Airbnb put consumers in touch with service providers that have openings. For Uber, consumers are connected to drivers with the touch of a button. Only the drivers that are nearby and have available time respond to the consumer’s request. Conversely, Airbnb connects travelers to accommodations that are relevant to their desired location and can quickly see if the timeframe is available.

In the same respect, warehousing and distribution centers have situational or seasonal demands such as trucking and varying needs of warehouse space. Emerging to fulfill these needs are companies that make transportation and warehouse space available on an as need basis; and like Uber and Airbnb, technology facilitates the availability and scheduling.

One such logistics provider is “Quick Transport Solutions.” As described on their website, “We are your one-stop-shop for everything you need to run your transportation and freight logistics business. Our website allows you to post load or find trucks, post trucks or find loads . . .” For the most part, flexible transportation services are available on a regional level so a little research can put you in contact with a quick source for varying transportation needs.

Flexible warehouse space is a more widely known option; however, the communication platform (online and mobile scheduling) is expected to grow as companies look for low risk options for cost savings.

Regardless of how fast and wide spread online and mobile booking of logistics services becomes, I fully expect more national players to seize the opportunity to provide convenience and creative approaches to deliver more services on an as needed basis.

 

Executive Vice President Diron Raines leads client partnership engagement for nGROUP. Raines manages assessment and benefits case development to ensure a good fit prior to initiation of projects. He brings years of senior management expertise in strategy practice for a Big Four consulting firm, developing portfolio strategies, manufacturing strategy, operations planning and shareholder value analysis.

 

About nGROUP For over 25 years, the nGROUP Performance System for labor intensive functions has been adopted by executives in manufacturing and distribution facilities to solve business issues and achieve corporate objectives. As a consultant or on-site outscouring partner, nGROUP consistently outperforms other production methods, increasing productivity, quality and morale, and reducing labor costs by a minimum of 10-25%.

Scientific Evidence That Insourcing Yields Innovation

During the recent Council of Supply Chain Management Professional’s Conference (CSCMP), I had the pleasure to attend a breakout session conducted by Scott Graves, a PhD candidate at the University of Iowa. Graves presented his research on the pros and cons of Onsite Outsourcing – what we at nGROUP call Insourcing.

Naturally this was of interest since it is what we do here at nGROUP.  The spin was a little different in that it focused on transportation, whereas nGROUP focuses on labor inside the warehouse or plant. Despite differences in tasks, the relationship is the same; a third party operates within the four walls of a client’s facility alongside their team.

The subjects for the study were IPC, a Subway franchisee owned organization that handles their logistics, and CH Robinson, a 3PL that has a team in IPC’s facility working alongside their team to manage IPC’s transportation.

Grave’s findings were insightful and consistent with our experience working with clients.

Based on his research Insourcing yields increases in the following areas:

  1. Loyalty between client and vendor
  2. Visibility both ways (client/vendor)
  3. Responsiveness in reaching objectives and overcoming challenges
  4. Innovation in finding solutions (Thinking outside of the box)

 

According to Graves, there are four key considerations for insourcing success:

  1. Task and Outcome Dependence – Dependence forces interaction and engagement between both teams
  2. Role Clarity and Autonomy – It is essential that roles of the third party onsite team members are clear and they are able to carry them out independently.
  3. Commitment – Client teams need to have a sense of accountability for the program’s success.
  4. Physical presence – Third parties should have a designated area that is their own to work in but provides easy access to the internal team.

Most prevalent negatives when it comes to insourcing:

  • From a client perspective, there are barriers to exiting the relationship.
  • From a vendor perspective, they often find themselves giving away services that are not part of the compensation agreement.

The finding that resonated with me the most was the idea that Insourcing yields innovation; an elusive and highly valuable byproduct that is desired by every company. What companies are innovative to you? I bet it’s a who’s who of industry that comes to mind (Apple, Tesla, Google, Amazon…).

The concept that insourcing and innovation go hand in hand makes a lot of sense. Third parties like nGROUP can bring a greater depth of expertise in a particular area. In addition they have more focused resources that can speed up the rate of iteration.

In our world that means combining our operations management expertise with our client’s inherent knowledge of their business to develop new strategies. Then our implementation team can focus on the execution and ongoing management, while our clients focus on improving another critical area of their company.

 

Ryan Cates is Vice President with nGROUP performance partners. As an insourcing partner, nGROUP works with companies in a vested partnership relationship. For over 25 years, the nGROUP Performance System (nGPS) has been adopted by executives and managers in labor intensive industries to meet and exceed corporate objectives. nGPS consistently outperforms other methods, increasing productivity, quality, and morale, and reducing labor costs by a minimum of 10-25%.

The Grass IS Greener On The Other Side: Why This Football Fan Decided to Outsource

If you are like me, you are elated to hear the introduction song to Monday night football; look forward to ESPN’s College Game Day and get a little upset when the Fantasy Football app doesn’t work. As hard as I work during the course of the week, I look forward to pulling for my favorite teams during the weekend and recharging for the next week’s challenges.

I live in the South so this is also the time of the year that I need to repair my lawn from the harsh heat of the summer and do all the things that will ensure a green lush lawn come Spring. The problem is I’d rather turn my attention to football. I’m certainly more productive on Mondays if I’ve had a relaxing weekend. Last year I made a decision that ensures I could watch football without the pressure of yard work calling my name. I outsourced the care of my lawn.

Sure I can fertilize, put down pre-emergent, aerate, seed, etc. myself. Performing these tasks are not of particular interest, not something I enjoy, nor do I regard it as a good use of my time. The service on the other hand takes pride in their abilities, invests in the right materials and equipment, and will gladly perform the service for not much more than it used to cost me in materials and equipment. And honestly the yard looks better. By outsourcing, I met both of my objectives – a beautiful lawn and a recharged mind and body.

Every executive overseeing distribution and manufacturing operations has similar sentiments towards some area of their business; it’s important but they’d rather focus on other things; it’s generally painful to deal with, and someone else would probably do it better.

The concept of outsourcing a task, a work cell or even an entire operation is certainly nothing new. However, the landscape of outsourcing options has changed dramatically during the last decade. Most notably, insourcing has become a popular and effective way to meet corporate objectives by delivering record-breaking results and eliminating headaches while maintaining control on-site.

What is insourcing? Insourcing is when a third party manages a process inside a company’s facility, often alongside other processes that the company continues to manage. Traditional outsourcing is when a third party manages a process outside the company’s facility which is typically wholly managed by the third party (see comparison chart below).

Executives may choose to go the insourcing route because they’re concerned about loss of control and protecting the customer experience. There could also be issues with utilization of assets like real estate or equipment that the company is committed to use. Or the process they’d like to outsource may be a part of a series that it needs to remain close to. Whatever the case; they need it to stay in-house.

Conversely, the traditional outsource model means that the operation takes place in a separate facility with their own management, transportation and labor resources. Often the outsourced operation is not in even in the same city as the company.

Insourcing as a business model does provide many of the same benefits as traditional outsourcing while remaining at the company’s site. There’s a contractual agreement to a specific cost per unit, or a cost-plus model and the insourcing company is responsible for meeting all production targets. However, not all insource companies offer the same services, benefits and areas of expertise. nGROUP Performance Partners is a unique example of a company, with both a consulting and an insourcing services, that provides experts in engineered standards and efficiency, labor management with black and green belt certification in Lean Six Sigma, and employee engagement. Not only does nGROUP pay for themselves, they bring expertise to the table that saves companies money by increasing efficiency.

For example, as an insourcing partner, nGROUP was able to achieve a 30% cost savings for Sony Electronics Distribution Center in Carson, CA during a corporate initiative to significantly reduce costs.

 

By Ryan Cates, Vice President nGROUP

 

nGROUP has been making the grass greener for labor intensive industries for 15 years. Their award winning nGROUP Performance System (NPS) consistently outperforms other methods, increasing productivity, quality, and morale by reducing labor costs by a minimum of 10-25%. For more information on insourcing with nGROUP, please contact Diron Raines EVP at draines@nGROUP.biz, or Ryan Cates VP at rcates@nGROUP.biz.

A True Win-Win: Blue Collar Productivity

Creating an effective incentive program for blue collar labor can lead to improved service levels, reduced labor cost, happier well-paid employees and greater profits. The key word is effective.
If an incentive program is not structured correctly it can create more problems than it solves. A well-structured plan needs to be easily understood by the employees and they must feel they are in control.
It is also important to make the reward as immediate as possible. The main objective of incentive pay is to affect behavior. Worker performance should include productivity, quality, attendance, safety and attitude.
Here are the 10 easy steps to create an effective incentive program.
  1. Measure Productivity. The most effective incentive programs can drill down to individual performance.  Once you start including more areas into the formula the less impact it may have.
  2. Set Accurate Labor Standards: People need to know how they are measured and rewarded. The standards must be fair, demanding and attainable. Reevaluate and reset standards after any equipment or process change that impacts work content. Incentive should accurately reflect worker performance.
  3.  Keep it Simple.  Try to go to the most basic measurements possible.  You need to eliminate any mystery on how people make incentive pay.
  4. Post performance quickly.  Posting worker performance quickly and publicly gives associates visibility into process and builds credibility in the program.
  5. Pay incentives quickly.  Production and quality incentives weighted with attendance performance should be paid on the paycheck that corresponds to hours worked.
  6. Identify best practices.  The best process ideas come from the people who are doing the work.  When you find a better method, integrate that into the SOPs and training and get everyone to embrace it.
  7. Remove obstacle to performance.  Work the floor personnel to identify any impediments that reduce worker effectiveness and try to remove them.
  8. Equip with the right tools.  Make sure employees have the right equipment to do their job and that all of the equipment is at full functional capability.
  9. Train the workforce for results.  Create a training program that embraces all of the elements of high performance and don’t omit training for temporary workers.  If they are essential to your labor strategy then it is essential to onboard them correctly.
  10.  Promote safe practices.  Give employees quality tools and the right environment in which to do their job. If they are not working in a safe environment, efficiency, productivity, and risk will sabotage your results.

How Often Should You Evaluate Engineered Standards?

Engineered standards are key to implementing production planning, management reporting, incentive structures, and individual accountability.  Standards are developed using techniques that create fair expectations of the output projected over a specific time frame.

data-anlaysis
The approaches to develop standards include traditional work measurement, random sampling, standardized systems like MOST, and the utilization of historical data.  I personally like to use work measurement in conjunction with historical data to help validate my findings.

Depending on the complexity of the work being done, it can take as little as a few days, to as long as a few months to develop comprehensive and fair standards.  Once the standards are created, implemented, and put to work as a baseline for efficiencies, it is incredibly important to ensure they MAINTAIN fairness and objectivity.  This means re-evaluating on a periodic basis.  So then the question becomes: How often should you evaluate engineered standards?

The answer is relatively simple and based on common sense.  First and foremost, anytime work content is changed in any significant manner we need to recalculate the standards based on that new scenario.  This is important in order to maintain the fairness of the standards, particularly if utilized for incentive.
The second way to time an evaluation is based on performance against the existing standards.  In other words, since you are measuring performance and comparing the results to the standards, you will notice fluctuations in the results.  If those variabilities begin to fall outside of the historical norms, it is a good prompt to check the standards for changes.   You may notice the standard has become too easy to achieve, or maybe your team can no longer meet the expectations.

Regardless of what prompts reevaluation, it is important to determine why the results are changing and adjust accordingly.  Some subtle factors that may affect results include:

  •  Different materials are being used, like packaging that is more difficult or easier to fold, changes in vendors, or use of new components or products.
  •  The workforce has become acclimated to the work and 100% standard has increased due to training or learning curve.  This can be tricky.  Be careful of new trainees and use a time based standard to get to a new 100% for new employees.
  •  Small incremental work content changes, like additional labels, production recording, or paperwork changes.
  • In any case, it is important to maintain fair and objective standards for both your management team and your employees.  I have always said, “bad standards are worse than no standards….”  Once you have your expectations in place, keep your eyes open for valid reasons to reevaluate your engineered standards.

 

Jim Zimmerman, COO

nGROUP

 

Alternative Solutions to Corporations Seeking Labor Compliance

With the majority of the “Obamacare” Affordable Care Act (ACA), mandates going into effect in 2014, executives and human resource professionals across the country are scratching their heads trying to figure out the best strategy for labor compliance and cost improvements. nGROUP Performance Partners, a national on-site outsourcing provider, is answering their call with a business model that offers solutions in both critical areas.

Our proven business model guarantees cost savings in labor, meets the ACA mandates, and eliminates most compliance and co-employment issues,” says David Hair, President of nGROUP Performance Partners.

nGROUP provides labor and process management services to companies with labor intensive operations. nGROUP oversees entire operations or a singular work cell. For example, a client may outsource an entire manufacturing facility to nGROUP, or nGROUP may only be responsible for one work cell within the facility, such as packaging.

According to Hair, it is the role of assuming responsibility that sets nGROUP apart from other industrial engineering efficiency consultants and other flexible workforce options, such as temporary staffing. “This year our clients are expressing concerns about a number of labor compliance issues, particularly those aimed at temporary employment. At the end of the day our job is to not only produce the results we guarantee but to also deliver a workforce that is motivated, trained, and in compliance.”

When it comes to compliance regulations, the ACA has gained a lot of attention from critics, citing that the law offers little guidance as to how mandates will be regulated. For example, one of the most controversial regulations of the ACA is the mandate that companies with more than 50 full-time employees shall provide “qualified” health coverage for all their full-time employees, or pay an annual penalty of $2,000 per full-time employee. If a company does provide such coverage but it’s not “affordable,” the penalty is $3,000 per employee. (Affordable is defined as less than 9.5% of the employee’s family income.) Many economists have reported that the financial impact of the penalties associated with this mandate will reduce profit margins and drive higher prices.

Regardless of any direct financial impact, the ACA will most certainly increase compliance burdens. As reported on the Committee on Ways and Means website, the ACA will add nearly 80 million man-hours each year to individuals and businesses. Critics point out that the IRS compliance burden is the tip of the iceberg. With agencies such as Health and Human Services and the Department of Labor, the fear is that additional and duplicate oversight and regulations will continue to add unparallel compliance burdens on corporations, small businesses, and individuals.

“Whether or not the ACA is here to stay or is destined for mass revision, one solid truth remains,” Hair says. “Companies throughout the United States need to take measures now to ensure compliance when the majority of its mandates go into effect in 2014.”

In instances involving the need for cost improvements, risk protection and a flexible workforce, companies are looking for new business models that ease compliance burdens. A performance based partnership is an emerging example of how companies are adopting alternative workforce models on U.S. soil.

For more information on nGROUP performance partners visit http://www.nGROUP.biz, view http://www.nGROUP.biz/movie, or contact David Hair, CEO at dhair@nGROUP.biz

7 Hidden Management Mistakes: Part 1

Written by Jim Rossini,
Executive Vice President of nGROUP

Within the past decade, I have assessed, managed or implemented engineered workforce management programs that utilize a large concentration of workers at over 100 facilities. Many of these facilities are within the Fortune 100 arena. The most common objectives we collaboratively agree upon prior to implementing our engineered labor solution are reduce labor cost, improve facility throughput and reduce risk associated with labor. The majority of companies have already addressed the common management mistakes: communication, culture, recognition, goal setting, etc…. However, there are seven hidden management mistakes that are not so obvious and just as significant. Here is an overview of the Seven Hidden Management Mistakes (SHMM).

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1. The Jefferson’s: Moving on Up
Every supervisor wants to move up to that apartment in the sky.  The one with the corner office and their name written outside of the door. The hidden mistake here is that managers migrate the best and brightest away from the place where everything happens, the production floor. The production floor* is the bank that produces the money to pay for everything in that corner office:  the administrative team, the lights, the pencils, etc…. Taking your key employees away from the hub of your companies production leaves the $12 / hour employees to manage tens of millions of dollars.

2. Walk Bombs
The GM or management daily walk through is very common and typically required by upper management to insure employees are engaged with the business. Too often these walks turn into “walk bombs.” The tiniest observation is blown out of proportion. Management blows up on the employees and dictates the team to concentrate an over-abundance of tactical issues with negative impact to performance.

3. First Responder
The first responder is probably the most common of the SHMM. A piece of information is delivered and acted upon immediately without funneling through a resolution process. Therefore, the issue is never fixed and additional problems began to affect operation. The first person to surface the issue is protected from blame and a “hot potato” dynamic develops.  The blame is passed around from person to person based on jaded points of view or partial information.

4. The Tortoise nor the Hare
Many managers subscribe to the tortoise production pace. This very slow, steady approach insures quality is always delivered above the established requirements. When pace picks up, these managers become uncomfortable and do not think the hare can win the race. They believe increased pace leads to quality errors and sloppy finished goods. The reality is neither the tortoise nor the hare is the answer. A cheetah-like approach is the answer. The cheetah’s objectives are to attack without being hurt. They can utilize blazing speed because of their ability to balance.

5. Allen Iverson
It is easy to fall into the mistake of promoting personnel based on their contributions as individuals. Allen Iverson was an NBA Rookie of the Year, NBA number one draft pick, eleven time NBA All Star, NBA League scoring champion four times, and a two time All Star MVP. While Iverson’s credentials were outstanding as an individual,  he was not a good leader and never delivered his team a NBA championship.

6. The Orphan
Everyone has heard the axiom, “success has many Fathers and failure is an orphan.” I have witnessed a repetitive tendency in management to pin a failure on an individual or one distinct area operation. They are publicly humiliated or even terminated as a result and the issue is never resolved. Silos quickly form and personnel concentrate on covering their exposure instead of driving performance improvements.

7. General Patton
Everyone has experienced some level of the General Patton.  Your good idea was plagiarized by a higher level manager and they get credit upon implementation.  The notion that “good idea’s only come from the top brass” is certainly one of the most frequent SHMM’s. The fact is, a good idea stands on its own merit and it shouldn’t matter if it comes from a minimum wage employee or General Patton himself.

My next article in the series will discuss the “The Jefferson’s: Moving on Up” in more depth and provide solid solutions to eliminate this costly mistake from your business.

*production floor could mean distribution floor, manufacturing floor, processing floor, office floor or any floor within a business. It is too cumbersome to list each floor every time.