Adapting to the Power Shift:  Modern Labor Management Systems (LMS) embraces flexibility

The earliest labor management systems (LMS) were focused on infusing clockwork precision into the production process. Organizations used the software to maximize output, streamline work, and get the most productivity out of every employee.

These “glorified” time clocks were deeply rooted in engineering labor standards, which represent the amount of time it should take to get a particular task completed when working at a sustainable, steady pace. By combining performance standards to key performance indicators (KPIs), LMS helped companies track everything from hours worked to breaks taken to unexpected worker downtime.

It then enforced the standards and pinpointed issues to ensure more predictable output levels. Over time, these early iterations of LMS gave way to workforce management tools that also handle scheduling, communications and perhaps most importantly, the “human” aspect of work.

Fast-forward to 2024, and the modern LMS has come a long way since replacing industrial engineers who used stopwatches and clipboards to conduct time-and-motion studies on the factory floor. Some of the evolution can be tied to workforce trends: as employees became scarcer and as their job opportunities proliferated, companies had to move beyond engineered standards when measuring their productivity and success.

In response, LMS vendors have introduced self-service scheduling capabilities that allow warehouse employees to swap shifts or take off a few hours for their children’s soccer games—without having to put in a formal request for the afternoon off. This has given associates a sense of control over their schedules in a work environment where rigid schedules have historically been the norm.

Going beyond the fundamentals

The modern LMS is built with advanced analytics capabilities that expand beyond basic performance metrics.

For example, the systems can identify skill gaps in individual employees (and alert employers to the need for additional training or support); analyze workforce trends (is one shift consistently calling off work, and for what reason); and help reallocate labor in the middle of shifts (trucks that unexpectedly pull up to the dock door precisely when a group of five employees had just finished what they were working on).

Modern LMS platforms also factor in something that their earliest predecessors didn’t worry much about: employee wellbeing, engagement and retention. This is a particularly important “win” for companies that are operating in a constrained labor market and recruiting younger generations of employees who want to do more than just earn a fair wage.

They’re also looking for good work-life balance, an employer with strong values and the opportunity to do things like volunteer, get involved with their communities and spend quality time with their families.

An LMS that warns managers when an associate has been putting in too many hours, slowing down their pace and approaching burnout, for example, allows companies to adjust schedules and workloads (e.g., reminding that person to take breaks when needed) before those issues affect both the employee and the employer.

These are just some of the ways LMS is proving itself in the labor-constrained fulfillment environment, where the next job is just a screen tap or mouse click away. Not only are those jobs plentiful right now, but they’re also not very high on the average person’s wish list when it comes to career choices.

Dwight Klappich, research vice president at Gartner, puts it bluntly when he reminds us that “no kid grows up dreaming of driving a lift truck in a warehouse.” Citing recent U.S. Department of Labor statistics, he says that the North American transportation and warehousing sector employs about 11 million people.

That number has grown by 5.7% over the last five years and that growth trajectory is expected to continue. The industry is losing roughly 1.4 million people a year, Klappich adds, and there are currently 2.3 million manufacturing, trade, and retail job openings waiting to be filled.

“These just aren’t the kind of jobs that people want,” says Klappich, who has seen a significant power shift from employer to employee take place over the last few years. This shift has made an impact on how LMS is used in the typical warehouse, where “ranking” employees and then eliminating, say, the bottom 20% of them just isn’t a viable workforce management approach.

Not only does it leave the remaining 80% of associates on edge about losing their jobs, but backfilling 20% of any given workforce is nearly impossible in today’s labor market, where Gartner research shows that 60% of supply chain organizations are grappling with labor shortages.

So where does LMS fit into the equation? For starters, it’s a hot commodity for companies that are trying to balance workforce needs with a constrained labor market and changing employee requirements.

“I can’t think of a single company that I’ve talked to in the last nine to 12 months that isn’t talking about and asking about labor management,” says Klappich, who adds that most are purely focused on labor reporting (i.e., how did we do yesterday and were those results above or below plan).

This planning generally focuses on a specific operational time horizon and addresses questions like: Based on how many inbound and outbound orders we’re managing over the next five days, will we have enough labor? Where do we need that labor to be positioned in the facility? And, do we need to move people to different departments to ensure that the bases are covered?

Going a step further, LMS can also be used to generate longer-term forecasts of, say, three, six or even 12 months. Most of this forecasting is managed on Excel spreadsheets right now, but a shift to a more digitalized approach could be coming soon.

“Companies spend millions on supply chain planning applications, but nearly all of them forecast labor on spreadsheets,” says Klappich. “There will be a time in the not-too-distant future when these organizations won’t be able to fulfill demand because they won’t have enough people.”

Klappich says vendors like Manhattan, Blue Yonder, and Easy Metrics are all stepping up to the plate to help on the labor forecasting front, where algorithms can be applied to develop more accurate, reliable forecasts. “Some of these vendors are absolutely stepping up their efforts on the planning side of the equation,” says Klappich, “while other smaller providers remain focused mostly on labor reporting functionalities.”

What to look for in an LMS

Amarendra Phadke, CTO, North American consumer products and retail practice at Capgemini Engineering, sees much innovation taking place in the LMS space right now. For starters, he says modern LMS is being designed to integrate seamlessly with other enterprise software—ERP, HRIS—in order to create a more interconnected and efficient system.

Some LMS systems also include gamification elements to boost worker productivity and morale by incorporating rewards and recognition programs. Phadke says that real-time task management remains a highly utilized feature because it helps managers efficiently assign and track tasks.

Here are six other features that shippers should ask about when shopping around for an LMS this year.

• Automation and AI integration. Many LMS providers are integrating advanced automation and machine learning to streamline processes and predict labor needs more accurately.
• Mobile-first design. With the increasing reliance on mobile technology in the workforce, new LMS platforms are being designed with a mobile-first approach, enhancing accessibility and usability for on-the-go management.
• Real-time analytics. Enhanced analytics capabilities allow for real-time insights into workforce efficiency, enabling quicker decision-making and improved operational responsiveness.
• Sustainability features. In response to growing environmental concerns, some LMS providers are incorporating features into their solutions to optimize resource use and reduce waste, particularly in retail.
• Predictive scheduling. Using historical data and machine learning, LMS solutions now offer predictive scheduling to optimize workforce allocation.
• Employee self-service portals. These portals allow employees to manage their schedules, submit time-off requests, and access training materials, fostering greater employee engagement and autonomy.

“Forward-thinking LMS solutions will be built with even more enhanced features that contribute to employee satisfaction and retention,” says Phadke, “including personalized scheduling and improved work-life balance initiatives.”

What’s next?

As the LMS market continues to grow, much of that expansion is being driven by the need for enhanced labor efficiency and reduced operational costs across most industry sectors.

“Increased adoption in emerging markets and sectors such as 3PL logistics and quick-service restaurants contribute significantly to this expansion,” says Phadke, who envisions a time in the near term when more AI and machine learning are folded into LMS platforms.

“Future LMS developments are likely to focus on deepening AI capabilities to further automate scheduling and predictive analytics,” Phadke explains.

More Internet of Things (IoT) integrations are also likely in the cards. “As IoT devices become more prevalent in industries,” Phadke adds, “LMS systems that can integrate with these devices for real-time data collection and analysis will become essential.”