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Sponsored by: Presented by:

Darin Russell, MSC

Charles Zosel, TZA

Multi-Site

Labor

Management

Program:

Practical Advice and

Lessons Learned to Help

You Succeed

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Introductions

Darin Russell Sr. Industrial Engineering Manager

Charles Zosel Vice President

Agenda

• MSC Overview

• Labor Challenges

• Multi-Site Labor Management Implementation

• Program Results

• Lessons Learned

• Next Steps

MSC Overview

4

MSC is one of the largest

direct marketers and premier

distributors of Metalworking

and MRO supplies to industrial

customers throughout the

United States.

STRONG CONSISTENT GROWTH

MSC Overview

As we grow, we continue to invest in our business to deliver

innovative solutions and offer expertise that enables

customers to drive productivity, efficiency and savings.

BY THE NUMBERS

1941 Year

founded

$2.4B In fiscal

2012 revenue

1,000,000 Industrial

products

99% In-stock

availability

99.9% Next-day delivery on

qualified orders

#35 Global 500

eCommerce Engine

5 Fulfillment

centers

4,500+ Trained associates

National Presence

Customer Fulfillment Centers

Call Centers

Branches

Sales Support

NEXT DAY DELIVERY ACROSS ENTIRE COUNTRY

Typical Facility

• Associate-centric culture

• Half million sq. ft.

• 500,000 SKU’s

• Multiple processes and shifts

Labor Management Program Components

Labor

Management

Program

Best

Practices Engineering

Labor

Management

Software

Training

Utilize Lean

Methodology to

develop standard

operating

procedures

Leverage

ProTrack

software to

gain visibility to

workforce

performance metrics

Use technical,

and leadership

training to

optimize

program results

Establish and

implement fair

and accurate

performance

standards

Labor Challenges at MSC

• Effectively utilizing associates

• Skilled labor force

• Competitive pay

• Long learning curve

• Productivity Tracking: Historical averages (lines per hour) by each supervisor on a spreadsheet across most functions

Labor Challenges at MSC

• Manager/Associate Relationship

• Some performance posting

• Productivity reviewed on annual basis

• Not much previous day tracking

• Coaching around productivity was very limited

• No observations being performed

Labor Challenges at MSC

• Focus group feedback revealed associates had pain points around labor tracking methods:

• Others were cherry picking orders

• Not fair: “I have to walk further than she does for

a pick in my area.”

• RE’s are not that accurate and fair across

functions and sites

Resolution

• Certain management and team members had experience in previous lives in implementing engineered standards

• Wanted an “off the shelf” labor management system

• Knew we didn’t have the internal bandwidth

Considerations for Multi-Site Rollouts of LMS

• Facilities will not be the same, no matter how uniform they look (different culture, history, processes, and motivators)

• IT support will be needed for sites after the initial implementation

• Each facility will be a new ‘change management’ engagement

• Evaluate how turnover will impact top line performance

MSC Labor Management Program

• Began implementation of Labor Management Solution in 2008

• 3 sites fully implemented; 1 in progress

• ~1,000 total users across all facilities

• Modules used: Discipline, Labor Planning, Active Performance Management

Project Launch

Lean Best Practices

Dynamic Engineered Standards

Client Standards Validation

Organizational Development

Go-Live

Site LMP Rollout

LMP Methodology

• Executive Kick-off

• Management Kick-off

• Associate Announcement

• Project Timeline

• Project Approach

• Roles and Responsibilities

• Keys to Success

Project Launch

LMP Methodology

• Holistic Approach

• Elimination of Waste

• Final Standard Operating

Procedures

• Critical to Developing

Accurate Standards

Lean Best Practices

LMP Methodology

• Multi-Determinant

• Fair and Accurate

• Whole Cycle Time Studies

• Pre-Determined, Where Appropriate

• Formulation and Validation

ProTrack Labor Management

Software

Dynamic Engineered Standards

Standard Calculation

• Based on SOP (standard

operating procedure)

• Order Start

• Pick (X seconds per line

and unit)

• Dynamic Travel

• Drop off totes or pallet

• Progressive fatigue

• User Defined Values

pick pick

d d d

d

d

d

pick

pick

Start Point

To drop point.

Then to next

start point.

• Builds Credibility and Buy-in

• Observation Training

• Understand What’s Included

• Believing is Critical to Success

LMP Methodology

Client Standards Validation

• Preparing your managers to be effective

Performance Leaders

• Training programs

• Technical Training

• Management Skills Training

Organizational Development

LMP Methodology

• Readiness Evaluation

• Kick-off Meetings: supervisors & associates

• Performance Management Phase

Go-Live

LMP Methodology

• Pre-shift Plan (expectations,

# of people, issues)

• Performance Monitoring

• Observations

• Coaching & Counseling

• Discipline

• Performance Reviews

• Clerical

Project Management Tools

• Weekly Project updates

• Scope

• Timeline

• Dependencies

Areas in Scope

• Receiving

• Putaway

• Replenishment

• Selection

• Packing

• Shipping

• Loading

Solution Options - Training

Course Course Name Hours per Class Classes Training Days Instructor

Leadership 1 - Program Kickoff and Design

OLP101 Intro to Optimized Labor Performance 4 2 1.00 PM

Tech 1 - LM Usage 1.00

LM101 LM - General Overview 4 1 0.50 PM

LM113 LM - Maintaining employees 2 1 0.25 PM

LM122 LM - Monitoring LM Data 4 1 0.50 PM

LM125 LM - Reporting Hiearchy 4 1 0.50 PM

LM155 LM - Kiosk Use Basic (How it works) 4 1 0.50 PM

Tech 2 - Observation Training 2.25

MGT179 Conducting effective Observations 2 2 0.50 PM

OBS101 Observation training (on the floor) - group 2 2 0.50 PM

OBS102 Observation training (on the floor) - individual 2 0 0.00 PM

LM110 LM - Daily Tracking and the Trip Audit 4 2 1.00 PM

Tech 3- Using LM to Monitor Performance 2.00

OLP102 Managing to Performance Expectations 4 2 1.00 PM

LM161 LM - Performance Reporting (Basic) 4 2 1.00 PM

LM164 LM - Performance Reporting (Advanced) 4 0 0.00 PM

7.25

Course Course Name Hours per Class Classes Training Days Instructor

Leadership 1 - Program Kickoff and Design

OLP101 Intro to Optimized Labor Performance 4 2 1.00 PM

Tech 1 - LM Usage 1.00

LM101 LM - General Overview 4 1 0.50 PM

LM113 LM - Maintaining employees 2 1 0.25 PM

LM122 LM - Monitoring LM Data 4 1 0.50 PM

LM125 LM - Reporting Hiearchy 4 1 0.50 PM

LM155 LM - Kiosk Use Basic (How it works) 4 1 0.50 PM

Tech 2 - Observation Training 2.25

MGT179 Conducting effective Observations 2 2 0.50 PM

OBS101 Observation training (on the floor) - group 2 2 0.50 PM

OBS102 Observation training (on the floor) - individual 2 0 0.00 PM

LM110 LM - Daily Tracking and the Trip Audit 4 2 1.00 PM

Tech 3- Using LM to Monitor Performance 2.00

OLP102 Managing to Performance Expectations 4 2 1.00 PM

LM161 LM - Performance Reporting (Basic) 4 2 1.00 PM

LM164 LM - Performance Reporting (Advanced) 4 0 0.00 PM

7.25

Course Course Name Hours per Class Classes Training Days Instructor

MGT101 Motivating your associates 4 2 1.00 TR

MGT110 Understanding and managing people 4 2 1.00 TR

MGT125 Purposeful communication for leaders 4 2 1.00 TR

MGT130 Situational leadership 3 2 0.75 TR

MGT115 Creating a self-disciplined workforce with 130 TR

MGT143 Coaching and Counseling for peak performance 3 2 0.75 TR

MGT157 Managing change in the workplace 4 2 1.00 TR

MGT228 Mediating conflict with 157

5.50

Solution Approach Labor Management Software

Labor Management Modules

• Executive Dashboard

• Advanced Labor Planning

• Configurable Alerts

• Active Performance Management

• Dynamic Incentives Calculations

• Progressive Discipline Modules

• Quality & Accuracy Reporting

• Employee Learning Curves

• Ad Hoc & Graphical Reporting

Labor Tracking Modules

• Dynamic Standard Calculation

• End to End Reporting

• Performance Reports

WMS, WCS

Touchscreen

Kiosk

Time &

Attendance

RF & Voice

Smartphones

Tablets

Connect

ETL: Extract, Transform, Load

Message

Boards

Technology Overview

Advanced Labor Planning

Proactive Labor Program Performance Monitoring

Rules based labor planning module

Least cost

Most productive

Dynamic Scheduling

Reporting - Dashboards

Employee Dashboards

Real Time Reporting

Mobile Technology

Deliver the power of the application to the floor

for more effective leadership

Challenges to Labor Management Adoption

• Culture Shift: Moving from LPH to dynamic engineered standards

• What level of detail to provide to associates

• Communicating program goals and practices

Translating First Site Success to Multi-Site Rollout

• Build a story

• Share successes and highlights of the tool

• Bring Site 2 managers to Site 1 to see tool in use

• Treat Site 2 with the same attention as Site 1

• Integration is done!

• Copy and paste values, then adjust based on site specific observations

Advice for Multi-Site Engagements

• Keep open and timely channels of communication to floor associates

• Leverage knowledge and expertise from implemented sites

• Invest in technical training and sustain

• Hire an initiatives manager to project manage

• Build an engineering team

• Get incentive discussions started early

Typical Benefits of Labor Management

Improve Productivity & Utilization

Decrease Labor Spend

Improve Quality Levels

Decrease Turnover

10% to 35%

8% to 15%

2% to 10%

10% to 20%

Results

• MSC accuracy and credits are doing great

• Best practice process in the WSOP implementation has benefited MSC by enabling us to put forth the best possible SOP in each area

• WSOP is not accountable for all the gains, but was surely a key ingredient to success.

WEEK ENDINGSep5

Aug29

Aug22

Aug15

Aug8

Aug1

Jul25

Jul18

Jul11

Jun27

Jun20

Jun13

Jun6

May23

May16

May9

May2

Apr25

Apr18

Apr11

Apr4

Mar28

Mar21

Mar14

Mar7

Feb28

Feb21

Feb14

Feb7

Jan31

Jan24

Jan17

Jan10

Dec20

Dec13

Dec6

Nov22

Nov15

Nov8

Nov1

Oct25

Oct18

Oct11

Oct4

Sep27

Sep20

Sep13

18

16

14

12

10

8

_X=12.99

1 2 3 4 1

REC LPTH by Qtr

• LPTH = 12.30% increase

• Lines Received During Same Period = 11% decrease

Ramp-up Start

LPTH Improvement

0

10

20

30

40

50

60

70

-30 -25 -20 -15 -10 -5 0 5 10 15 20 25 30 35

# o

f A

sso

cia

tes

Productivity Range

Typical MSC CFC Productivity

MSC Productivity Curve

Accuracy & Credits

• Communicate, communicate, communicate

• Training is essential

• Engineered standards should not be like the “Wizard behind the Curtain”—you need to explain the ins and outs

Keys To Program Success

• Corporate Sponsorship

• Client Project Champion

• Credible Standards

• Consistent Communication

• Employee-Friendly

• Comprehensive LMS

• Momentum to Complete Adoption

• Willingness to Act

Next Steps

• Continue to update standards, but only when a

process or layout changes

• Utilize Labor Planning module to help position our

associates in the right areas to make them

successful and service our customers more

effectively

• Partner on improved training and possible e-learning

platform to continually train management team on

how to properly use program tools.

For More Information:

Darin Russell: russelld@mscdirect.com

Website: www.mscdirect.com

Charles Zosel: czosel@tza.com

Website: www.tza.com

Or visit MODEX 2014 Booth 4815

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