Looking beyond the obvious for labor savings
Written by: James K. Allred

The period from the 1920s through the 1950s marked the heyday of "labor saving" machinery for the American home. From vacuum cleaners to washing machines, the possibilities for cutting down on domestic labor seemed endless.

But, of course, the savings didn't happen in a linear fashion. Eventually, folks realized that there was a level of diminishing returns. If it took an hour to vacuum the house, a newer, more powerful model didn't make the chore go faster. Yet, people everywhere continue to invest in new appliance technology. How come?

We know it isn't for the direct labor savings alone. But what about the indirect benefits? Cleaner dishes. Whiter laundry. Less time in the kitchen. A more efficient and functional household.

And so it is with investing in automated material handling. In the past, System X was a good buy if you could eliminate enough direct labor in the process to pay for it. But like household appliances, material handling automation has come a long way. Redesigning your processes to take advantage of technology can save you a lot more than order picking labor or assembly time.

As you put together your justification, start by taking a look at how much support labor you'll save.The best way to accomplish this is by examining your logistics pipeline from beginning to end.

Who are the internal customers of this pipeline? How will the new system reduce their workload? Who are the workers that keep the pipeline flowing? Are you enabling them to eliminate reams of paperwork? How much planning and scheduling labor will be saved? What about order entry and shipping? How much time (and labor) is wasted chasing products or parts? And don't forget about reductions in workers' compensation claims and lost time due to injuries resulting from improved workplace ergonomics and safety.

Of course, you may reduce your direct labor expense as well.The chart below illustrates many of the areas, direct and indirect, where you should look for labor savings.The point, as always, is that you should not try to justify your new system using old methods. However, even when you take into account all the labor savings your new system will provide, you will still have many additional factors to consider. In the next installment, we'll look at how your redesigned system can help your company conserve capital while at the same time increase production capacity.

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