How Much Can an LMS Save My Operation?

It can be hard to know the true ROI on a Labor Management System (LMS). In our blog, we break down the top savings drivers and how to calculate them!

From inventory management to ensuring timely delivery, it can be a challenge to keep a warehouse running smoothly. One tool that can make a significant impact on a warehouse team's productivity and profitability is a Labor Management System (LMS).

An LMS is a software system that helps manage and optimize performance of the employees and equipment within the warehouse. It provides real-time tracking of productivity, including the time it takes to complete tasks and the efficiency of the work being accomplished. By providing this data, an LMS can help managers identify areas for improvement and optimize processes to increase productivity.

So, how much can a warehouse team realistically save using an LMS? At Takt - we see most warehouse teams save 10%+ of labor costs, but the true dollar figure depends on several factors, including the size of the warehouse, the number of employees, and the current state of operations.

Regardless of the operation size - the top areas for savings tend to be consistent:

  1. Reduced overstaffing & unutilized time

By providing real-time tracking of employee performance, an LMS can help managers identify areas where employees are underperforming and adjust staffing levels accordingly. This can lead to significant cost savings, as overstaffing can be reduced, and understaffing can be addressed before it becomes a problem.

  1. Improved efficiency & performance

An LMS can also help improve productivity by identifying specific tasks that employees are struggling with and providing training or coaching to help them improve. This can lead to faster completion of tasks, reducing the time it takes to process and ship orders. As a result, warehouses can increase their throughput and handle more orders without needing to hire additional staff.

  1. Optimized processes

Modern LMS's also have a significant amount of analytical data that can help warehouses optimize their processes. By providing real-time data on employee performance, an LMS can identify bottlenecks and areas where the workflow can be improved. LMSs also store historical performance data, which can be used to identify & evaluate performance trends, such as a consitently low performing process. These processes can be targeted for re-engineering or otherwise revamped, leading to significant cost savings.

  1. Reduced error rates

Errors, exceptions, and re-work are a significant source of waste within the warehouse. LMS data can identify areas with high error rates and recommend training or otherwise help facility teams address underlying issues, leading to fewer erros and  money spent on fixing mistakes.

While your exact savings will depend on your staffing level, existing performance, and appetite for change, an LMS is a valuable tool that can help any warehouse team become more efficient and profitable.

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