Clearly defined expectations are essential to your workforce’s success. Multi-determinant labor standards are the cornerstone of establishing fair and accurate performance expectations. When applied correctly, these standards help your organization cultivate a high-performance culture and boost employee morale while also promising significant improvements in your operations.
What Are Engineered Labor Standards?
The International Labor Office defines work measurement as “the application of techniques designed to establish the time for a qualified worker to carry out a specified job at a defined level of performance.” In essence, it determines the duration required for a trained employee to complete a specific task under standard conditions. This measurement considers factors such as the worker’s skill level, average working pace, typical environmental conditions, predefined work methods, and expected quality standards.
Types of Engineered Labor Standards
Single Determinant Historical Standards/Reasonable Expectancies:
Single-determinant standards are based on one variable, such as lines, cases, or units per hour. These standards are derived from historical performance data and represent the average performance level of the team. While they are inexpensive to develop and easy to calculate, their accuracy diminishes as work content becomes more variable and complex. Single-determinant standards typically require more extended performance evaluation periods and regular reviews, increasing maintenance time. They often result in the lowest level of performance expectation, typically 15-25% lower than multi-determinant standards.
Dynamic Multi-determinant Engineered Standards
Multi-determinant standards use multiple variables to calculate performance expectations. For example, a standard for picking may include:
- Number of lines
- Number of cases
- Number of inner packs
- Total cube
- Total weight
- Dynamic travel calculation based on specific pick location.
In complex distribution environments, multi-determinant standards are essential for setting fair and accurate performance targets and gaining associate buy-in. Although they may be more costly to develop, they improve performance by 15-25% over single-determinant standards. These standards not only enhance employee morale but also improve labor planning and effectively support incentive pay programs.
How to Develop Engineered Labor Standards
Before establishing labor standards, organizations must develop a Standard Operating Procedure (SOP) for each activity. SOPs should eliminate waste in the current process. Standard work measurement techniques include:
Time Study (or Time and Motion Study)
An industrial engineer breaks down an activity into elements, timing each with a measurement device. Adjustments are made for pace and skill variances, with allowances for personal time, fatigue, and delays added to the final standard.
Predetermined Motion Time System (PMTS)
Engineers obtain time from published standards, such as MTM, MSD, or MOST, for basic body motions. They determine specific frequencies for each work element and include allowances for personal time, fatigue, and delays.
Implementing Engineered Labor Standards with a Labor Management System
A Labor Management System (LMS) is a crucial tool for calculating performance expectations and supporting your Labor Management Program. Modern LMS tools, like TZA’s ProTrack, accurately calculate engineered standards, including dynamic travel, and provide management tools to transition your operation into a high-performance culture. This practical application of labor standards through an LMS is key to their successful implementation.
Why Engineered Labor Standards Are Critical for Warehouse Efficiency
Engineered labor standards are about enabling your operation to work smarter, not faster. These standards ensure reasonable and attainable employee expectations, which boosts performance and reduces labor costs. Our experience shows that engineered labor standards typically enhance productivity by 15 to 35 percent and help clients:
Getting Started with Engineered Labor Standards
Developing accurate standards requires specific skills and tools, which is why many companies choose to outsource this project. When evaluating providers, consider those with experience in both traditional time and motion studies and predetermined approaches. This dual experience ensures that your provider can develop standards that are both accurate and adaptable to changing work content with minimal maintenance.
The ideal provider will offer both tier-one LMS technology and experience in developing engineered standards, delivering seamless integration of technology and engineering for the most effective solution.
ROI of Engineered Labor Standards
The return on investment (ROI) of engineered labor standards is significant. Implementing these standards not only enhances productivity but also delivers measurable financial benefits. For example, organizations using TZA’s ProTrack LMS have experienced up to a 10% decrease in overall labor costs and a reduction in overtime to less than 3% per week. This substantial cost saving, combined with improved employee engagement, makes a compelling case for investing in engineered labor standards.
Learn More About Implementing Engineered Labor Standards
Labor management technology can enhance your planning and management capabilities, improve culture, boost performance, and reduce costs.
Connect with TZA today to learn how ProTrack LMS and our labor management services can transform your distribution centers into high-performance operations. For more insight, schedule a ProTrack LMS Demo or Free Operational Labor Audit.
