Labor Management System: How to Retain Talent and Optimize Warehouse Operations

Despite the increasing use of warehouse automation, people are the driving force behind quality warehouse fulfillment. But unfortunately, warehouse staffing is one of the most significant operational challenges faced by third-party logistics (3PL) companies. 

Before figuring out how a warehouse labor management system (LMS) can help your organization solve this complex issue, let’s look at the main causes of the current staffing challenges.

Cause #1 Labor shortages  

In 2019, Zebra interviewed 1,400 executives in the manufacturing, supply chain, retail, and distribution industries as part of their Warehousing Vision Study. Sixty percent of respondents cited staffing and achieving labor efficiency and productivity as top challenges.

According to research from 2020 by 6 River Systems, finding candidates for warehouse positions (order pickers, floor operators, repair technicians, etc.) is the top hiring priority for 3PL companies. And that’s where recruiters face the next issue. 

Cause #2 Lack of qualified candidates  

In their research, 6 River Systems also reports that 95.8 percent of organizations say people entering the labor market are either unprepared or not fully prepared to cope with the challenges of today’s fulfillment environments. 

The main reasons for this unpreparedness are:

  • challenges using current technology
  • rapid changes in the logistics environment that make it hard to adapt
  • younger candidates’ lack of satisfactory soft skills and experience 


In the absence of fully qualified candidates, onboarding and adapting unprepared employees falls on the shoulders of employers.

Cause #3 Difficulty retaining employees  

Some of the main causes of warehouse staff turnover are shift work, anti-social working hours, and hours that fluctuate from week to week. Logistics HRs and managers cite many ways to retain warehouse human resources. Among perks like high wages, retirement savings plans, and healthcare benefits, they also mention motivational and engagement programs. 

But their effective implementation requires visible employee progress and constant feedback, which is hard to establish without a relevant technological solution.

three main components of the warehouse staffing problem

LMS as a solution to warehouse staffing and operational issues

As a solution to the problems above, 88 percent of those interviewed by Zebra in 2019 were planning to partially or entirely automate their warehouse operations by 2024. Since 2019, labor challenges have persisted in the distribution sector. And in 2020, finding, training, and retaining staff became even more challenging due to COVID-19. 

This trend suggests that you should consider implementing an LMS for your logistics organization. It might be an effective solution to your warehouse staffing issue. An LMS is a software system tailored to managing employees within a distribution center.

Further in this article, you’ll learn how an LMS might help you make the most of your warehouse labor force, increase employees’ job satisfaction, and improve your warehouse’s operational efficiency. The image below shows common features of an LMS that are usually provided by default. 

common features and capabilities of an lms

Read also: How to Use Technologies in Logistics Management System Development

Benefits an LMS can bring to your logistics company

Modern LMS products integrate with different technological solutions in logistics and provide mobile user interfaces and regularly updated dashboards. These and other capabilities enable ready-made or custom LMSs to bring your company the following benefits.

Improved performance and resource utilization

Labor costs are commonly the largest expense in a warehouse. No wonder businesses try to reach the highest level of productivity with the fewest workers in order to be profitable. This is where LMS performance management comes to the rescue.

Warehouse workloads might fluctuate depending on outgoing and incoming shipments. An LMS should track all hours spent and inform you about what tasks those hours were spent on via dashboard reports. This capability will enable you to analyze weak spots in the workflow so you can optimize them. LMS software should also help you identify high-workload areas so you can quickly move employees to them.

In addition, an LMS should allow you to establish key performance indicators (KPIs) like the number of orders picked for each individual worker. An LMS can track and analyze staff productivity and notify managers if an employee’s work requires their attention. Later, you can use LMS data to train employees, which improves productivity.

Read also: Building a Custom eLearning Solution: Advantages and Implementation

Reduced employee turnover

Using incentive management, gamification, and behavior predictions, an LMS can improve employee engagement, satisfaction, and retention. 

Motivation. An LMS should enable workers to set and achieve small goals and receive rewards. The system might be able to automatically congratulate an employee on achieving a goal or reaching a milestone via a mobile user interface.

Incentives. By tracking when a worker exceeds the standard for a task or other measure like units per hour, an LMS might be able to grant incentives such as more money for increased performance. By using LMS analytics, you can also understand how effective your incentives are at retaining employees. 

Employee behavior predictions. A labor management solution might help you detect when employees are going to quit. Such a solution can take into account the behaviors people tend to exhibit shortly before they quit. This will enable you to create an engagement strategy to reduce employee turnover and associated costs.

Optimized total operational efficiency

Advanced analytics might enable your company to not just calculate labor standards and monitor productivity against them but also to define areas like storage or a receiving dock that are increasingly loaded with work and predict the need for more employees. 

LMS analytics might also offer you a range of essential data across all facilities, such as data on the mix of work, lost time, and cost changes by functional area or department. You can then compare employee productivity data and other metrics across facilities to identify which facilities are doing better than others.

If you’re considering implementing an LMS solution, your next step will be choosing between licensing a ready-made LMS and building one from scratch. 

Read also: 5 Indicators Your Warehouse Management System Needs Improvement

benefits of a labor management system

Ready-made labor management solutions

One of the easiest ways to automate labor processes is to purchase off-the-shelf software. You can quickly install commercially available software and customize it to suit your needs. The market offers a variety of solutions to suit many needs. Below, we list some popular LMS products.

Kronos. This labor management technology suite helps companies track working hours and employee attendance. Kronos provides clients with portable badge reader devices, barcode badges that allow employees to clock in and out, biometric terminals, and mobile access. Employees can log in to the system and view metrics and task statuses.

Blue Yonder Labor Management. Using this software, logistics enterprises can receive detailed data on employee performance by means of dashboards and alerts. The system helps an organization determine operational goals, monitor work performance, and identify bottlenecks, and it allows managers to mentor their teams. 

Manhattan. This system measures productivity according to labor standards. The highlight of the Manhattan LMS is that it helps to motivate employees through gamification. The system’s two-way communication enables employees to receive feedback on work done, increasing their productivity.

Common disadvantages of ready-made LMS solutions

Each ready-made labor software solution has its own benefits and drawbacks mentioned by users on software review websites. The most common user complaints fall into three categories:   

Price. Labor management platform providers usually charge a subscription fee. However, be ready for extra costs. For example, Kronos offers a relatively low maintenance cost that begins at $6 per month per employee. However, if you want to expand the functionality — for example, by adding scheduling — you will have to pay an additional $5 a month for each employee.

Customizability and user experience. Ready-made solutions have sets of functionality that simply may not meet the needs of your business. For instance, Manhattan LMS users often complain that they have to do a lot of behind the scenes work in order to make the system work for their purposes. Also, according to user reviews, ready-made solutions like Kronos can be tricky to use. 

Customer support. Popular ready-made software providers might be difficult to reach, as their support centers are overloaded with user requests. As a result, getting help with a minor issue might take days or even weeks.

As an alternative to implementing a ready-made LMS, you can invest in a custom solution developed from scratch. Ultimately, this should ensure that the system’s functionality and design are based on your and end users’ needs, that the system is constantly maintained and improved, and that it’s flexible to accomodate any add-ons and integrations.

Read also: How to Digitize Value-Added Warehouse Services at Your 3PL Company

What to keep in mind to create an effective LMS

There are lots of nuances to consider while creating an LMS, including support for multiple languages, matters of regulatory compliance, and considerations related to building a system for one warehouse or several. You’ll also need to implement functionality encouraging employees to use your LMS (which we’ll talk about later). But in general, LMS software development comprises the following steps:

Step 1. Define the purpose of the LMS. You must decide what tasks your LMS will perform and how it should improve the company’s workflow. If you don’t set a well-defined goal at this stage, you could fail to develop a useful product and waste your money. To make it easier to navigate what tasks your system should perform, determine whether you just need a digital tool to control personnel or a full-fledged tool to grow your business. 

Step 2. Select your LMS functionality. Based on the purpose of the software, you’ll be able to list all functional requirements. Follow the problem–solution approach. For example, if you want to control task performance, you’ll need time tracking functionality and analytics so you can take measures to improve workflow.

Step 3. Determine data sources. An LMS might be implemented as a standalone solution. In this case, it should offer the option to enter data manually. It also might be integrated with other software such as a warehouse management system (WMS), a timekeeping system, a payroll system, enterprise resource planning (ERP) software, and a warehouse execution system (WES). For example, if integrated with a WMS and a timekeeping system, an LMS can automatically receive production, time, and attendance data. 

Read also: New Functional Module Integration to Improve Your Logistics Software

Step 4. Develop standards. An essential part of setting up an LMS is developing standards against which all tasks in a warehouse will be benchmarked. In the past, developing such standards required a team of industrial engineers, which was costly and time-consuming. Nowadays, a large portion of these standards might be generated automatically by means of regression models and other data science tools.

Step 5. Use algorithms. Along with the above-mentioned steps, take care of using algorithms to optimize labor operations and obtain analytics. You might develop your own algorithms or use ready-made algorithms. An experienced logistics software provider can help you come up with the most relevant solution. 

For example, Yalantis has wide experience using algorithms that help to optimize workforce performance. We can provide you with an individual approach and logistics expertise, leading you through all the steps of collecting requirements right to your product launch.

Implementing an effective LMS also requires persuading and encouraging your staff to use the solution. An LMS can drive robust performance gains, but it's of no use if employees reject it.

what to consider when developing an lms

How to motivate employees to use an LMS

The sudden appearance of labor management software might be perceived by unprepared employees as an employer’s attempt to control them and push them to work harder. To soften the process of adopting an LMS, educate staff on the purpose of the system and point out its advantages in advance. These advantages might include incentives, growth prospects, an improved workflow, and unbiased job evaluations.  

Consider the following factors that will contribute to faster and smoother LMS adoption: 

Onboarding and training. Make sure you onboard and train staff on how to use the new system. This will save time spent getting used to it and human errors made as a result of incorrect time and performance tracking.

Feedback. Your LMS should give employees systematic feedback about their performance. This might be implemented via a score card that includes performance feedback and gamification capabilities.

Goal setting. The ability to set professional goals enables employees to see where to go next. An LMS might allow a worker to create a goal, give it a name and a description, add context, and inform coworkers about the goal for better motivation.

Gamification. An LMS might have embedded gamification elements for doing daily tasks like picking, packing, and slotting. Workers can use an LMS to see how they’re performing in comparison to their colleagues and if they’re beating them in terms of performance. Earning points and rewards can motivate and inspire workers. Let employees turn those points into time off, money, or other benefits.   

If you decide to build an LMS from scratch, make sure you find a mature LMS platform development partner with domain experience. Yalantis has expertise in logistics software development and has in-house supply chain experts. We’ll help you create an effective LMS, from thorough business analysis right to employee onboarding.  

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