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Steve Lewis, President of GXO Direct, the shared services division of GXO Logistics, spoke at Blue Yonder’s ICON User Conference. Blue Yonder is he one of the world’s largest providers of supply his chain software solutions. GXO is the world’s largest contract warehouse provider. Lewis later spoke to industry analysts in more detail. Lewis announced that Blue Yonder’s Warehouse Management System (WMS), which comes with modules for labor management, automation and order management, will be the preferred solution offered to direct customers.
GXO Direct operates warehouses in major markets in the United States and Canada. Our warehouse network allows us to deliver brands anywhere in the country in one day. Since its introduction in 2018, GXO Direct has grown exponentially, adding millions of square feet each year. We provide multiple customers across industries with access to warehouse space, technology, and value-added services including e-commerce shipping and returns. Direct departments serve multiple customers from the same warehouse. For example, we have a 670,000 square foot warehouse in Southern California serving eight different fast-growing e-commerce retailers. By operating a hub of multiple warehouses on campus, GXO increases operational agility, lowers transportation costs and shortens delivery times.
GXO (NYSE: GXO) is a publicly traded company headquartered in Greenwich, Connecticut, with approximately 1,000 warehouses and more than 130,000 employees worldwide. The company generates $9 billion in annual revenue and serves clients across a wide range of industries. GXO’s annual report states that about 30% of its revenue comes from automated sites. This is well above the industry average of 8%. That’s because the company bet big on technology early on. Their choice of Blue Yonder is one such example.
need for speed
GXO chose Blue Yonder as one of the Direct network’s warehouse software partners because the rapid implementation of a warehouse management system (WMS) is critical to supporting Direct’s fast and flexible model. They realized that with the right cloud solution he could implement twice as fast as a traditional on-premises solution.
The GXO implementation approach was already done in 16 weeks, so this is quite a feat. The 16-week implementation was made possible by Direct researching how the last 40 warehouse startups were structured and using that data to develop a new template that enables rapid implementation. because it was created. This allowed us to know which configuration switches to turn on before implementation began. Not so long ago, it was not uncommon to hear stories of WMS implementations taking up to nine months. It’s breathtaking to think that he plans to shorten the implementation period to eight weeks.
Rapid implementation reduces implementation costs and allows you to onboard new customers faster. In addition, he wanted a 5% labor savings based on labor management solutions. The savings from labor management dwarf the savings from rapid implementation.
Additionally, we were looking for a very simple solution that could be changed by operations managers rather than IT analysts when processes needed to change. Mr. Campbell has visited many of his major WMS provider customer sites. On one of his Blue Yonder sites, he asked a manager, “What if I want to receive it on his PO (Purchase Order) with serial capture instead of an ASN (Advance Shipment Notice)?” Manager said no problem. Within minutes, he found the appropriate configuration switch, clicked it, and the new process was enabled. This allows you to make changes in real-time as needed.
GXO is known for being customer-centric, providing customized solutions based on the unique needs of its blue-chip customer base. If a potential customer prefers another of her WMS and it is her one of her 10 her WMS solutions supported by GXO, that preferred solution can be implemented. However, we plan to introduce Blue Yonder as a solution for GXO Direct. Additionally, if another vendor’s WMS is used, GXO Direct believes the Blue Yonder Labor Management solution will seamlessly layer on top of the other vendor’s WMS solution.
A different approach to workforce management
To layer its workforce management capabilities, GXO begins by documenting standard operating procedures to optimize operations. But then instead of using industrial engineers using stopwatches and other work measurement techniques to determine what labor standards should be, machine learning will be used.
Historically, when Labor Management Systems (LMS) were introduced, employees were placed where in the warehouse at a particular time and how they were assigned to complete tasks in order to help them work more efficiently. Engineered work measurement techniques have been used to determine how long it takes. Traditional LMSs consider distance traveled, whether the pick is in the golden zone, whether forward bends or stretches are required, equipment used, and many other variables to create labor standards. As processes change, industrial engineers have had to keep their standards updated.
The problem is that industrial engineers have become a scarce commodity. This makes it difficult for companies to establish labor standards or even keep existing standards up to date. Fortunately, we can use machine learning to solve this problem.
Using the new Blue Yonder solution, GXO will apply machine learning to data generated across its warehouse network to establish standards, ensure the right number of employees in warehouses, and manage those employees. You will be able to place and rearrange them properly. Data is captured over time with a machine learning approach to drive labor standards. This data shows that it takes Steve an average of 29 seconds to move from location X to location Y. If Dave travels from the same origin to the same destination, it takes 36 seconds. On average for all employees, the average time he has is 33 seconds. You can use that 33 seconds as a reference. This is done across all tasks in the warehouse. Using these standards, you can predict how many labors you will need and where they will be needed in your warehouse.
The Blue Yonder WMS product manager I spoke with said that labor standards generated by machine learning are not the same as those generated by engineered labor standards. probably lower than that. That’s good. We don’t want new standards to be higher than those created by industrial engineers. If the standards prove to be higher, they will place an undue burden on employees. Over time, Blue Yonder will take data from multiple machine learning LMS implementations and compare the results to traditional industrial engineering standards to provide a better understanding of the differences between standards generated by machine learning and those created by industrial engineers. You may be able to reduce the divergence.
Will an LMS increase sales?
Lewis doesn’t expect the new labor management solution to increase turnover. Investments in robotics will allow workers to walk and lift less. Cobot-related optimizations reduce travel distances. In Goods to Personal (GTP) automation, GPT robots deliver goods to station employees. Lewis believes these investments have improved employee satisfaction, safety and retention.
Additionally, having the right warehouse manager in place is key to employee satisfaction and retention. GXO offers comprehensive leadership training for shift managers to site managers. There is a meeting at the beginning of each shift where team members highlight the importance of safety, make suggestions on how to improve processes and report on their work in the field. Employees can participate in continuous improvement projects, and team members’ suggestions and feedback are evaluated and encouraged.
Robotics reduces training time and enables employees to be productive faster. In some cases, new hires working with cobots are able to reach standard levels of productivity by the end of their first day. GXO always aims to develop temporary workers into full-time employees and give them career paths that enable them to become managers.
final thoughts
Historically, contract logistics companies have made minimal investments in technology. At least for his GXO, those days are over. In the strategy section of GXO’s annual report, the company claims it “delivers value to customers in the form of technological innovation, process efficiency, cost efficiency and reliable results.” When I spoke to Lewis about investing in technology and training, it didn’t sound like empty rhetoric.
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