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hyster forkliftBusinesses that use forklifts powered by propane autogas and propane can now claim a tax credit for $.50 for every gallon of the alternative fuel they used during 2015.

The Internal  Revenue  Service announced the alternative fuel tax credit in a guidance released this month. The move comes after Congress passed  a new law authorizing a number of new tax breaks for businesses.

New Law Passed

The Protecting Americans from Tax Hikes (PATH) Act of 2015 retroactively extends the alternative fuel tax credit for forklift operators. The law actually approves the same tax credit for 2016 as well, but the IRS has not yet officially published its guidance on how the credit may be claimed for the current year.

The law actually approves the same tax credit for 2016 as well, but the IRS has not yet officially published its guidance on how the credit may be claimed for the current year.

IRS Redefines ‘Forklift’

In the 2015 guidance, the IRS redefined forklifts as “off-highway business motor vehicle(s)”, which made them eligible for the alternative fuel tax credit currently being offered to on-road vehicle burning alternative fuels. The federal taxing agency said the end-user of the propane autogas fuel is the entity that should receive the tax credit.

Claims for 2015 must be filed with the IRS by Aug. 8 of this year.

Check with Tax Advisers First

The Propane Education and Research Council recommended that forklift owners seeking to file a claim to receive the credit consult their own tax advisors first before seeking any credits or refunds under the new law.

Roy Willis, the council’s president and CEO, said the tax credit is the financial incentive for forklift owners need when considering a switch to cleaner alternative fuels.

“For fleet managers, propane autogas vehicles offer the lowest cost of ownership,” Willis said in a news release. “And one way to maximize the financial benefit of propane autogas is by taking advantage of this alternative fuel tax credit from the federal government.”

Tax Break and Fuel Efficiency

In addition to saving money with the new tax credit, forklifts that are powered by propane also provide businesses with more productivity, he said.

“Propane forklifts are already proven to be a solution for facilities with multiple shifts and round the clock operation where downtime isn’t an option,” Willis said. “The federal tax credit simply makes propane forklifts more cost effective than they already are.”

Other Benefits to Propane

Besides the new tax break, powering forklifts with propane offers other benefits:

  • Easy Refueling — With propane, you don’t need to wait for batteries to recharge or handle dangerous liquids like gasoline. Instead, you simply pop the empty tank off, attach a fresh full tank, and off you go.
  • Lower Gas Prices — According to CleanFUEL USA, a gallon of propane costs about $.40 less per gallon than gasoline. The average price of propane is $2.92, compared to $.306 per gallon for diesel fuel.
  • Better Performance — Propane generates better horsepower and torque than electric-powered forklifts.
  • Indoor Use — While propane isn’t as emission-free as electric forklifts, it is considered clean enough for indoor use and is safer to use than many other gasses.

 

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Pallets filled with products sitting in the aisles, stacked in dock areas, or placed on rack end caps can adversely affect warehouse operations.

Pallets filled with products sitting in the aisles, stacked in dock areas, or placed on rack end caps can adversely affect warehouse operations. (Courtesy: Joshuabooks at flickr.com)

There is only a certain amount of space in a confined building. If that building is a warehouse, then what can a warehouse manager do when he finds himself in need of more space to accommodate more products?

It is common for any size warehouse to experience space issues. These problems arise due to rapid growth, seasonal spikes, large discount buying sales campaigns, an inventory buildup due to manufacturers’ shutdowns, consolidation of a number of warehouses into one, and a slow selling period. All of these scenarios result in storage problems that occur due to three specific issues.

1.     Too much of the right product.
2.     Too much of the wrong product.
3.     Poorly used warehouse space.

Warehouse executives may have a good initial feeling when the problem of too much of the right product arises. In short, there is an abundance of the right product available to accommodate customer demand. That seems to be a good thing. However, it takes the warehouse executives time before they realize that warehouse operations are well below productivity quotas and conditions in the work environment are not safe.

A warehouse working under these circumstances probably suffer such issues as pallets filled with products sitting in the aisles, stacked in dock areas, or placed on rack end caps. Moreover, there’s a real possibility that multiple SKUs of products may be mixed in single bin locations.

There are all sorts of issues here that affect warehouse operation including blocked routes and visibility that can result in safety issues, problems in finding inventory, decreased worker productivity and multiple handling of products. The good thing here, however, is that the bottleneck probably won’t last too long because the products are moving through the warehouse quickly. This helps limit the existence of the problem to maybe a few weeks.

In the case of too much of the wrong product, some executives’ projection of sales and their production planning to accommodate were way off the mark. However, this scenario also suggests that the warehouse operation is not managing inventory levels or obsolete products well. When there are too much of the right product, warehouse managers can hire more personnel to speed up operations. However, in the case of too much of the wrong product, inventories are not picked for months and even years.

Poorly used warehouse space may take some time to become obvious to warehouse executives. That’s because the problem arises due to steady growth, changing storage requirements or change in product mix, and always expanding service requirements. This problem is a common happening for warehouses. That’s because warehouse operations are based on the handling of predicted volumes. Warehouses are expected to adjust as customer demands change and become more efficient over time. In this case, warehouses will execute short term plans over the long run including creating customized floor-ready merchandise, hand-pricing merchandise at the piece level or creating mix loads to speed up orders when products are usually shipped in full case or full pallet quantities.

As a result, there is a loss of floor space and labor from other important warehouse functions. Other issues due to poor use of space include bad use of vertical space, too wide aisles and too many products in single bin areas and/or partial unit loads left in full unit load locations.

Don’t worry. Finding more space and improving inventory management can fix all of this and we will show how with the next blog.

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Image courtesy of Wikimedia Commons and in the public domain

Image courtesy of Wikimedia Commons and in the public domain

Bucket elevators are a specialized type of materials handling equipment. They are most often used to lift bulk materials from one height to another.

Bucket elevators resemble conveyor belts, except they move materials such as sand, fly ash, wood chips, animal feeds and others using buckets attached to a rotating belt or chain. The buckets scoop up the material, move it to the desired endpoint, then dump it out before returning back to the starting point to pick up a new load.

How bucket elevators are configured depends on the application, the type of material to be moved, the required horsepower, and the height of the elevator. Theoretically, they could be used to lift materials to any height.

Types of Materials

They are widely used in plants that process lime, manufacture fertilizer, and in pulp and paper mills, steel plants, and power plants. The buckets themselves can handle a wide variety of materials with various characteristics.

The buckets themselves can handle a wide variety of materials with various characteristics. Light, heavy, abrasive and fragile materials can all be handled using a bucket elevator. Common materials include calcined coke, fertilizer, fly ash, frac sand, minerals, potash, and coal. they aren’t recommended for wet or sticky materials or those that have a sludge consistency because these tend to create discharge issues.

Two Types of Bucket Elevators

There essentially are two types of bucket elevators: Centrifugal bucket elevators and continuous bucket elevators, both of which use belt and chain options. Specialized bucket elevators are also used for certain applications, but they are the exception rather than the rule.

As the name implies, centrifugal bucket elevators use centrifugal force to toss the material out of the bucket as they travel over a pulley head or sprocket. Generally, centrifugal bucket elevators operate at a faster speed and space buckets farther apart in order to optimize material fill and reduce the risk of interference between the buckets.

Centrifugal buckets can be attached to a belt or a single chain drive.

Continuous Bucket Elevators

Continuous bucket elevators usually work at a slower speed and have buckets that are closer together. This usually allows materials to spill over the back of the preceding bucket. They also have extended sides, which allow materials to be guided gently through a discharge spout.

These modifications are frequently used for materials that are fragile, abrasive or sluggish. They allow for better aeration and minimized breakage of friable materials, and less damage to fragile material.

Generally, continuous bucket elevators are attached to a belt, single chain, or double chain drive.

Customized Buckets

Depending on the material and the applications, some bucket elevators use buckets with top covers, access doors for easy maintenance, and horizontal or vertical reinforced jig-welded head, foot, and intermediate sections.

 

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Here is a special sneak preview of some of the stories you will find coming up soon on the Bahrns blog:

  • Bucket elevators are useful for moving materials that aren’t easily handled. We’ll explain how they work and how they could help your operation run more smoothly …
  • Experiencing space issues within a warehouse or any business for that matter is a common problem. However, solving the problem is another story …
  • Do you use a propane-powered forklift in your business? You may be eligible for a new alternative fuel tax credit. We’ll give you the details …

All this and much, much more can be found this week on the Bahrns blog … so stay tuned!

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The BASF workerless warehouse in France (Photo courtesy of Egemin Automation)

The BASF workerless warehouse in France (Photo courtesy of Egemin Automation)

A truck backs into a dock at the BASF warehouse in Breuil-le-Sec, France, just north of Paris. As the truck’s driver remains in his cab, an unmanned automated guided vehicle opens the truck’s gate and goes to work removing pallets of vehicle paint products.

The AGV transfers the pallets to a conveyor system, which moves the pallets to another area of the warehouse where yet another robotic worker breaks down the pallets and reassembles the cases on new pallets, which are then transferred to a very narrow aisle truck that takes the load to predetermined area of the warehouse, where it is put away.

The elapsed time? Just of a few minutes. The total number of human workers involved in the process? Zero.

Working towards Full Capacity

The automated system — which was installed by the Belgian company Egemin Automation — currently is in the ramp-up phase, according to a company news release. But when the employee-less warehouse is at full capacity, it will be able to process 2,500 boxes every 14 hours over two shifts per day.

About 500 people continue to work in the BASF production facility, which makes paints and lacquers for both vehicle body work and repair, as well as for car makers. But the company’s warehouse has eliminated the need for any employees. Everything is automated.

When they are produced, the automotive paints are stored in tins ranging in size from one-half liter to 5 liters, which are then packed into boxes. These cases are then placed on mono-reference pallets, which are transferred and stored in the pallet warehouse.

Robotic Vehicles Do the Work

Egemin provided the pallet mini warehouse’s racking, as well as two MX-X turret very narrow aisle trucks built by its sister company, STILL. The VNAs were fitted with Egemin’s E’gv automation pack. The warehouse can accommodate about 14,000 boxes of product.

BASF management installed the system due to concerns about operator safety, risk prevention, and protection of the environment. Due to the nature of the chemicals it handles, the facility is required to have special safety equipment, including integrated explosimeters that are attached to the AGVs to detect any leak of solvent vapor.

The pallet warehouse has a capacity of about 3,500 pallets, an estimated 70 percent of which eventually will make their way to customers outside of France. When an order comes in, the automated VNAs will pick up full pallets and deliver them to trucks waiting at the dock. Mixed pallets are conveyed to a palletizer, which reorganizes the mixed pallets so they can be shipped to the customer.

Egemin — a subsidiary of KION Group and is headquartered in nearby Antwerp, Belgium — designs, integrates and maintains automated materials handling solutions to improve the intralogistics processs in warehouses, production, and distribution facilities.

 

 

 

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The 80/20 Rule and Warehouse Ergonomics

02 Feb 2016

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Because of the nature of the work, pickers can suffer all sorts of ailments including shoulder, elbow, wrist, hand, and back injuries.  (Courtesy: Jim Crosslive at flickr.com)

Because of the nature of the work, pickers can suffer all sorts of ailments including shoulder, elbow, wrist, hand, and back injuries.
(Courtesy: Jim Crosslive at flickr.com)

If you’ve been involved in business for any length of time, then you probably have heard of the 80/20 rule. What it means is that in anything a few (20%) is crucial and many (80 percent) is trivial. Business managers would interpret this as 20 percent of the work eats up 80 percent of time and resources. A traffic manager may surmise that 20 percent of the problems on the road is due to 80 percent of the drivers. A clothing designer may make the rule relate by observing that 20 percent of the clothes in one’s closet are worn 80 percent of the time. A restaurant owner could presume that 20 percent of his restaurant’s menu accounts for 80 percent of the sales.

A warehouse manager knows that there are products in his stock that can be defined as “high movers” or sell in higher volume than other products. Thus, using the 80/20 rule, a warehouse manager could conclude that 20 percent of products stored in his warehouse is picked 80 percent of the time.

So how can a warehouse manager apply this rule and make his warehouse personnel perform more efficiently?

Look around your warehouse. What do you see? You see rows and rows of shelves. Some shelves are as tall as 30 to 40 feet while others are just a few feet high. As a warehouse manager, you know what products are the “high movers.” Wouldn’t it be best to store this 20 percent of your inventory in locations of easiest accessibility to maximize efficiency and lessen wasted time?

Another major concern for warehouse managers is the workforce. If a large number of workers, especially pickers, are injured on the job and cannot work as a result, then you’re staring at additional costs that affects your bottom line.

The Occupational Safety and Health Administration (OSHA) and the National Institute for Occupational Safety and Health (NIOSH) and especially human resource managers in warehouses know that due to the nature of the work warehouse employees suffer sudden acute accidental injuries and chronic injuries due to repetitive motion and awkward positioning.

NIOSH regularly perform studies to ascertain the risks warehouse employees are subject to due to their job demands. What they have discovered is that metabolic rates, lumbar movements performed during common warehouse tasks and the average frequency of lifting a common load of 30.4 pounds can all result in health issues for those employees.

As a result of their normal working activity, employees suffer injuries to shoulders, elbows, wrists, hands, and backs.

Issues that cause these problems can be fixed.

Consider this: a baseball player standing in the batters box waiting for a pitch has a strike zone. So does a warehouse employee who is tasked with picking orders. The strike zone for a standing warehouse picker is the area between his shoulders and his knuckles. If he is required to reach below his knuckles, he must flex his hips to reach downward. Such a position forces the worker into poor posture. Moreover, studies have shown that performing a task in which a picker has to reach below his knuckle height takes 3.2 times as long as performing the task within the strike zone.

If the worker has to reach above his shoulders, which is above the strike zone, his shoulders must move above the body and that causes the bending of the back, which increases the risk of low back and shoulder injuries.

All of this can be avoided with the proper design of shelves and storing the “high move” products to areas in the workers’ strike zone.

Perhaps it is asking too much for all “high move” products to be stored in areas of shelves within the workers’ strike zone. It’s not practical. The plan should be to store heavier and high-use products within the strike zone and place lighter and low-use items in locations that may be out of the strike zone.

The result of this strategy will be happier employees who will be more productive and efficient in their jobs.

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Konecranes Gantry Crane (Photo by SignalPAD via Wikimedia Commons)

Konecranes Gantry Crane (Photo by SignalPAD via Wikimedia Commons)

An announced merger between two of the world’s largest manufacturers of forklifts, cranes and other heavy-duty materials handling equipment is in jeopardy now that a Chinese company has company has intervened with a hostile takeover attempt.

China’s Zoomlion Heavy Industry Science & Technology Co. has offered $30 cash for each outstanding share of Terex, which last August announced a merger Konecranes Oyj, one of its biggest competitors.

The Chinese offer totals an estimated $3.3 billion. If the deal goes through, it will be the first time a Chinese construction equipment company has openly tried to purchase a US competitor, according to a Wall Street Journal report.

The offer could be too tempting for Terex shareholders to pass up. Even though after the announcement of the offer shares of the company’s stock soared 37% to $20.50, that price was still well below the Zoomlion offer.

Chinese Seek Entry into US Markets

China has tried to penetrate the US construction machinery market for many years, but with limited success. Currently, the Chinese equipment market — as well as China’s economy as a whole — have been mired in an economic slump. Buying a company like Terex could offer the Chinese construction equipment industry a way out.

In August, Terex announced that it was merging with Konecranes in an all-stock deal. The merger would have given Terex shareholders with 60% of the stock in the new company, which was to be called Konecranes Terex PLC. That deal is now on hold as both companies await the outcome of the Chinese company’s hostile takeover bid.

When Terex officials announced the merger with Konecranes, they planned on relocating the business to Finland, home to Konecranes and where the corporate tax rate is only 20% compared to the 35% tax rate in the US. Prior to the proposed merger, Terex was headquartered in Westport, Connecticut, and the newly formed company planned to maintain offices there.

Both sides had hoped to complete the deal within the first half of this year. Konecranes, which has annual sales of $2.7 billion, builds cranes for factories, warehouses, and ports. Its biggest competitors are Japan’s Kito, China’s ZPMC, and the US company Columbus McKinnon

Terex has annual sales of about $7.3 billion and makes cranes and equipment for miners and builders. Its biggest rivals are Caterpillar and Finland’s Metso.

The newly combined company was expected to have annuals sales of about $10 billion. Within three or four years after the merge, it’s projected sales were expected to be about $10.6 billion with a projected operating profit of $1.1 billion, according to new reports.

Terex Growth

In recent years, Terex has attempted to expand its presence in the factory crane market by buying the German company Demag Cranes AG in 2011 for $1.36 billion.

But Terex since the global economic slowdown, Terex has struggled to deliver higher sales and profits because the global demand for heavy equipment has been inconsistent. In response, the company has sold equipment lines and cut costs.

If Terex still merges with Konecranes, the new company would be one of the biggest players in the industrial and port crane markets. But these industries have been slow to respond to the economic turnaround and global annual sales have expanded at a paltry 2% to 4% in recent years.

While cranes are something companies buy infrequently, there is always a strong market for replacement parts and maintenance services. And as ports, factories and other facilities become more automated, there may be an increased demand for newer, better performing cranes in the coming years.

 

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Here is a special sneak preview of some of the stories you will find coming up soon on the Bahrns blog:

  • The multi-billion dollar merger of two of the biggest materials handling equipment companies is now on hold thanks to a hostile takeover attempt by an unexpected competitor: The Chinese …
  • Ever heard of the 80/20 Rule? We cover what the many definitions in a business sense and how it can be utilized. …
  • There’s something unique about a new automotive paint warehouse that recently opened in France: It has zero employees. Everything is done by robots. We’ll give you a tour …

All this and much, much more can be found coming up on the Bahrns blog … so stay tuned!

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OSHA LogoNews Analysis and Opinion

(Editor’s Note: The following article reflects the opinions and views of the author.)

A Dollar General store in Texas has received five citations from the US Occupational Safety and Health Administration and faces up to $162,800 in fines after inspectors found numerous safety violations, including emergency exits blocked with cases of products, blocked electrical panels, and no emergency escape routes for employees.

The store in Sherman, Texas, is the latest Dollar General store to be cited by OSHA for safety concerns. Since 2006, the Tennessee-based company has received 240 safety violations in stores in 21 states.

Dollar Tree

And Dollar General isn’t the only discount chain to be targeted by OSHA.

Last month, the Dollar Tree discount store chain agreed to adhere to a strict set of rules and pay more $825,000 in fines after a federal agency found multiple safety violations at its stores, including blocked emergency exits, obstructed access to exit routes and electrical equipment, and improper material storage.

So what’s the deal? Why are discount stores like Dollar General and Dollar Tree and others being cited for safety violations by federal inspectors? Are they really that unsafe? Or are their low-pay employees just taking advantage of the government’s anonymous hotline to rat out their employers?

Probably, it’s a little of both.

How Discount Stores Make Money

In order to sell products for so little, discount chains like Dollar Tree generally can’t afford to pay high wages. In some case, not even to its managers. Some discount chains pay their managers an hourly rate not much higher than minimum wage. For that little money, there’s less motivation to maintain high-quality service and efficiency standards — let alone hold other employees accountable.

And because many of these chains have expanded so quickly — it sometimes seems as if their new store openings rival the Starbucks building boom of the early 2000s — it may be hard for regional and district managers to keep up with their workload.

Physical Space Issues

Variety stores often will order by volume in order to afford the steep discounts they need to make a profit. While other retailers, such as pharmacies, can have product orders picked by the piece from a regional distribution center, discount stores often need to buy whole cases of products — or even full pallets.

Combine that with limited storage space due to lower rents and overhead costs — another cost-cutting move — and that can be difficult to maintain the kind of neat, orderly storage area that’s essential for safety.

Political Considerations?

While OSHA probably isn’t purposely picking on Dollar Tree, Dollar General and other discount chains, its inspectors also know how to get good press for the agency. The leadership of federal agencies like OSHA are under pressure to produce positive results that can be reported to the tax-paying public. And that pressure often exerts itself from the top down — especially in an election year.

So far, there hasn’t been any disastrous fires, instances of trampling, or other serious issues at any of the discount store’s chains. But unless some stores start taking safety more seriously, inspectors need to keep holding owners responsible for protecting their workers and the public.

 

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The integration of labor management systems and lift truck fleet management systems offers data that shows how productive the forklift operator is. (Courtesy: Wayne S. Grazio at flickr.com)

The integration of labor management systems and lift truck fleet management systems offers data that shows how productive the forklift operator is.
(Courtesy: Wayne S. Grazio at flickr.com)

Like it or not, this is the time of “big data.” Analytic software is helping businesses streamline their operations resulting in more profits and more efficient operation.

Warehouse managers are already taking advantage of management systems including lift truck fleet management and labor management. These systems have been used separately to make forklift fleets and employees work more efficiently. However, by integrating the two systems a warehouse manager can get a fuller understanding of a warehouse’s entire operation leading to more cost savings and better use of equipment.

It permits warehouse managers to:

·      Measure Performance
·      Eliminate Avoidable Costs
·      Ensure Efficient Equipment Use

Peter Drucker, a famous business consultant, once said, “What gets measured gets managed.” Analytic software does that and it allows managers to see where improvements can be made so that they can make them. Warehouse managers who have been using labor management systems and lift truck fleet management systems have found a way to combine the data from both to better evaluate tasks within their warehouses to measure the affect on profitability.

By itself a lift truck fleet management system permits a fleet manager to obtain, study and then act upon data about their forklift fleet operations. This permits them to control and reduce costs involving the fleet.

Meanwhile, a labor management system (LMS) gathers data about worker activity including inventory handling, equipment use and traveled routes. This data brings to light operational activity that was not measured in the past and permits the manager to take steps to improve operations related to material flow and use of labor.

Used separately, each system offers reports specific to its discipline. So a fleet manager can know what is going on with his forklift fleet and the operations manager can know what is going on with his employees. Each can then make improvements in their particular departments.

Reports generated by an integration of the systems will allow all managers in the warehouse to know such things as what is driving costs within the warehouse, departments, process and categories. Managers know on a daily basis what is going on, so they can make changes and increase profits.

Moreover, the data from a combined report can help the operational manager assign forklift drivers by productivity and equipment use. It permits a facility manger to track individual performance against projected budget for each task. This will help the manager to contemplate possible improvements and make changes before the month is over.

The integration of labor data with equipment data permits managers to analyze costs through a method known as activity-based costing (ABC). It is a strategy that encourages managers to analyze costs by tasks. It assigns costs based on performed activities and it emphasizes actual costs, not averages. So data concerning the cost of putting away products can assist managers to make informed improvements concerning such things as trailer placement and slotting.

Managers can improve productivity by discovering inefficiencies of employees, material flow or use of the equipment.

Integrating systems can assist in eliminating avoidable costs. Consider this: experts say that 30 percent to 40 percent of forklift maintenance costs are avoidable. Managers will be able to identify them with the monitoring achieved by the integration of fleet and labor management systems.

A fleet manager can make cost cuts based on generated data concerning battery functions, impact issues and fleet health. The data achieved from a fleet management system can help managers evaluate ongoing maintenance costs for each forklift. The manager will know when an older forklift’s maintenance costs are beyond its usefulness and will alert the manager that it is more cost-effective to replace the older lift with a new one.

The integrated systems will help to ensure efficient use of equipment because it offers data that shows how productive the forklift operator is and whether the correct lift is being used for an assigned task.

Here’s another statistic to consider. About 72 percent of the average equipment costs goes to labor. An integration of labor and forklift management systems can help managers determine how productive the forklift driver is and whether he is using the proper equipment for the assigned task. It will also identify information concerning a forklift operator’s productive versus nonproductive tasks. The integration of these systems focuses in on how much time the driver is actually using the lift, how long it is being used and how long the lifts are idle. The data can be compared with labor data generated by the labor management system to show how productive the driver is per task. It is not surprising that a manager might find that the labor management system’s report shows that the driver is performing 100 percent of the time while the forklift management system’s report shows that the equipment is used less than 50 percent of the time. A manager who realizes this can make improvements to assure greater productivity.

Finally, the data can also identify when a forklift is being used for the wrong job. For example, data can show that a reach truck is being used for long horizontal transportation causing unnecessary wear and tear on the lift. Knowing this, a manager can assign a more appropriate lift to the task.

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