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MDM Picks Up Manage by Metrics Article

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MODERN DISTRIBUTION MANAGEMENT VOL. 48, NO. 19 OCTOBER 10, 2018 7 Copying or reprinting all or parts of this newsletter without specific permission violates federal law. www.mdm.com Using your WMS to Measure and Reward Performance If the culture is outstanding, employee performance will reflect it How important is organizational culture in a warehouse setting? Experts say that if the culture is outstanding, employee performance will reflect it. The culture establishes a framework for equal treatment for all – and nothing helps reinforce fairness better than pure analytics derived from concrete data. By Eric Allais By now, you may already be familiar with the data that can be gleaned from a warehouse man- agement system (WMS) and how it can be used to help streamline operations and staffing. The core metrics derived from a WMS are designed to show the efficiency of an organization's receiving, slotting, picking, shipping and other logistics and order-related activities. But, in the last few years, warehouse managers have been discovering how to use WMS metrics to evaluate employee performance. Things like establishing fair standards, identifying additional training opportunities, and initiating pay-for-perfor- mance bonuses are just a few examples. Jensen Distribution Services: A WMS-driven Bonus Plan Landon Horton, vice president of operations for Jensen Distribution Services, Spokane, WA, is one of the pioneers in determining how to extract and use employee-specific metrics from the company's WMS. When he first rolled out the software in 2009, it produced rudimentary worker data, such as number of hours worked. But he collaborated closely with his provider over the years to enhance and tweak the soft- ware to deliver the sophisticated level of data he uses today. Jensen currently expects 160 hourly employ- ees to handle 23,000 lines (or 15,000 cartons) per day. Zone standards vary, but the average throughput is between 52-71 lines/cartons per hour, with some zones managing to hit 160. The company offers a monthly bonus for high performers. "The data we collect now in our WMS helps manage our warehouse incentive program," Horton explained. "Every four-week period, employees receive a bonus if they exceed 100 percent of their goals. On average, as few as 50 percent and as many as 88 percent of them get incentive pay – which is pretty high." He continued by saying, "The incentive program pays for itself. And with the metrics we extract from the WMS, there's no question as to how the bonuses are distributed." What happens to the employees who don't receive bonuses? Horton says that the company goal is for everyone to be eligible for monthly in- centive pay. If an employee regularly misses out, he or she goes on a "watch" list where supervi- sors look for wasted motion, distracted picking and other obvious reasons for poor performance. In some cases, the next step is for that employee to shadow a high performer in the hopes that he or she will begin to mirror better, more produc- tive work habits. Horton added that the incentive program is based on more than just pick accuracy and output. "We also measure housekeeping issues. If one employee opens a case, it needs to be pre- sented in an easy way for the next person who might need one of these items. If a pallet is put away, it needs the shrink-wrap removed so that the next person can easily retrieve this product." Horton believes that the data it now collects through its WMS has allowed Jensen to move from using customer complaints as the only way of tracking errors to its current 99.99% accuracy rate. He attributes the minor remaining error percentage to human error, as even voice pick- ing isn't flawless. EPS Gauges: WMS Feeds Merit Pay KPIs For ESP Gauges, Kennesaw, GA, data is king. Everything the company does in its warehouse is driven by metrics. That makes Tony Moore, the company's warehouse manager, its data guru of sorts – someone who looks to disrupt old thinking by finding new ways to use data and facts. He might even be considered a New- Age type of manager, since he spends consider- able time thinking about employee welfare and how to boost the morale of not just individuals, but the team. The company offers pressure gauges, pri- marily to the oil and gas industries, and operates its warehouse with 26 people. It deployed a new Continued on next page

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