Yes, using a rewards based performance strategy with your inventory management software can increase your warehouse efficiency without having to add more staff or equipment. Increase the productivity in your picking and shipping processes by implementing a few reporting tools to help your warehouse operation perform better – here’s how;
Firstly, you need to assess your current level of operational efficiency. This is a benchmark total of your current output over time. What is the average productivity of my warehouse? This should be a simple metric that you can generate from your inventory management software on a weekly or monthly basis that is an indication of activity. Some people use lines shipped or you can use orders shipped. Whatever works best for your environment is fine, as long as it can be created from your inventory management software with accuracy and on a regular basis. From that base, you can create targets for improvement. Set a realistic and easily achievable goal. I would try a 5% overall increase to start.
How to Set-up your Incentive Plan
From your inventory management software, calculate your current performance, averaged over time. This is the base line everyone needs to hit consistently. Then set-up targets for each role in your warehouse where you want to shape behavior. You can try and increase the picking rate by setting the number of lines or orders picked per day. Set a realist target for staff to increase that level of output. Now that you have some clear targets – calculate a reward to help motivate staff to work towards these targets. How much more revenue does this extra output create? What percentage of that should be used as the reward for staff?
Meet with staff and discuss the plan in an open and fair setting. Remember this is a win-win proposal. Staff can increase their earning. Management can get a guaranteed and measurable increase in performance. You want buy-in from your warehouse team and allow them to participate in designing and contributing ideas to the rewards program.
Finally, display the performance reporting chart in the warehouse. Display reports created from your inventory management software that show everyone the level of performance that is happening in the warehouse each week. This gives staff a visual tool to see progress and provides advance notice if they are about to miss the numbers.
Adding to an Existing Plan
Now that the plan is up and running, you may want to add more features to your plan. This might include individual performance reporting or department specific targets. You could look at each task in the warehouse and make specific targets for receiving, customer returns or shipping staff. If your warehouse has issues with miss-picks, part of your program my be simple rewards for error free days or a week of 99.9% accuracy. It is better to reward performance that to penalize the wrong behavior. Offer a bonus when things go well as opposed to claw backs for shipment errors or for product damaged by staff. If these are issues that need to be addressed in your environment, they should be part of your performance goals and can be added to the plan using rewards rather than penalties.
Make a big deal of the reward payout at the end of each month by reviewing the results as a group and awarding the cash. If the target was missed, help staff and managers review where things went wrong. Show staff you are interested in their success and in hitting target each month. They will be more willing to trust in the joint goals of the program and they will become willing participants.
Review the Plan Often
Be sure that your performance plan is shaping staff for the desired results. Talk with staff on how the plan might be improved. Consider how the plan can be made more focused on specific objectives. Here is an example of a more elaborate plan that uses a point system for various activates. This way, staff in the warehouse get points for various actions and are rated based on past performance. Each employee is only judged on their personal performance and not matched against other staff. This allows management to focus on training each staff member as an individual. You can overlay a shift bonus to entice staff to work as a team and support the operations of the warehouse as a whole.
You can increase the performance of your warehouse by tracking and reporting performance. By shaping and rewarding positive improvements in operational efficiency, you create a win-win scenario for you and your employees.
To read more about current trends in Distribution and Warehouse Management techniques, please visit one of the following recent posts;
- ERP Tools to manage your Inventory
- Get your Warehouse Ready for 2015 Sales
- CRM – 5 habits to generate more sales
- Is your business software holding you back?
- Forget about Google’s Car – I want to see these on my Roads.
- Are Order Processing Errors Costing you Money and Customers?
- Yearly Inventory Count – Are you ready?
- 5 Techniques to Improve Warehouse Performance
About the author:
Beckard president Dave Savard brings extensive management, business planning, and operational expertise to the company, gained through two decades of public and private sector management experience. Dave’s ability to diagnose client operational problems and provide effective, practical solutions has earned him the enduring loyalty of clients. He is also known for a deep commitment to customer service, ensuring that client needs are not only met but that client priorities are considered in future product enhancements. In his role as company president, Dave holds responsibility for operations, planning and customer service. Dave has a degree in Economics and Law from Carleton University.
Beckard Associates is a full service ERP and Wholesale Distribution Software company providing Accounting, Warehouse Management Systems (WMS) and Customer Relationship Management (CRM) tools to companies across North America. We write blog articles that inform and educate are clients and colleagues. If you would like to learn more, please visit us at beckard.com.
Beckard Associates can be found on the following social media sites. Please visit with comments and suggestions for future postings.