Managing Change and Incentive Alignments
Gene Hammons, MBA
Senior Account Manager
Super Store Industries (SSI) is one of AFS’s earliest and most successful Priya Enterprise Warehouse Management System (WMS) customers. Supporting more than 350 grocery stores throughout Northern California and Nevada, SSI ships approximately 1 million cases of dry and frozen food every week from a 800,000 square foot warehouse in Lathrop CA, receiving and shipping hundreds of orders daily.
AFS Technology delivers superior software features to all our users – however, it’s really up to the users to get the most from the systems. Some AFS users achieve extreme profitability, while others don’t quite reach that level. The following details how SSI deployed change management and incentive alignment to get the most from their AFS Software, get the most from the staff – all while providing a great place to work by giving the staff more work time flexibility and increased financial stake in success.
In June of 1998, SSI began implementation of the Priya Enterprise WMS system. Facing increasing labor costs, staff turnover and the challenges of managing hundreds of thousands of square feet of warehoused product, the latest in WMS technology, including Vocollect Voice Picking was selected as the ultimate answer.
It was assumed that once the technology was in place, efficiencies would abound, profits would flow and the warehouse world would be an all-around better place. SSI’s warehouse had formerly been a very manual operation – reams of labels were printed each day, and each member of the pick staff would take a stack of labels, representing a single order and move throughout the warehouse, applying a label to each box as it was selected and brought to a staging area for loading into the trucks.
Everyone agreed that the new voice picking system would greatly improve productivity, no more labels, the staff would be hands-free to pick more efficiently, errors would reduce. Predictably, when the new system came on-line, there were some growing pains. These growing pains consisted of the new system having a few bugs that needed to be worked out, as well as some initial resistance on the part of the pickers. Some were of the opinion that this new voice in their ear would never work – and they expressed an interest to return to the familiar labels.
The stated team goal at the time was to reach 100% of the engineered labor standards (which were then being tracked by a software program that was separate from their WMS), while increasing selection accuracy. But the staff struggled and ended up in the 80% range day after day. The call would go out over the loudspeaker - - ‘Mandatory overtime – 2 hours’ just to fill the day’s orders. It seemed that labor costs were worse than before, productivity was dropping and all this came after considerable investment in technology.
Enter the User Group Community. At a previous Priya User Group meeting, sessions on warehouse efficiency were presented by an outside group of consultants, Operations Associates. SSI called in the award winning engineering and consulting firm – and a new approach was developed. In a close partnership with the Priya Enterprise development team, new work commenced on the early versions of a module that would later become Engineered Labor Standards a module embedded in Priya Enterprise, eliminating the need for an additional software system to track warehouse productivity levels.
Engineered Labor Standards works on the premise that picking and loading a 50 pound case of canned tomatoes takes more energy than grabbing a 7 pound box of cereal. And getting to bins and racks at the back of the warehouse is more time consuming than loading something off the front of the forward rack areas. By engineering all the variations possible and creating a standard defining the labor needed for a particular amount of work, a couple of goals are quickly realized. #1) Each picker can be assigned equivalent workloads for both the individual picking run as well as the full day’s expected productivity. #2) Management can see how much manpower is needed to load the day’s trucks and determine exactly how many labor hours are needed.
Once this was in place, the next step was to align incentives. Under the existing system, if all the workers continued to operate at 80% of bench marked productivity, the result was mandatory overtime – in other words, a financial bonus for dragging their feet – not exactly what management had in mind.
The solution was called Quick Pick. Engineered Labor Standards determined exactly how much a particular worker should pick in a 10 hour shift. If the picker worked quickly, they could finish the work equivalent to that 10 hour shift in as little as 9 or 8 hours – and SSI paid for the full 10 hour shift and allowed them to leave as soon as their day’s assignments were completed.
So at this point, members of the picking team who doubted the new voice system had some immediate feedback – they watched their more ambitious co-workers leaving early. It didn’t take long for everyone to start to buy in to the new system. Productivity soared. Instead of the 100% benchmark they’d struggled to meet, shift productivities were soon coming in at 120% and 130%.
Some energetic workers were nearly running through the warehouse so in the name of safety, a ceiling benchmark became necessary and was implemented – determining that anything faster would be theoretically unsafe.
At this point, the crew that couldn’t formerly hit 100% of the benchmark now had to regulate certain employees from working too fast. Overtime was eliminated almost overnight. As attrition trimmed the staff, fewer replacements were needed. But it was just the beginning.
Staff was given the option of signing up for Quick Pick and having the schedule flexibility of leaving early or a new program was introduced called Quick Pay.
Quick Pay allowed a picker to pick the equivalent of 12 or 13 hours work within the normal 10 hour shift and be paid for the extra hours, while only working the 10 hour shift. Now a worker could choose between more time off or a weekly pay increase.
In an industry where turnover rates can be as high as 25-30% per year, SSI has a workforce of pickers with 10 and 20 years on the job. Fewer workers are needed (and fewer benefit packages, etc.) Error rates are down, there’s savings in labels, rework, double-checking and more.
SSI’s Lathrop facility is now known as one of the most efficient warehouse environments on the West Coast if not the nation. Last fall, the User Group experience came full circle as group of other AFS WMS customers held a user group meeting and toured the Lathrop facility to get a first-hand look at how Priya Enterprise can work when both incentives are aligned and change management is handled effectively.
Remember, it wasn’t just the software features that made the difference, it was creative management techniques, teamwork from the staff, input from the consultants and even the user group community playing a part (to highlight just one more reason to attend and make connections at AFS’s annual user group conference).
Often, when a company is evaluating software, the question is “What can this software do?” when the question should be “What can WE do with this software.” Because in the end, it’s how the software is utilized that makes all the difference. The SSI story shows the same software, same features, yet vastly different results when the incentives are aligned to both the interests of the company and the workforce.
Approaching any software project, whether it’s in the warehouse, automating the outside sales force, creating better business intelligence or replacing a dated ERP system with the latest upgrades or even the latest AFS ERP offering – beginning with the end in mind can be a very valuable step.
That’s why your AFS Account Manager can help determine, what would be the potential return or ROI on a proposed system improvement. Granted, no one predicted the relatively short ROI for SSI prior to the Priya Enterprise implementation, but based on averages achieved by other AFS users, your Account Manager can prepare presentations documenting expected savings, system payback and help put you in touch with others at the annual User Conference who’ve reached the pinnacle of efficiencies using various AFS software offerings.
Contact your Account Manager for further details. And next time you’re in a Northern California supermarket, you can think to yourself, “Hmmm Priya Enterprise knows exactly where that box of Cheerios has been and precisely how it got here.”
gene can be reached at firstname.lastname@example.org because the domain "SoftwareCowboy.com" wasn't available.
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