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good morning everyone and welcome to our webinar today we're excited to have tim stiff and joe doyle from procat presenting on how to build an incentive program for distribution centers and as a reminder we are recording this webinar and we will post it to our on-demand webinar library for you to review again or share with anyone and if you do have any questions during our presentation please feel free to type them into the questions box and we will get them answered during our q a time at the end of our session so now i'm going to pass it on over to tim to kick off our presentation okay thanks angie and thanks to everyone taking time out here today today to join our webinar how to build an incentive program for distribution centers i'm tim stipp director of marketing at procat distribution technologies and i'll be joined later in the presentation by joe doyle our director of sales at procat so today's agenda we put forward today we'll introduce you to procat introducing procat the importance of warehouse productivity we'll lay out the business case for incentive pay and we'll start start introducing this incentive program what does that mean talk about the elements of a successful program and joe doyle will talk a bit a bit a bit more about introducing incent right by procat so a bit about procat company was started in 2001. the mission is to improve warehouse operating performance in in distribution centers we work with distribution centers across the country as you can see by the map there we support warehouses in over 40 states the leadership team here has been doing this quite a while with collectively over 150 years of warehouse operations experience and our solutions are modular we call these modular warehouse solutions procat is or procat offers 14 modular solutions that support critical warehouse functions like picking receiving cycle counting truck loading and delivery our procat procat's flagship or picking solution is called pick right altogether these solutions enhance the capabilities of your current software we call these modular solutions because you can customize the solutions based on your needs so talk about the importance of productivity here we'll set the foundation with operations warehouse operations the backbone of distribution companies the people that get it done distribution centers have the straightforward yet complex task of moving goods from the manufacturer to their customers and on some level this is very simple but we know how complicated that can be to to deliver the right product to the right customer day after day when operations are disrupted worker productivity drops errors increase customer customer confidence dips and bottom lines are impacted but when warehouse operations run smoothly costs are more predictable and customers are not unhappy over time warehousing needs needs to adjust and adapt to new products programs and situations and having a committed and focused workforce will help keep operations running smoothly and a bit more about labor it's one of the biggest expenses for warehouses as you probably know nearly 50 percent 48.9 as a percentage of your gross margin this is ing to ifta international food distributors association and we argue the pick shift is the best place to start an incentive program um the the percentages we have here the warehouse workers who describe themselves as actively disengaged from their work 20 of warehouse workers and 50 from the scallop poll doing just enough to get by the typical warehouse worker compensation is based on hourly wages which contributes to a culture where employees are all treated the same your top performers are not recognized differently than your bottom performers employees are motivated to accomplish the minimum work deemed acceptable for the job this backed up by those stats that we just mentioned so distribution centers are continually looking for ways to maximize this productivity and again hammering home the point having a committed and focused workforce will keep operations running smoothly the end goals here make labor more efficient and an effective incentive program can help you do that a plan that is time saving and labor saving is important distribution centers want to optimize workflows automate processes and reduce waste and to touch on this pig ship mention here the pig shift is the best place to start why picking well pickers do very measurable very consistent work that is easier to set a measurable incentive plan that will benefit your organization and we'll explain that a little bit further in the presentation let's make the business case for incentive pay optimize employee performance improve job satisfaction retain employees and reduce turnover attract new talent in a tight labor market and align picker goals with management objectives when pickers are incentive to pick uh excuse me when pickers are incented to pick faster they will have higher productivity additionally when employees are incentivized there's a higher what we call a care factor employees will let you know what barriers that are keeping them from doing their jobs effectively again having a committed and focused workforce will help keep your operations running smoothly look at what to incent here in warehouses just about anything can be measured that can be measured can be incentivized and today's digital environment allows distribution centers to collect and analyze data like never before common operation metrics to measure you see here pick rate air rate safety and attendance when we tell you over the years the most effective incentive paid plans focused solely on driving pick rates and employee productivity we would tell you that incentive pit plans focus solely on driving pick rates and employee productivity but we would caution you only do this if you're confident that orders are being picked accurately if you're picking orders with paper for example we would not encourage you to put the incentive plan in place because encouraging your pickers to pick faster will drive errors and you certainly don't want to do that picking errors are the most expensive thing you could possibly happen in distribution centers and here's a scenario you pay someone to pick an order pay someone to load an order pay someone to deliver an order and then pay for it all to come back with zero margin this is expensive only uh this is only to implement an incentive plan you're confident that your orders are being picked accurately accurate orders affected effective incentive plans and on the flip side of this our quote here when this is done right quote from steve douglas president ceo of douglas companies when my company implemented our pay for performance plan our productivity improved 17 percent they've got 30 plus pickers in that building so you can imagine the impact that that that's had on their operation 17 17 productivity improvement is equivalent to 17 payroll reduction for their picking staff very significant homegrown homegrown incentive plans let's take a look at the this may sound familiar here there are many companies we talk to about either considering or have homegrown homegrown incentive plans these current plans are often managed with excel spreadsheets and have several criteria those plans have become become convoluted because management implements with the hope that they would be cure-alls for everything that's wrong with the distribution center the result is employees will have little or no understanding of how the incentive is actually calculated or how much they can actually earn from each pick they make over time these incentive programs get obsolete and they should really be updated but management very understandably is hesitant to change that program because you don't really understand what the impact will be on your workforce so properly structured pay-per-performance incentive program can help you improve and reduce costs significantly from for any comp a company that has a significant picking staff in place all right and i'll turn this over to joe doyle to talk a little bit about starting an incentive program thanks kim hey everyone joe doyle director of sales from procat using the toolbar that you have for go to webinar by a show of hands who is using an incentive program today to run their operations nothing okay all right we'll get back to that later so starting an incentive program what do you have to look out for when you want to get an incentive program started within your organization well you've got to understand your current results before you can move forward you've got to understand where you are so you want to determine your current performance levels so you're going to set your goals out there that are achievable you don't want to put goals out there that are so hard in the sky that nobody can reach them because you're just going to not you're not going to get the motivation that you're seeking with an incentive program so when you set your goals you want to use reliable data this data is going to come either from your labor management systems or if you've got a picking system such as the procat pick right you can use the data right from that solution but you definitely need reliable data in order to set the program up you want to add about 10 to 20 percent your current levels doing so will be something that's achievable by your pickers that are out there and allows them to see what it is to make additional money uh by incenting them and these are obtained obtainable goals and you want to also set the expectations the program's going to evolve it's not going to stay stagnant and possibly every 90 days there may be a bump up in what is the rate for achievement so you guys aren't just going to get up and start making extra money and kind of grinding to a halt with any productivity enhancements you want to continually move the bar so that you're motivated to move even faster one of the key things you want to remove the bias within an incentive program you want to incentivize by area and product line uh you don't want to give different incentives to different people this will just demotivate people so you want to have it a pretty balanced solution out there and then you need to decide how basic or how detailed your plan is going to be obviously in the beginning you want to start very simple and you want to make it uh clear goals with clear incentives so your folks know what they're doing know what they need to achieve in order to move forward and get more money out of the incentive plan so considerations for a successful program what do we need to look at to make sure that if we implement a program that's going to be successful well first of all we need to balance it we need to have attainable goals that are not too difficult again we don't want to demotivate people by setting goals that are so lofty they'll never be able to get there you want to check for unintended consequences we caution you to start slowly and adjust as you grow things are going to happen and you're not going to realize them until you start looking at your data so you definitely want to start slowly so you don't introduce new issues into your processes you want to have inclusivity this needs to apply equally to the entire workforce the program that you're setting out you need to have transparency you want to have clearly defined goals and metrics out there and explain to your employees why they are being incentivized the amount that they are or maybe why they're not being incentivized at all because they're not meeting their goals as long as it's clearly and uh defined and well explained this should be not a factor you want to have multiple levels of your incentive program this leads to higher performance leads excuse me this leads to higher performers getting higher incentives so you don't want to just have one incentive level and your top guys get there and then just kind of fall off you want to have them continually uh striving to hit more incentive levels so they're picking faster you need to have measurability key metrics are important so you can see the impact overall of your incentive program you want an incentive program that is going to lead to productivity enhancements yet not derail you in terms of uh extra orders that are being uh held up because of mistakes etc you need to have flexibility within your organization changes obviously would be hard putting in an incentive program at first may seem you're going to have some resistance so you need to be aware of the struggles that are out there and then by far the key thing is that you want the incentive program to pay for itself the new program should provide productivity increases which offset the overall program cost so you want the labor savings to be more than the incentive program pay that you're paying out so quickly we're going to go into the incent rate system that procat has developed incent rate helps to create an incentive program that drives increased productivity based on the individual pick rates for area and the goals for that area it's a very easy system to implement use and understand and it really helps your pickers understand how they are being incentivized what they're being paid and why it's pretty easy to understand so if takers meet their target pick levels in their specific areas they're picking in then they're rewarded with an incentive when pickers achieve higher targets they get more incentive so very basic program easy concept to understand but it is something that needs to be explained to your picking staff since they know why they're being paid what they are being paid and incent right enhances our picking solution called pick right with pick right you're scanning upc code so you're confident that your orders are accurate so one of the key things is that you want your pickers to be as accurate as possible 99.9 percent and higher and once you're sure that they're going to be hitting that accuracy rate then you can have them step on the accelerator and start picking faster and becoming more productive and then you need a reporting suite out there which is included with pick or excuse me incent right to help management payroll monitor the program incentives again you want to make sure that you're picking uh is accurate still while including incentives to get them to fix the pick faster and then we see a 10 to 20 percent overall increase when an incentive program is administered properly we've got a distributor story one of our distributors governor wholesale out of ohio they're a large convenience store distributor with 40 pickers so a pretty sizable operation utilized the manual incentive plan using the excel in the past so it took over two weeks excuse me two hours per week to calculate the incentives using the excel program uh the excel program is very formula based and employees didn't know exactly why they were getting the incentives that they were once governor implemented the incent right program they were able to customize their targets in the incentive programs the result management of the incentive program decreased from over two hours per week down to about 10 minutes per week so a real big sizable gain there for your management team overall productivity increased 15 to 20 percent and savings completely paid for the program within two months so that's key there you want to make sure again that you're not paying out more in incentives than your saving and labor rates so uh chris hampton who is one of the management team there at dummer said the incentive motivated my workers to make management aware of anything that's keeping them from picking faster because it directly pays or impacts their pay so you're getting continuous improvement there and the pickers are helping you with that so let's go in and do a quick wrap up here um is an incentive for an intent program proper for your company well if you're not getting the productivity you need then i would say that incentive program is something that can definitely help you once you're confident that your picking accuracy is up over 99.9 percent then you want to increase your efficiency and reduce your overall cost by adding productivity incentives the plans need to be clear and concise and benefit both the company and the employees and you want to have a committed and focused workforce that will help keep operations running smoothly so let's talk we'd like to talk to you about your challenges that you're having within your company and determine if we can help you improve those processes how would your company be different if every order you delivered your customers was perfect and then we wanted to help you take advantage of our free roi analysis to see just how much we could save you within the senate program any questions out there angie thanks joe uh no none have come through at this time if anybody does have any please feel free to type them in and we can get them addressed for you and if there are any questions that come up after this uh my email address is right there on the screen j doyle at procatdt.com that's pro cat d is in distribution tears technologies.com i'd be happy to answer any questions you might have set up a call to go through what uh your company is experiencing uh where productivity is where your incentive programs are and see if there are efficiencies to be gained uh with the help of technology so we appreciate everyone's time today angie i'll give it back our video all right thank you tim and joe appreciate you presenting today and for everyone on our webinar or if you're watching on demand thank you for taking the time out to join us and i just want to let you know that we do have a new round of training workshops available for you and your team members to attend you can visit our training workshop page at inovia.com workshops for more information and to register for the training workshop that fits your role and we do have more webinars coming up this afternoon we have target team presenting on beginner's guide to target and tomorrow we have naveen reddy from dynamics eshop presenting on expand your e-commerce with eshop solutions so check out our website for more of our upcoming events and that's innovia dot com events and have you heard of our podcast yet it's called the innova conversation and we just want to encourage you to listen to the selection that our hosts steve waltz and jeff pergolsky have provided to us and you can learn about all the different uh podcast platforms to listen to on our podcast page and that's anova.com podcast but check out that selection and subscribe so you'll get notified when those new episodes air alright well thank you again everyone for joining us thank you again tim and joe for presenting and we look forward to seeing you soon on another anova webinar take care everyone