When it comes to managing for performance, Tony Moore, operations and technology manager for Kennesaw, GA-based ESP Gauges, has taken a radically new approach. A professed data junkie, Moore uses the information generated by PathGuide Technologies’ Latitude Warehouse Management System (WMS) to position ESP as an industry-leading provider of precision temperature and pressure gauges when it comes to customer service and employee satisfaction.
Gathering intelligence with WMS-tracked data
Moore is a pioneer in recognizing that using technology to streamline warehouse processes and gather data is just the first order of business. Since deploying Latitude, he rigorously applies performance metrics derived from the WMS to every aspect of the warehouse operations. Initially, this was in much the same way as other distributors – to tackle critical picking and shipping problems.
By reviewing the metrics generated from Latitude, he was able to quickly lower the average shipping time from approximately seven days to less than one. That is a visible outcome of nearly 700 percent.
But Moore didn’t stop there. Empowered by management to continue innovating, he sought to discover new ways of applying Latitude’s data beyond simply correcting operational problems.
Could leveraging this technology possibly help ESP measure individual employee performance and establish a new paradigm for rewarding top performers while fostering an employee-centric culture needed to maintain the company’s high level of customer service?
He established a rigorous cross-training program that saw everyone, except the supervisor and sub-department leads, participate in a rotating roster. Latitude WMS tracked all of activities; he then used the system’s metrics to establish baselines for every transaction and assigned a dollar value on productivity. For example, ESP measured how many transactions could be completed in an hour, the accuracy levels of outbound sales orders, the average number of internal errors caught through cycle counting, and more.
Rolling out the new pay-for-performance program
Moore is a pioneer in recognizing that using technology to streamline warehouse processes and gather data is just the first order of business. Since deploying Latitude WMS, he rigorously applies performance metrics derived from the WMS to every aspect of the warehouse operations. Initially, Moore used a report card system that would be based on Latitude-generated data charts.
“We would show people, hey, you worked 160 hours this month and these were your activities, and here’s how you stacked up with the average,” he explained. This led to discussions of whether the employee was where he or she wanted to be, and what steps they could take to make improvements.
He then took time to research structured pay-for-performance programs at other companies. Moore noted that most of these organizations instituted minimum activity thresholds, and quickly determined that this wouldn’t work for ESP because it decreased an employee’s desire for cross-departmental training. Instead, he chose to use Latitude’s Transactions Per Hour (TPH) metric to measure output.
“I brought everyone together for a town hall meeting – to hear the pros and cons, hear everyone’s concerns, and listen to ideas to make it work well,” Moore said. “Then, instead of giving raises, we took all of the money that we had allocated for raises and put it into a general bonus pool. It’s paid out monthly to the employees, based on their level of activity tracked in Latitude.
“We tell our folks that we don’t care how many transactions you do as long as you stay above the average TPH,” Moore continued.
“As long as the employee is working at an above-average pace and maintaining accuracy, then he or she is going to be eligible (for incentive pay).
We have some folks that work in pick, pack and shipping, and even if they only have five or 10 minutes to spare at the end of the day, they’ll run across the warehouse and receive a few lines because they know they’re going to get credit for it. It’s just a couple of transactions, but in aggregate, it adds up to be quite a bit.”
Upon instituting the performance pay program at the end of 2017, employees immediately saw how the new system could affect their paychecks. “We had some workers that achieved more than a 30 percent increase in pay because of it,” Moore elaborated. “In a group of 20 employees, it was pretty rare to have more than four people who didn’t earn at least something extra.”
Under the new pay-for-performance program, ESP’s accuracy soared to more than 99.96 percent, sustained over a six-month period. This is despite a very hands-on operation; workers are using RF scanners, going to the shelf, picking the product by hand, counting it by hand, and packing and shipping it.
At the same time, employees began to embrace the new system. Instead of an inherent fear of how their numbers stack up, it soon turned into a healthy competition among coworkers.
“We dedicated a couple flat screen TVs out in the warehouse to just display our Latitude metrics all day, every day. And people would see their name up there and it became a stats chart for them. And we found people would really pride themselves on being at the top of the chart for picking or being at the top of the chart for receiving, or other tasks.”
Expanding beyond the warehouse
Since implementing Latitude in 2016, ESP has experienced a 22.7 percent growth in revenue while simultaneously reducing its production and processing labor by 31.5 percent. Moore is now looking at how he can use the data from Latitude to help make improvements in other areas of the business, such as sales and customer service, and to better use information available through Latitude’s manufacturing module for production orders. He also wants to capture date and time stamps from order entries, so ESP can better segment shipment times.
For Moore, the bottom line is that Latitude not only helped streamline ESP’s operations, including eliminating the need for an annual physical inventory, it also provided a mechanism to level the playing field for employee incentives. “Latitude really helps us find where the sweet spot is for our people, helps us align our goals for them and then, of course, their goals for themselves.”
About ESP Gauges
Based in Kennesaw, GA, Engineered Specialty Products (ESP) has been a leader in quality pressure and temperature instruments for over 25 years, offering the industry a one stop shop for tailor-made solutions. With innovative thought leaders and a strong story to tell of sustained growth, ESP is expanding its organizational infrastructure through ERP system upgrades, website development and technology expansion. For more information, please visit www.espgauges.com.