We can do all the strategizing, planning, and measuring possible, yet a fundamental question remains: How can we get people and organizations to perform at high levels?
Art van Bodegraven was, among other roles, chief design officer for the DES Leadership Academy. He passed away on June 18, 2017. He will be greatly missed.
We can do all the strategizing, planning, and measuring possible, yet a fundamental question remains: How can we get people and organizations to perform at high levels? Unfortunately, there's no simple answer; success invariably depends on a mix of complex, inter-related factors, including metrics, performance standards, reporting methods, and rewards.
Elevating performance is closely related to the subject of metrics. But it's not about what the metrics are; it's about how they are used. Once an organization has chosen a few mission-critical metrics, it has a couple of subsequent responsibilities. One is to report performance results against those metrics—frequently, visibly, simply, and on a timely basis. The second is to plan what to do when targets are reached or exceeded—and then do it.
Failure to follow through with some type of reward inevitably makes people lose interest in doing what it takes to continue meeting targets. It is not a matter of having to bribe people to perform. It is very much a matter of demonstrating a positive cause and effect relationship between performance and payoff. That demonstration reinforces interest in and commitment to sustained high-level performance.
The details of the associated reward and/or recognition are less important than their consistent implementation. The payoff might be a group pizza party, a quarterly bonus, a field trip, or privileged parking spots. Group rewards are appropriate, whether they involve group benefits, or individual benefits delivered to all members of the group. This approach is particularly conducive to developing cooperation among team members, and to fostering healthy competition among teams. The key is to make the rewards as visible as the accomplishments.
Finding appropriate rewards
There is a tendency among the techno-geek community to want to use performance standards to generate incentive pay for working associates, be they drivers, order pickers, or customer service reps. We suppose there must be exceptions, but the concept generally is misguided. It smacks of the bad old days of "efficiency experts." Worse yet, it suggests parallels with the bad new days of piecework in Asian sweatshops.
But we do need to have performance targets— whether quantitative (more production, perfect orders) or qualitative (zero defects, on-time deliveries). And we must have ways to motivate people to achieve them—consistently. And there's a fair chance that hitting the numbers will contribute to meeting the organization's higher-level group objectives. What to do?
Begin by setting equitable, achievable targets. Not "stretch" goals that can only be met when the planets are aligned. Not generous allowances that can be achieved all day every day without breaking a sweat. Whether the specific standards are engineered, derived from historical data, or created through some other type of work measurement system is not material. Just stay away from guesses and management estimates.
Once standards are established, follow through with timely, visible reporting—by person. Recognize individual accomplishment orally, with gift certificates, with T-shirts—whatever makes sense in the culture and environment. But make the recognition relatively minor compared with group rewards for meeting group objectives.
Don't use day-to-day performance for disciplinary purposes—the program will immediately be discredited, and good performers' achievements will drop like a rock.
What it's all about
What the reporting process is really all about is highlighting both success and failure. Success, obviously, gets rewarded. But it also presents an opportunity—a responsibility, actually—for supervisors to interview the high-performing associates to determine what factors have contributed to their success. They might find, for example, that the answer is a process, a short-cut, an absence of obstacles, good weather, or the mix of tasks and transactions.
Failure presents an even greater opportunity. As with success, failure provides supervisors with an excuse to interview employees to try to determine what went wrong. That can have a couple of beneficial effects. First, it demonstrates to the workers that the company was sincere in its assurances that the measurement/reward program is simply that, not a disciplinary tool in disguise. The effects of this realization on morale and employee commitment can be enormous. The second is that it provides a forum for the workers to inform supervisors about factors that hamper their performance—barriers, obstacles, problems, bad processes, upstream failures, downstream disconnects, insufficient tools, lack of information, and poor communications. Supervisors then have the opportunity—the mandate—to analyze, prioritize, and remedy those problems.
Additionally, with continuous reporting of performance to targets, both working and supervising associates have a way to track how effective the problem solving and repairs have been. That's powerful indeed and far distant from punishment, reward, and incentive pay.
The metrics/standards disconnect
It's important to note that there's a big difference between performance metrics and performance standards. In the world of metrics, we are generally after outcomes, ideally outcomes that bear directly on customers and profitability.
In the realm of standards, we are working with details that, in the aggregate, contribute to the outcome metrics. Standards (and the processes of using them intelligently) also help us devise better processes, understand and improve costs, and plan/manage the labor component of the supply chain.
By way of illustration, standards might be related to number of stops, miles driven, parcels handled, or number of orders delivered. The performance metric, by contrast, would likely be on-time delivery percentage. In a DC, we might have standards for picks per hour, putaway productivity, fill rate, and the like. But a performance metric might be cost per order.
All of the above notwithstanding, there are times when performance standards are used in other ways. For example, many (if not most) operations have, or should have, a minimum production/quality standard. Inability to meet the minimum, assuming adequate training, can indicate a mismatch of skills and job demands. For example, in a DC, people with insufficient hand-eye coordination, with poor small motor muscle skills, or with alphabetic or numeric processing problems may simply be miscast in their assigned roles. Consistent performance below minimum standard will show this.
In other, happily unusual, cases, outside problems may manifest themselves in low productivity or quality. In those situations, documentation is important. But the issue is not failure to meet standards. Consistent shortfalls provide an indication that something else is wrong and that further analysis is necessary.
The way to get people to meet—or exceed—targets, goals, standards, objectives (at any level, from corporate to individual) is not to push them to strive for excellence. It is as straightforward as removing the obstacles that get in the way of performance. Once the barriers come atumbling down, they'll strive on their own to do what is expected—and needed.
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
Serious inland flooding and widespread power outages are likely to sweep across Florida and other Southeast states in coming days with the arrival of Hurricane Helene, which is now predicted to make landfall Thursday evening along Florida’s northwest coast as a major hurricane, according to the National Oceanic and Atmospheric Administration (NOAA).
While the most catastrophic landfall impact is expected in the sparsely-population Big Bend area of Florida, it’s not only sea-front cities that are at risk. Since Helene is an “unusually large storm,” its flooding, rainfall, and high winds won’t be limited only to the Gulf Coast, but are expected to travel hundreds of miles inland, the weather service said. Heavy rainfall is expected to begin in the region even before the storm comes ashore, and the wet conditions will continue to move northward into the southern Appalachians region through Friday, dumping storm total rainfall amounts of up to 18 inches. Specifically, the major flood risk includes the urban areas around Tallahassee, metro Atlanta, and western North Carolina.
In addition to its human toll, the storm could exert serious business impacts, according to the supply chain mapping and monitoring firm Resilinc. Those will be largely triggered by significant flooding, which could halt oil operations, force mandatory evacuations, restrict ports, and disrupt air traffic.
While the storm’s track is currently forecast to miss the critical ports of Miami and New Orleans, it could still hurt operations throughout the Southeast agricultural belt, which produces products like soybeans, cotton, peanuts, corn, and tobacco, according to Everstream Analytics.
That widespread footprint could also hinder supply chain and logistics flows along stretches of interstate highways I-10 and I-75 and on regional rail lines operated by Norfolk Southern and CSX. And Hurricane Helene could also likely impact business operations by unleashing power outages, deep flooding, and wind damage in northern Florida portions of Georgia, Everstream Analytics said.
Before the storm had even touched Florida soil, recovery efforts were already being launched by humanitarian aid group the American Logistics Aid Network (ALAN). In a statement on Wednesday, the group said it is urging residents in the storm's path across the Southeast to heed evacuation notices and safety advisories, and reminding members of the logistics community that their post-storm help could be needed soon. The group will continue to update its Disaster Micro-Site with Hurricane Helene resources and with requests for donated logistics assistance, most of which will start arriving within 24 to 72 hours after the storm’s initial landfall, ALAN said.