As a supplier of precision gauges for mechanical and industrial engineering applications, Engineered Specialty Products Inc. (ESP) takes customer service seriously. It has to: ESP's customers, which are mainly in the oil and gas industry, rely on its products to make critical temperature and pressure measurements.
So when the Kennesaw, Georgia-based company adopted PathGuide Technologies Inc.'s Latitude warehouse management system (WMS) in 2016, the first order of business for Operations and Technology Manager Tony Moore was to restructure its order-fulfillment process. ESP serves its customers from a single 40,000-square-foot facility in Kennesaw, where workers process about 1 million units a month, split evenly between inbound and outbound shipments. At the time, the site was struggling with inefficiencies in its picking and shipping operations that had led to an average order-to-ship time of seven days.
Moore's decision paid off: By using the metrics generated by the WMS to streamline warehouse processes, ESP was able to slash its average ship time to less than one day.
HIGHER PAY, BETTER PERFORMANCE
While the benefits of streamlining warehouse processes were significant, Moore realized he could do much more with the performance metrics derived from the new WMS. That led him to begin developing a program to reward top performers while fostering an employee-centric culture.
Moore started by establishing a cross-training program where warehouse workers rotate responsibilities. He used the WMS to track their activities, then established baselines for every transaction and assigned a dollar value to each based on productivity. Soon, ESP had enough data and performance metrics to support a new pay-for-performance program.
At first, Moore used a report-card system, showing employees their data charts, comparing their activities with the average, and discussing what steps they could take to improve. Next, he began refining the program, using the WMS's transactions per hour (TPH) metric to measure output. Then it was time to roll out the pay-for-performance program. Instead of giving raises, Moore says, the company put the money it had allocated for raises into a general bonus pool. Bonuses are paid out monthly based on employees' level of activity as tracked in Latitude.
Under the new arrangement, the number of transactions per individual employee doesn't matter, provided they stay above the average TPH, Moore explains. If the employee is working at an above-average pace and is maintaining accuracy, then he or she will be eligible for incentive pay.
Employees immediately saw how the new system could affect their paychecks. "We had some workers [who] achieved more than a 30% increase in pay because of it," Moore says. "In a group of 20 employees, it was pretty rare to have more than four people who didn't earn at least something extra." The WMS, he adds, helps ESP find the high-productivity "sweet spot" for employees while aligning the company's goals for them with their goals for themselves.
The program has paid off handsomely for ESP too. Since implementing the Latitude WMS, the company has reduced its production and processing labor by 31.5% while simultaneously increasing revenue by 22.7%. It didn't take long before Moore started thinking about ways in which the WMS could help ESP achieve other objectives. He's now looking to capture date and time stamps from order entries to better track shipment times and is considering how to use the WMS data to improve other areas of the business, such as sales and customer service.