Engineered Standards Reduce Warehouse Costs for Pep Boys
The auto parts distributor shares five keys to a successful incentive-based pay plan.
(Boonton, NJ, June 28, 2012) It seems impossible, but auto parts distributor Pep Boys says it's true: The company cut pay for many of its warehouse workers but is getting more work from them.
After realizing that its incentive-based plan was too generous for many warehouse workers, Pep Boys decided to introduce engineered standards at its 600,000-square-foot DC in San Bernardino, CA.
The result? Pep Boys is paying top performers more, it's paying mediocre workers less, and the company was able to dump the slackers.
In the July issue of industry newsletter Distribution Center Management, editor Jeff Ostrowski reports on Pep Boy's experience and four keys to the program's success. These include:
- Moving from team-based to individual incentives.
- Setting minimum standards for workers. Those who fall below the goals are fired, those who exceed them are paid incentives.
- Providing a grace period for new hires and coaching for workers who are lagging.
- Creating a culture of accountability by sharing data with workers throughout the day.
Details on each of these strategies appears in the July issue of Distribution Center Management newsletter.
About the Distribution Group
For more than 40 years, Distribution Group publications have helped distribution center and warehouse managers increase productivity, cut costs, and meet increasing customer demands. Distribution Group publishes Distribution Center Management newsletter, books and reports, and a free e-newsletter.