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Pay-For-Performance Plan Boosts Bottom Line in Multi-Site Distribution Operation

Caroline Dreyer, vice president of fulfillment operations at Home Shopping Network and Dan Keto, a founding partner at Integrated Management Systems provides advice and tips on implementing performance-based incentives in the warehouse.

(Boonton, NJ, July 27, 2011) — At Home Shopping Network's distribution centers, a combination of engineered labor standards and performance-based incentives have boosted productivity and cut costs by $5 million over the past three years.

Home Shopping Network has implemented a labor management program at its three DCs, and the company can now keep tabs on things such as whether workers' 15-minute breaks last 25 minutes.

In the July issue of industry newsletter Distribution Center Management, Home Shopping Network and Integrated Management Systems offer a wealth of advice for improving employee productivity through benchmarking and performance-based incentives. The first piece of advice is to start by measuring the right metrics.

Dan Keto, a founding partner at Integrated Management Systems says that he often sees DCs where managers throw pizza parties one day and criticize workers the next. But the case-per-hour metric that the DC was measuring didn't take into account that light cases arrived one day and heavy cases the next.

"The workers said, 'You're rewarding us for doing easy work, and you're punishing us for doing great work,'" Keto says.

The next piece of advice? Don't start with your biggest, most complex facility. To speed its return on investment on its new labor management program, Home Shopping Network chose to start at its DC in Roanoke, VA, its biggest and most complex facility, and the warehouse with the most veteran staff.

In retrospect, says Caroline Dreyer, vice president of fulfillment operations, it would have been wiser to pick a different facility. "I would start in the smallest facility and get my feet wet," she says.

Additional tips on getting the most from performance-based incentives are in the July issue of Distribution Center Management.

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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.

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