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Building a Performance Culture in Distribution

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Материал из категории  News of logistics (in English)
26.12.2011 00:15

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What is a "performance culture" in distribution center operations? And what does it take to get there?

The term, originally coined by the consultants at Kurt Salmon Associates, has moved into the wider distribution lexicon, though not pervasively so. Still, it is increasingly common to hear logistics executives and distribution center managers to speak of their success in building a "performance culture" in their operations, or their plans to get there.

We're not sure, however, that there is a clear definition of what the term means, or how a company knows when its DC operations have moved to this state of goodness. Search Google on the term "performance culture in distribution," and what shows up are a few entries from previous work SCDigest/SCTV have done in this area and little else.

The concept is clearly connected to the area of Labor Management Systems (LMS), which in general involves a combination of engineered or discrete standards for tasks in a DC, LMS software for productivity tracking at an individual level against those standards, and changes to the way supervisors manage their associates, moving to more of a "coaching" orientation, among other elements.

Building a "performance culture" is a goal often associated with LMS projects, with the objective of using the tools of LMS not only as is commonly done to drive productivity gains, but as a platform to establish a performance culture that will endure over time.

However, we would also argue that it is certainly possible to build a performance culture without a full LMS implementation, though some type of equivalent reporting system would probably need to be in place. But creating a performance-based culture without the use of engineered standards would certainly be achievable, if perhaps not capable of delivering quite the same results as might otherwise be attained.

 

Defining a Performance Culture in Distribution

Based on SCDigest interviews with a number of companies that have said they have reached this state in their DC operations (e.g., DSC Logistics, The Sports Authority, West Marine and others), we offer the following definition of a performance-based culture in distribution:

"A performance culture in distribution is one where there is a pervading but positive sense of achieving continuous improvement in both total operations and individual performance, where DC associates are valued and recognized as the key resources needed to drive that improvement, and extensive reporting on productivity measures and fact-based decision-making drive operations."

There are a couple of key and related components of that definition.

The first is that while the focus on performance and continuous improvement is pervasive, it is developed and maintained in a positive environment, not a negative or punitive one. At times it may be hard to tell the difference, but spend much time in two different distribution centers and often the differences in the positive versus negative approached to productivity become apparent.

Second, a performance culture needs to be focused around the individual associate. While such efforts can and often should be led from the top, the most successful ones are those that clearly value the associate, not just in words but in sharing some of the benefits of improvement, with high levels of recognition for performance.

Most important of all the factors in building a performance culture is probably a distribution center manager who "gets" what this end state is really all about, and continuously looks for ways to sustain and build that culture over time, as workers come and go, other priorities emerge, pressure on operations builds and other issues are faced that can easily lead to backsliding.

 

Guidelines for Getting Started

Two years ago, KSA's Michael Gregory authored a column for SCDigest in which he offered some guidelines for getting started in building a performance culture, which we think are just as valid today as they were then:

- Craft a vision…not just goals: While goals and objectives are necessary (i.e., productivity, cost per unit), a vision implies much more. It includes “seeing” the results, as well as the means to achieve those results. It includes the interaction between management and associates, understanding the roles of partners, and clarifying the new organizational expectations.

- Declare non-negotiables…not just future improvements: What are the company’s core values and cultural aspects that you do not want to change (i.e., respect for associates, value for customers, individual accountability, team-based problem-solving)? Are these values a competitive advantage? If so, ROI expectations must be defined for improvements that do not sacrifice these core values. In most instances, it means that additional checks and balances are required to reinforce those values.

- Create fair, objective measures…not just expectations: One of the easiest ways to derail a performance management program is to lose trust with associates. Regardless of the engineering methodologies employed, associates need to understand how the measures relate to their job. It must be absolutely clear that the measures are a fair representation of the work they perform and that the measures accurately calculate performance for the variety of work conditions and product mix that associates will encounter.

- Define interactions…not just roles: All roles and responsibilities as they relate to the program are defined – including management, supervision, associates and engineers. How will the interactions be characterized in a performance management program? How frequently will supervisors meet with associates? What kind of feedback is required? What attributes of performance will be included in the feedback?

- Define the actions…not just gaps: Currently, are managers focused on crisis management (fire fighters), managing flow (expeditors) or employee production (bean counters)? In the vision of the new organization, what new responsibilities are required? Determine the development needs for supervisors and identify the systems, processes and routines to fill the gaps.

- Demonstrate commitment…not just support: Front-line management needs to be seen as the sponsors of the performance improvement initiative. Often, the team implementing the program is seen as the key sponsor with management playing a back seat role. This ownership must transition to management to achieve lasting improvement. The management team should be prepared to answer questions, reinforce the reason for the changes and clarify any new expectations. It may require time behind closed doors to educate the management team and prepare them to play this pivotal role.

- Focus on the path …not just the destination: Quite frequently, there’s a temptation to focus only on bottom-line results with little regard to the details of an implementation. While a management team should not lose sight of progress against the ultimate goal, knowing the details and understanding implementation options will help the team remain flexible to input along the way and foster a willingness to course-correct if needed.

- Build partnerships…not silos: With complex, high-value implementations, it’s critical to enlist partners in other parts of the organization to assist with the initiative and to provide support. This likely will include IT, engineering and HR, but also store operations, allocations and transportation.

In a recent Videocast on our Supply Chain Television Channel, Jim Chamberlain, Director of Industrial Engineering at DSC Logistics in Chicago, noted that building such a performance based culture "has totally transformed our operations."

He added that "The standards and the methods that go along with Workforce Management, those are just the enablers. These are people projects, the people on the floor. You have to make sure they understand what the definition of success really is when you roll these programs out.”

 

Source: http://www.scdigest.com/


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