27% increase in productivity in a warehouse. How?

Hint: it's not through automating the processes. It was already done and they were good enough.

The Challenge

How to manage growth with a warehouse at maximum capacity?

Hampton Build Ltd (not its real name) is a distribution company with a problem that many companies would kill for: they were growing too quickly and struggling to manage the process.

Hampton’s sales had increased by 25%, but their warehouse was already stretched, causing delays in order deliveries. There was no room to hire extra workers and they had no time to build another warehouse, and their dispatch process was falling behind.

They needed an increase in warehouse productivity — and they needed it fast.

The Solution

Accountability and Transparency

To address the organizational culture issue, the proposed solution was a reward and recognition model designed to promote performance and encourage healthy competition among employees.

To fairly measure warehouse operations, four key performance indicators (KPIs) were established:

Number of lines prepared for delivery
Number of orders processed
Total volume processed
Total weight processed

The winner of each category (an employee could win in multiple categories) received a 25% bonus.

A second bonus was awarded to each team member if the team as a whole met the monthly target. This played a crucial role in fostering team spirit, not just individual motivation.

Data was calculated in real-time and made available to all employees, ensuring transparency.

The Implementation

From Concept to Results

We implemented a BI solution that imported data from SAP and calculated the performance indicators (KPIs) necessary for the incentive scheme.

Note: Obtaining accurate data in (almost) real-time from SAP was an interesting challenge that might be worth detailing in a dedicated case study.

The real-time dashboard was organized into four tables, one for each indicator, and was available to everyone involved, from management and team leaders to individual workers. A display screen was even installed in the locker room.

The Results

Nobody Wants to Be Last

The Incentives

The incentive scheme worked, though not quite as we expected. The possibility of winning prizes and recognition, along with the feeling of contributing to the company’s success, motivated the already competitive employees even more. However, the most significant boost came from those who were consistently at the bottom of the rankings.

The overall result was a 27% increase in productivity, which allowed LogisVest to manage the rapid growth and buy some time to build a new warehouse.

Thanks to the 27% productivity increase, LogisVest achieved a return on investment for the software application in less than five months.

Organizational Culture

The organizational culture improved significantly. Offering officially recognized performance measurement and tangible rewards for top performers led to a drastic change in the company culture — all for the better.

Secondary Effect: Accountability

Low performers could no longer hide behind the team, as the numbers clearly showed individual performance. Some employees discovered an amazing ability to boost productivity, while others decided to seek employment elsewhere. This allowed LogisVest to eliminate inefficiencies and foster a more productive work environment.

The 5th Bonus

LogisVest also introduced an incentive for all team members if the overall productivity level met an ambitious monthly target. This meant that low performers faced additional pressure from the rest of the team to improve their performance.

Conclusions

A “Simple” Dashboard that Created Transparency

In this case, cultural issues were addressed through digital methods. As always, the challenge was in correctly identifying the problem and developing an appropriate solution. The technology was relatively easy to implement.