New labor standards and a supervisor training program are helping Certified Grocers Midwest to reverse a productivity slide at its warehouse
What a difference a year makes.
Up until a year ago, worker productivity at Certified Grocers Midwest's 1.2-million-square-foot warehouse in Hodgkins, Ill., had been declining for four years. But over the past year, productivity has jumped close to 20%, reversing the recent declines.
“We're now where we were four years ago,” said Todd Avery, director of distribution for Certified, a cooperative wholesaler serving 67 members and 267 stores across five states.
Avery expects the progress to continue, with productivity growing at least 15%, and probably “more like 20% to 25%,” over the next year.
The reason for the productivity turnaround can be summed up in one word: standards. Certified has applied productivity standards — how long specific warehouse tasks are expected to take — for two decades to the order selection process in its grocery sections. But over the past three years the wholesaler has worked with logistics consultant Tom Zosel Associates (TZA), Chicago, to update those standards and establish new ones for the perishables and freezer areas and for other functions such as putaway of products received from manufacturers.
“I can tell you that now only 60% [of employees] meet the standard for putaway,” said Avery. “But when we finish implementing the standards, it will be almost [100%].” Certified expects to turn on the new standards this month, following an overview by union engineers.
Avery attributes the productivity progress over the past year to the implementation of the updated selection standards, as well as the application of a new incentive plan for selectors whereby they are paid more for exceeding minimum expectations. In addition, productivity has benefited from a new training program for warehouse supervisors that has been in place since February.
Industry standards for each job are based on a careful time analysis — down to the millisecond — of each of the tasks that go into completing the job. “If you're picking a case, we look at the time it takes to bend down, stretch out, grab a case and put it on the pallet,” said Avery. “If a case is 2.5 pounds, you're given a half-second less than if it's 5 pounds.” Standards also take into account the size, bulk and position of a case.
Employees at Certified are only required to achieve a C-plus average rating for any given job. For selection of products, Certified uses industry standards, but also factors in fatigue over time, warehouse congestion and machine efficiency. “The standards are designed so a person can comfortably, safely and ergonomically do a job,” Avery said.
To track whether workers are adhering to standards, Certified employs Power Productivity software from Retalix, Plano, Texas. Employees let the system know where they are positioned and what they are doing by scanning bar codes at those locations and on the pallets they are transporting. The software, incorporating standard times and operating procedures, then determines the time spent between locations and calculates how closely employees are meeting the standard time windows.
Certified has involved the Teamsters union in the establishment of its productivity standards, Avery said. “The union and the company agree that this is how we're going to measure productivity and that these are the minimum expectations. We have validated the standards together.”
This kind of “change management” within a warehouse is increasingly becoming a “more visible portion” of technology and standards implementations, observed Nyle Morris, vice president of value delivery for labor technology provider Red Prairie, Waukesha, Wis. “People are making sure they have buy-in and support.”
Another key feature of Certified's effort to reverse its productivity decline is training. While training programs for warehouse workers are common, Certified has taken the far more unusual step of training its 33 supervisors in how to get the best performance out of employees within union guidelines.
Since February, Certified supervisors have participated in twice-monthly sessions that focus on “team management, standards management and people management skills,” said Avery. The program, conducted by TZA, will conclude by the end of the year.
In teaching “people skills,” the program helps supervisors “read how someone is acting and what's troubling them — their body language,” said Avery. “That was an eye-opener.” He commended the practicality of the program, which asks supervisors to apply their learnings in the warehouse and come back to discuss the results. “That's when the light bulb goes on,” he said.
In the initial training sessions, Certified brought in union stewards and workers so that they could “understand where we were coming from,” said Avery. “We understood the anxiety the union had when we decided to implement the new training methods, but it was not an attack against them.”
In particular, the supervisor training sessions afforded the union members an opportunity to see how Certified's new standards were developed and how they would be used. “The union agreed we needed the standards, but asked us to keep them involved in the process,” Avery said.
Learning how to implement and manage the new standards is another big part of the supervisor training program. “Our people knew about standards but not how to manage them,” Avery noted. “You still have to manage employees to make sure they are following the standards, because there are ways around them. We're able to close loopholes or at least monitor them.”
At the same time, Certified's supervisors are trained to help employees improve if they are not meeting productivity standards. “If they're doing an SOP [standard operating procedure] wrong, we can get them back to doing it right,” Avery said.
Employees who fail to meet standards over time are subject to a disciplinary process. “All we want is for people to be productive,” said Avery. “We're not out to fire anybody. There's a cost to turnover.” Most employees, he added, are able to meet the minimum C-plus average for productivity.
Employees who exceed productivity standards are able to earn monetary incentives proportionate to their performance. “If they go 10% over the baseline, they get 10% more pay,” said Avery. He stressed that greater productivity will not lead to layoffs, though employees lost to attrition may not be replaced. In fact, by being more productive, “we can be more competitive with Wal-Mart, so they'll be able to keep their job,” he said.
Because of Certified's productivity gains, Avery sees a return on its investment in labor training and technology. “Our payroll is $14 million per year, so even a 1% productivity increase would pay for the TZA training alone,” he said. “And we will get more than 1%.”
Next on Certified's agenda is to deploy voice-based picking technology, an investment of about $1 million. “We first want to see how the standards affect productivity,” Avery said. “After we get positive results, then we'll take the next step.”