As a warehouse labor outsourcing firm, Costa Solutions has worked with many warehouse managers. If your warehouse or distribution center is like most, it’s a safe bet that approximately 65 percent of your operating budget is eaten up with labor costs.
Here’s the part that really hurts:
Far too many warehouse employees don’t feel motivated and engaged with their work. Anyone who has managed a warehouse knows many of them are just doing the minimum amount of work to get through the day. They also face pressure to optimize the supply chain. Properly managing the workforce is where this optimization is going to happen.
The key to getting the best performance possible from the warehouse labor force is to align worker motivation with management goals. Part of this approach is applying an incentive-based pricing model in which warehouse labor outsourcing is driven to meet and exceed specific performance objectives.
What is Incentive Pricing?
Typically an add-on to more conventional pricing models, incentivized pricing offers levels of compensation to warehouse workers. Among freight handling services companies, it is becoming a popular way to make up for limitations in fixed-wage models and make sure that the labor staff’s motivations are consistent with the company.
Elite customer services are offered to clients that exceed their objectives, keeping customer service and production first.
Incentivized pricing also adds a level of complexity to the engagement model. Businesses that want to outsource warehouse and shipping of their products have to make sure their freight unloading partner drives measurable advantages. Your labor outsourcing provider has to own their work, and they have to collaborate fully with your team to know where they should be focusing their efforts.
A well-designed incentivized mode for warehouse labor outsourcing includes the following objectives:
Specific Metrics That Track Performance and Success: Agree upon and document each KPI or benchmark at a specific level. Components of dock scheduling costs and other lumper services should be designated specifically as either in or out of scope.
Structure for Collaborative Efforts: This is done by determining which person or people from each party will take part, be accountable for, and manage the measurement and execution of the incentive program. The absence of an agreement and “sign off” by both the DC and the lumper on definitions and benchmarks will handicap the work relationship.
Design Achievable Incentives: Make sure that the goals being set are reasonable and that the incentives are tied to controllable factors. For instance, if your workers are rewarded for unloading a certain number of trucks within a certain amount of time but there’s a lull and there aren’t that many trucks at the dock, make sure their goals are adjusted accordingly.
Businesses with large warehouse operations in Texas and the surrounding states should remember that outsourcing is a partnership. Clear communication of both parties’ expectations in the incentivized model can go a long way in achieving success.
When considering warehouse labor outsourcing, trust a company that has plenty of industry experience and provides a range of custom solutions. Costa Solutions has state-of-the-art warehousing technology that can address any need associated with inbound, outbound, warehouse, and production services.