|
August 22, 2006 You Hire Employees To Make You Money Not Cost You In last week’s issue we explained how effectively implementing Food Designed Software can help take accurate measurements of your inventory so you can use reports to see how to more efficiently manage them. You can have the latest and greatest software in the world but if you have employees that don’t seem to care enough then nothing can save you from inaccuracy. Any manager can tell you, there are 3 major problems that happen from inaccurate inventory: · Wasted Time As we have said many times before Wasted Time = Wasted $$$. If sales people consistently have to go out to the warehouse and check inventory status then they can’t sell product. How do you think your customers will feel if they always have to wait on hold while the salesmen checks to see if the item is available? I have been in too many warehouses where the salesmen don’t know the inventory or worse yet don’t “trust” the computers figures. · Wasted Money If inventory is lost, broken, or stolen in your warehouse it has to be replaced. Replacing this inventory is a lot more expensive than people think. Let’s say that you have an employee that costs you $100 in inventory a month. Most people would just say you have to sell $100 worth of inventory. This is completely wrong. If you make 4% on every dollar sold you would have to sell $2,500 worth of product to make up that amount! $2,500 X 4% = $100 · Disappointed Customers & Diminished Trust When you don’t know what is in your inventory you run the risk of promising products to customers that you can not supply. Every time you do this there are disappointed customers and you loss their trust. Sooner or later you customers will loss all trust in you and will turn to someone else to get their product. As you can see and already know making sure that you have an accurate account of your inventory can make or break your business. Owners and upper management should already know the importance of accuracy (Because their paychecks depend on them) but the question comes how do you make your warehouse employees understand its importance? There are two common practices that managers use to try make their employees understand: · Their pay checks depends on inventory accuracy Make the employees understand that inventory accuracy is very important to the success of the business. The more accurate an inventory is the more money the company makes which in turn makes raises and other advantages more available to them. Also tell them the flip side, that if an inaccurate warehouse is held and products are continually lost, stolen, or broken then sooner or later their will not be enough money to pay your salaries · Provide economic incentives for maintaining an accurate inventory Incentive programs for the warehouse, implemented in a variety of ways, have resulted in striking gains in productivity. There is one report that says that 60% of the employees that were offered economic incentives raised their productivity by 10-30% over 2 years and 13% of those employees raised their productivity by over 30%. The best way to run an incentive program is in two phases. The first phase is to get all employees to work at a target level, this will be different for every business. The second phase is to reward people that go above and beyond that target standard. This seems like a very simple process and it is. The hardest part in this is trying to determine the best way to accurately track an employee’s performance. We have talked about incentives before, try getting the guy who does cycle counts “in charge” of the items in his cycle and bonus him for variance minimums for count against computer amount. This is very easy to do with the correct software. We will give you a model for this type of incentive next week. The More Efficient Your Employees Work The More Money You Save To Unsubscribe
to this newsletter please respond to email with "UNSUBSCRIBE" in the subject line.
|
|
