Measuring Your Employee’s Performance
The following is from a recently received email sent to Curt Barry…
Dear Curt -
We met briefly at the NCOF conference in Vegas, and I wanted to reach out to you regarding performance errors. I was hoping you could provide me with some insight into how other 3 PL fulfillment companies manage employee errors. Currently, we don’t have a strong policy in place to deal with these issues.
Some questions that arise in my mind are:
1. How many mistakes is too many?
2. Should the consequence be different in receiving than picking or packing?
3. If there is a larger mistake that causes our company should there be a more severe consequence?
I understand that everyone makes mistakes and I would like to allow for learning and coaching, but I also want to make sure that our employees have a formalized consequence to ongoing errors, and they know what to expect. If you have any feedback on this I would really appreciate it. Or, if you know any warehouse managers I could speak with to get ideas on what they do that would be great!
Thank you so much for your time!
Sharon, VP of Client Services, 3PL Company
Dear Sharon -
In my opinion, there are a couple levels of issues:
- Weekly productivity reporting by person through out the call center and fulfillment. Our clients display these by department and person on white boards, reports and monitors throughout the facilities.
- Contact center monitoring should be in place. There should be a form for evaluating the calls and a weighting system for the responses. What are your standards for monitoring experienced core employees versus new hires? Companies have developed coaching approaches to improve employees, get them to accept responsibility for improvement or a basis for asking them to leave the company.
- Personnel policy that deals with severe HR issues. These include theft, embezzlement, sexual harassment, etc. These should have clear documented policies which employees understand.
In terms of error rates, we would expect that controllable error rates would be only 0.5%. Meaning, 99.5% of all major transactions are error free. In bar coded systems it will be much higher.
In a speech a number of years ago when I made the statement about error rates of 0.5%, a national FedEx manager pointed out that meant 73,000 of their customers would not get their package on time in any given day. What is your management’s attitude about errors? And you are in a 3 PL service so what guarantees are you making to clients? Hope this helps. Call me if I can further explain.
Curt Barry
Hey, blog readers, what’s your company’s approach?
Related posts
BI systems across the enterprise
The most serious business information problem companies face is finding a “single version of the truth.” Many companies are installing best-of-breed systems for order management, fulfillment, call center, marketing, product information, inventory, finance and e-commerce.
Yet no one vendor in the marketplace today can provide more than two of the best-of-breed components needed. Even most ERP systems available to direct marketers don’t provide specialized direct, retail or warehouse management functions that are as good as best-of-breed.
Such systems have given companies access to the best system functionally for end users. But even when they are integrated with one another, you still have numerous - and differing - occurrences of key data and metrics.
The result of all these silos of information is that no one system provides more than 30% of the data needed by senior management; for larger companies it may be only 10% to 15%.
Related posts
“SORRY FOR THE DELAY - THANK YOU FOR WAITING”
I just had a pleasant experience with a back order from L.L. Bean. How can you have a good experience with something that’s been on backorder for 6 weeks? Well let me tell how.
First the background. On April 1st, I ordered 5 pairs of chino pants and 1 was on backorder. The CSR told me immediately that the color would not ship until May 15, six (6) weeks later! I liked the color and the price so I let it remain on backorder.
Well guess what? The 4 other pairs came in 2 days shipped for free on my L.L. Bean card and express delivery which is standard. And the back order arrived before May 15th much to my surprise-I’d forgotten it. Who hasn’t had nothing but disappoint with projecting back order dates arrivals?
But even as important, I found something of real interest printed on the backorder’s order/packing slip. On the line above the item was this message:
“SORRY FOR THE DELAY - THANK YOU FOR WAITING”
It struck me, how many times do we thank customer’s for their patience when we disappoint them? And better yet, how many times do we follow through with the promises we make on backorders? But then, that’s why I always use L.L. Bean as one of the standard bear’s for high customer service.
Related posts
From the Dark Side of Productivity
I’m with a firm that spends much of its time helping clients improve productivity and reduce costs. We are ever mindful of the negative side—the “dark side”—of productivity projects. What is the dark side? It’s what happens if we don’t take the human factor into account. As someone with 30 years of experience in industrial engineering, I can tell you that there is no way to achieve long-term success in a re-engineering project without considering the effect it will have on people.
Two articles in the Wall Street Journal serve as stark reminders of this reality. The first, “Retailers Reprogram Workers in Efficiency Push” (September 10, 2008) described installations of workforce management software at AnnTaylor Stores Corp. and other retailers. According to the article, workforce management systems are “sweeping the industry as retailers fight to improve productivity and cut payroll costs.” As the Journal noted, some workers aren’t happy about the trend, saying the systems leave them with shorter shifts, make it difficult to schedule their lives, and “unleash Darwinian forces on the sales floor that damage morale.”
The Ann Taylor system keeps track of the usual productivity metrics: average sales per hour, units sold, and dollars per transaction. The system schedules the most productive people during the busiest hours—and, because it awards more-productive salespeople with favorable hours, it gives employees an incentive to persuade shoppers to buy things. And it’s worked, as far as the overall economic goals are concerned; the chain’s director of store operations said it has helped turn more store browsers into buyers. But, as the WSJ story made clear, it also resulted in the loss of some veteran salespeople who had developed long-term relationships with customers. By focusing strictly on the metrics that could be easily measured, the system actually penalized associates whose selling style depended on longer interactions with the customer—even though such relationships often assured continued customer loyalty. Others found their hours cut back to the point where they could no longer afford to make the trip to work. During busy times, the formerly congenial staff began competing for customers, sometimes stealing them away from one another. While productivity was, indeed, increased, perhaps the most surprising unintended result of the system was that this story, with all its unflattering aspects, was splashed across Page A1 of The Wall Street Journal.
Related posts
Managing Customer Call Center Costs in an Uncertain Economy
Today’s call center mantra is, “Do more with what you have.” In this uncertain economy there is even more pressure to perform miracles by increasing productivity while lowering costs, yet still continuing to provide expected customer service levels. In our consulting engagements with direct call centers and through our F. Curtis Barry & Company Best Practice ShareGroups, we’ve been able to observe the latest call center trends and how managers are dealing with them. Here are some of the major issues that direct customer call centers face, as they examine their costs and try to reduce them without major disruptions to customer service.
Higher Labor and Benefit Costs
There has been a tremendous acceleration in hourly labor rates over the past five years. In addition, our industry is in competition with call center jobs in banks and other financial services, which often pay more and have stronger benefits. As recently as 2003, many of our clients had average pay rates in the $7.50 to $9.00 range, with benefits adding 15% to 20%. Today those same clients are paying an average of $10.50 to $13.00 per hour. Some of those in urban areas are faced with $16.00 to $17.00 per hour, with added benefits in the 25%-30% range. However, there are still fortunate direct call centers with labor rates of $7.50 to $9.00 in smaller cities and rural areas.
Related posts
Top Ways to Cut Costs and Improve Customer Satisfaction
Every smart business manager is constantly looking for ways to reduce costs and make the operation more productive. In today’s challenging economic climate, such efforts become even more crucial. Small steps that can help to save money may make a big difference. Our experience in the fulfillment and call center has been that often the same process improvements used to reduce costs also result in better service—and greater customer satisfaction. These are some of our top tips in four of the key areas.
Related posts
Outsourcing to Save Call Center Costs
Having managed a call center, I have always been a proponent of in-house call centers, but times are tough and they are changing. Every company today is looking for ways to save money without hurting sales and customer service. As the pressure on businesses to dramatically reduce costs intensifies, you need to look at domestic or off-shore outsourcing of some or all call center and data entry functions as a way to improve your bottom line. Companies are also outsourcing these functions more because they can avoid using capital for new order management and telephone systems.
Recently, one of our clients outsourced 300,000 phone calls off shore, resulting in a substantial reduction in costs. How substantial? This client’s fully loaded internal cost per minute was $0.72, while a fully loaded off-shore cost per minute for this client is $0.42—and most of the customer service remains in house. Additionally, the client’s 90,000 mail/fax orders cost only $0.15 per order: scanned, transmitted to Asia, keyed overnight and available on-line for picking and customer service the next morning.
Clearly, you need to look at the potential savings of offshore outsourcing. How should you approach doing this type of study?
Know your internal costs. In order to compare your internal costs to outsourcing, you need to identify your fully loaded internal costs. “Fully loaded” includes direct and indirect labor, occupancy and telecom costs. This needs to be converted to a cost-per-minute basis, which is how outsourcing will generally be proposed and invoiced. You may say that you can’t control occupancy costs, however, there may be other uses for that space, if call center is outsourced.
Competitively bid out to multiple vendors. It goes without saying that you need to competitively bid the potential project to a short list of qualified bidders. This is the only way to get the lowest costs.
Formalize an ROI (Request For Proposal). This should include:
- A pro forma for your business, meaning the types and volumes of transactions (actual and multi-year forward projections)
- Required services
- Service level standards for total call length, abandonment rate, and average call service level standards
- Request references and boilerplate contract
- Details about order management systems needed, systems integrations including e-commerce site, etc.
Decide what to keep in house. In my opinion, you should keep your custom service internal. This gives you a way to monitor the service levels of the outsource company.
Ask other critical questions. Among the things you’ll want to know:
- How will training be conducted about your product(s) and company policies?
- Is the provider PCI credit compliant and certified?
- How will you monitor your customers’ calls?
- Who are the company’s references? Come up with standardized questions to ask each of the references so you can compare their responses.
Domestic outsourcing has some advantages over off shore. Here are a few that I think are important:
- There may be an advantage in the area of English speech. However, I am greatly impressed with how well the Philippines has performed for some of our clients.
- Shorter travel distance means you can visit centers more often.
- Understands US culture.
- Keeps jobs in the USA. This may or may not be as much of a factor for you.
Of course, domestic outsource providers’ costs will be higher than off shore, but that is not necessarily a dead end. We have one client, a major non-profit with a high average order, that outsourced 100% of its direct orders domestically while keeping customer service in house. They were able to successfully renegotiate with their domestic outsource provider so that the costs were not so widely different.
Tocky Lawrence is Vice President of F. Curtis Barry & Company, a multichannel operations and fulfillment consulting firm with expertise in multichannel systems, warehouse, call center, inventory, and benchmarking; Learn more online at www.fcbco.com.
Related posts
How Will You Provide Your CEO’s Favorite Reports?
You have just spent four months doing your homework to replace your aging call center and order management system: gathering user requirements, writing an RFP, getting capable vendors to bid on it, conducting demos and selecting the finalist. Yet there is one more activity that, if not done superbly, will shake management’s confidence that replacement of the old system will go smoothly. If you haven’t adequately studied how management at every level—from CEO to department managers—will get the information they’re used to having in order to run the business on an online, daily, weekly, monthly and year-end basis, your credibility could be in trouble. Even when business analysts feel they have done an adequate job of determining user requirements, this area frequently gets cut short. There are a variety of reasons:
- In requirements and demos, users often spend too little time reviewing the entire system. Some feel they can do it in half a day. In reality, it is a two-day task—and even then you run the risk of not seeing everything.
- Vendors have stopped developing reports—yes, that’s right: no reports. “But we have online displays of data!” software vendors and less experienced users will say. Of course, when you go live with the new system, users line up at your door and want to know, “Where are those 10 important reports I had in the old system?”
- Then there’s the fact that management, while sponsoring the systems replacement effort, takes little time to see whether their most important data is in the system or find out how they will get it from the new system. The biggest area of systems deficiency is in the lack of plans and historical data. Many order management systems have been developed without history by product, category, list segment, total business by year, or any other criteria. Management therefore has adapted with its own spreadsheets and Access systems. How will they get the information in the formats they will need?
- Software vendors convince the users that they can develop the reports they need with Crystal Reports, a query language or a data warehouse tool the vendor has included in the purchase agreement. But here’s the problem: Do you know how many and which reports will need to be replaced, or how much effort this will take? Our experience in implementing order management and warehouse management systems is that there are literally hundreds of reports that have to be replicated in order to be comparable. Just this week, in working with a client we discovered there were over 200 key reports that would have to be replaced in some form.
Think about some of the reporting needs of various departments:
- How will Merchants get their merchandise performance reports? Do they require history? Plans? Vendor analysis? Category trending? Contribution to profit?
- Does your Marketing department require source code statistics? Do they need figures by channel performance in terms of demand, average order, etc.? How about conversion rates for first time to multi-buyers? Reactivation of inactive customer accounts? What about history and plans?
- Is there productivity analysis required for the Call Center? What about customer compliance and inquiry reporting from customer files?
- What data do you need to provide Fulfillment with reports about picker and packer productivity? How will they feed their departmental productivity and cost systems, which may be manual or spreadsheets?
You get the picture. Here’s what you need to do: Be proactive in soliciting specifics on what analysis is required. Collect the requirements and determine where each analysis will come from in the new system. Get users to sign off on the new system, confirming that it meets their needs. Cost out the time and effort required to provide all of this and make it a key ingredient in your system conversion work plan. I think you’ll find that reporting is an area of systems requirements on which many don’t spend enough time before going live.
Brian Barry is a Senior Consultant with F. Curtis Barry & Company, a multichannel operations and fulfillment consulting firm with expertise in multichannel systems, warehouse, call center, inventory, and benchmarking; Learn more online at www.fcbco.com.
Related posts
Best Practices in Multichannel Operations & Fulfillment - Our New Book
Best Practices in Multichannel Operations & Fulfillment is now available. This guide to multichannel best practices was derived from our 24 years of experience with hundreds of catalog, eCommerce and retail companies.
Our team understands the issues and challenges facing multichannel businesses and provides insight on the following topics:
- Business Management - including “Developing Your Corporate Dashboard Of Key Performance Metrics”
- Contact Centers & Call Centers - including “Managing Your Cost Per Call”
- Forecasting & Inventory Management - including “10 Ways To Improve Vendor Quality Control”
- Direct Commerce Systems - including “How to Select Any Business System: Four Steps To Take Now”
- Warehouse & Distribution -including “Rising Transportation Costs – And What To Do About Them”
With over 45 articles filled with data, results and in-the-trenches experience, we compiled this information to provide a how-to and best practices resource to our clients and others in the industry. The articles in this book reflect the type of in-depth knowledge that a consulting firm with 250+ published articles in US and European trade publications should have - the type of knowledge and experience that F. Curtis Barry & Company brings to every client engagement. Each article was reviewed by our team and edited with timely updates.
Best Practices in Multichannel Operations & Fulfillment provides quick tips and thoughtful answers to companies working to increase their profitability, improve efficiency & productivity and reduce costs.
To order visit: http://www.fcbco.com/book.asp.
Related posts
Balancing Your Budget and Investment: When is the Right Time to Outsource?
Many multichannel merchants focus on how they can lower operating costs when they consider outsourcing certain tasks. But when you outsource operations, you also outsource the investment. Sounds obvious, but maybe the magnitude isn’t all that clear until you’re faced with replacing an order-management system, moving into a new fulfillment space or upgrading your website.
When outsourcing your investment, you don’t have to invest in those upgrades as your business grows and changes. Let’s look at some examples that show the size of these investments.
* Order-management systems. Software as a service (SaaS) can free up a potential investment of $25,000 for an emerging company. If you’re a $500 million company — with several hundred users adopting a SaaS model — it eliminates an $8 million to $10 million investment. For a $20 million cataloger, the spend runs $280,000 to $400,000 to license and buy hardware. Then you implement an order management system with call center and warehousing functions.
* Specialized forecasting and inventory management system (working in conjunction with your fulfillment system). Here, investment and implementation costs for a 10-user system will cost, on the low end, $150,000. Larger companies invest several million dollars.
* Replacing an e-commerce site. SaaS business models can eliminate an investment of $750,000 to $1.2 million for a multichannel cataloger with sales in excess of $100 million. With the e-commerce that growing companies experience, there’s also often a need for an e-mail management or chat-system investment.
* Call-center operations. Outsourcing eliminates investment in the required space, telecom terminals, headsets, ACD, scheduling software, call-monitoring hardware and software, e-mail management, chat systems, etc.
* Fulfillment center. You avoid investing in the construction and/or build-out costs, as well as the racking, conveyors, material handling, warehouse management systems, shipping systems, furniture and fixtures. Plus, you avoid a long-term lease.
It should be pointed out that when looking at these investments on a five- to seven-year basis, many would have been amortized and depreciated over that time. But many companies are struggling to make the initial and ongoing investments because of the competition for financial resources.
Here are some of the questions you need to answer as you look at outsourcing and the business investment:
- Are you keeping pace with investment in the infrastructure required?
- What alternatives for capital use does your business have rather than investing in physical assets?
- Does the outsource provider have the finances to grow and expand? What’s its track record of doing this for clients?
- How will those costs be passed onto your business as it grows and changes?
- Can a major activity be outsourced and not result in a total loss of control (e.g., call-center overflow, peaks and weekends)?
- Which provider best understands your category of product (e.g., apparel with its high SKU storage needs, returns, etc.) and mode of operation (e.g., e-commerce, catalog management systems, etc.)?
- Which provider will be the best long-term partner?
- How vulnerable will this leave you if the provider’s performance isn’t up to par?
- If you wish to sell your business and don’t own major assets, does this help you (the prospective owners aren’t paying for assets) or hurt you (you may need to remain operationally independent of the other businesses a prospective owner has invested in)?
The Issue of Control
So why isn’t outsourcing more commonplace? Most managers want to control their own destiny. Outsourcing means giving up some control.
Also in certain cases, the outsource industry providers have a less than stellar record of long-term, reliable and cost-effective service. Many, including myself, believe that SaaS business models will change much of this. I’ve also seen many companies successfully use both domestic and offshore call-center facilities. We’ve had one client outsource all call-center and fulfillment operations for its $25 million apparel catalog and e-commerce business since 1988.