One of North America’s biggest logistics companies needed to reduce costs created by excessive damage in one of its large distribution centers.
The company asked the Jim Shaffer Group to assess the amount and root causes of the current damage and develop and implement a strategy to reduce damage while not adversely affecting productivity.
The Discovery and Solution
We conducted interviews and focus groups with leaders, supervisors and individual contributors. We analyzed the center’s systems and processes, including what was measured, rewarded, recognized and communicated formally and informally.
Although the center’s leaders said quality was important, the various systems communicated that productivity—moving product in and out of the center– was more important than quality. For instance, leaders’ goals and pay emphasized productivity at the expense of quality. Recognition was focused on productivity, not quality. Work processes that required product to be moved more times than was necessary and inadequate forklift driver training communicated that quality was not a priority.
We helped the center’s leaders to create and implement a strategy to reduce damage by emphasizing that safety, quality and productivity were of equal importance. Working with several high involvement employee teams, we re-aligned work processes, measurement systems, rewards, recognition and training in a way that communicated that safety, quality and productivity were of equal importance.
In five months, damage decreased 65 percent. To the leaders’ surprise, productivity during this period went up 16 percent. This was because we didn’t take this on as a damage reduction initiative. Rather it was an effort to improve performance overall.