An independent survey on incentive pay conducted by Boston's ARC Advisory Group revealed that 76% of over 200 respondents had achieved productivity gains in their warehouses and distribution centres of at least 10%, with 13% of respondents indicating gains of over 30%.
The report also found incentive pay programs led to other benefits such as increased employee satisfaction and retention.
The report indicated that RedPrairie is the market leader in providing Labour Management built on granular labour standards. ARC's findings showed that such systems support the most effective incentive pay programs.
Steve Banker, Director of Supply Chain Research for ARC and author of the report, says the programs that made the greatest gains in productivity achieved their results by setting individual incentive targets based on granular labour standards, and by linking payment of incentives to maintenance of predefined levels for quality and safety.
The study was conducted by e-mailing a survey to hundreds of North American companies across a wide range of industries. Respondents were asked whether they currently used incentive programs in their distribution operations, and if so, were asked a series of questions on their incentive program practices and results.
Those who indicated they did not use incentive programs were asked to indicate why they did not, and what their expectations were if they did employ such programs in the future.
Banker is not surprised by the results of this study. In a previous study of Labour Management Systems based on granular labour standards, ARC found on average these solutions had a payback period of less than one year.
The previous ARC study found Labour Management Systems were a prerequisite for deploying granular labour standards, and that RedPrairie was the leader in this category. The current ARC report on incentive pay reiterates RedPrairie's market leadership.
John Jazwiec, RedPrairie Company Leader, believes that succeeding in today's consumer-driven supply networks requires agility in distribution processes and technology unheard of just a few years ago. He says companies must be able to respond immediately to customer demand by profitably scheduling and allocating the right resources (people, products and equipment) in the right place at the right time.
He says the combined strategic and tactical labour demand planning capabilities in RedPrairie's DLx Labour 2006.1 release ensure workforce utilisation is both demand-agile and optimised.