Action taken over the last three years fundamentally changed a PDC (parts distribution centre) of a South African company from an “I” to “we” facility.
It is generally thought that a typical unionised South African workforce won’t accept flexible work arrangements and achieves relatively poor productivity. But these notions are being decisively disproved at the PDC, partly because of the implementation of the Legitimate Leadership Model in the form of the Care and Growth Leadership programme and the Grow to Care programme.
The PDC site is divided between warehouse and administrative staff.
A new national distribution/warehouse manager of the PDC joined the business in June 2013. He has spent his entire career in warehousing.
When he took over, the warehouse had 36 employees and performance was generally poor. For instance, airfreight was being turned around in 48 hours; stock orders took 12 days; stock count also took 12 days; and the PDC had two months’ worth of back orders. In the new warehouse manager’s words, “The warehouse was a great challenge with great opportunity.”
The warehouse manager told his boss, the parts operations director, that focus was needed on the warehouse’s core function, namely picking and receiving. Within those six months, non-core functions, packing and dispatching, had been identified for outsourcing to a logistics company.
Considerable preparation was done in the six months for the warehouse manager’s first (December 2013) stock count, which took five days.
In the six months, the warehouse manager’s biggest move was to introduce five aspects into the facility: Receiving; Airfreight; Binning; Stock Management/Stock Loss; Picking; and Pick Quantity.
He also identified that five supervisors were needed to run each of these five aspects.
Before that, although there were two supervisors, the warehouse was essentially in the hands of “me (the manager) and the workers en masse … Also, there were a lot of wrong people in wrong positions,” according to the warehouse manager.
The five supervisors included the two pre-existing supervisors. The other three were promoted from the ranks – two pickers and one binner. The five’s titles were: Receiving Specialist; Binning Specialist;
Airfreight Specialist; Stock Management Specialist; and Picking Specialist.
The warehouse manager introduced KPIs (key performance indicators) for each of these aspects. But simultaneously he made them all understand the pipeline which linked each one – called “lean-on management” and “value chain logistics”. “They were flabbergasted as to how important one was to the other,” he says.
Related to this, he also introduced the concept that the teams should not only be aiming to just do their jobs; they should be aiming to give their internal and external customers 110% or more. And that meant all of them – because they were all interdependent.
“Slowly they realised ‘you are just as important as I am’, and they started linking themselves, although there was still a lot of individualism.”
The warehouse manager also instituted constant measuring of performance and productivity.
Pay incentives were linked to performance. The warehouse manager made each of the five supervisors responsible for the others’ KPIs.
If they reach the KPIs, they are paid normally; if they exceed them, they receive extra incentives, but only to the degree to which the weakest of them performed – “we all miss until we all hit.”
If a supervisor goes on leave, the leave form is signed by the other four supervisors who stand in for him. No leave is processed by senior management.
The warehouse had a particular problem with attendance and timekeeping. So the incentives were divided 50% for time and attendance (which had, by July 2016, risen to around 97%); and 50% to achievement of KPIs. “Although by law I cannot be flexible with their basic pay, I can structure the incentives as I like!”
“I started filtering the team effect into the staff. So, among the staff, I swapped people around. This diversified ability and allowed me to stress-test the facility. It also allowed me to see more clearly what minimum staff complement was needed to run the facility.
“This changing of roles was generally welcomed because many people had been doing the same jobs for years. It represented some possibility for growth and promotion.”
From the start in June 2013, the warehouse manager had a good idea of who were weak performers and troublemakers in the staff. Particularly with KPIs being applied, it was possible to start pushing those non-performers out. Many of them were dismissed for misdemeanors.
In one case the warehouse manager contravened a rule and issued himself with a written warning – pointing out that the rules apply to everyone.
Eventually, the total distribution workforce fell to 26 people, after which some additional, carefully-picked people were recruited.
There was no resistance from the rest of the workforce to these dismissals and job flexibility exercises, even though the workforce is unionised.
“To consolidate the multi-tasking of the employees, I needed to make their titles more general. Titles like pickers and binners were abolished – they are now either general workers (staff) or warehouse specialists (supervisors), though these names are currently being reviewed.
“We kept measuring everything and the workforce began to comprehend why this was being done.”
“In November 2015, the issue arose that despite all that had been done, ‘how do we get these people to give a damn, to care about coming to work, to realise their impact on the facility?’
“I was a participant in the Care and Growth Leadership programme (which had recently been introduced in the overall company) and had been relaying what I had been learning about care and growth leadership to the supervisors. We were now a close-knit team handling R4-R5million (about $350,000) worth of stock per day, with tough KPIs. However none of the supervisors or staff had undergone any direct care and growth training.
“One supervisor kept on ‘getting out of his seat’ – in other words, going to do the task for his subordinates. No amount of remonstrating with him could break the habit. I literally stapled his pants to his seat so that he had to watch the game rather than play it. He now goes home at 4:30 PM, compared with 6:30 PM previously.
“But generally, the staff were still ‘in it for me’. That’s what prompted me and the supervisors to think about Grow to Care.
“It was resolved that we would do a sample, pilot half-day Grow to Care training with a few people from administration, supervisors, pickers and packers. The training was done by Nothemba Mxenge of Legitimate Leadership.
“The feedback was tremendously enthusiastic – for the whole process. One woman took the manual into the administration department and started teaching them. The enthusiasm even reached head office.
“It was then decided to roll out Grow to Care to everyone on site – 60 people (30 in the warehouse and 30 in administration), over three days in early 2016. The three groups were deliberately integrated between distribution and the warehouse so they could meet each other and appreciate their different roles.
“According to Nothemba, an almost unique feature was that the participants brought their own pens and didn’t ask for food!
“Since then there has been a notable change in attitude in the whole workforce. Attitude change is hard to measure but is unmistakable for any visitor to the warehouse.
“Grow to Care fundamentally isn’t about how we as the company can get more out of you. It is more, ‘this is for you, it is a gift to help you have a better life’. People’s response in terms of willingness and contribution has been a natural reaction to this.”
Since then, one of the supervisors has been recruited by another distribution operation within the group of companies, on the warehouse manager’s recommendation.
The warehouse manager has also split the facility between two senior supervisors:
A Stock Management/Perpetual Counts Senior Supervisor; and
A Receiving Picking Senior Supervisor.
Work is also being done on perfecting the counting system.
The warehouse manager says within six months, the new management will be independent of him except for measurement and accountability of the two senior supervisors.
“The supervisors now measure the staff members. I measure only the senior supervisors. I’ve handed over full staff responsibility, leave responsibility, KPI feedback and disciplinary to the supervisors.”
In June 2016, with the introduction of the new organogram, KPIs were increased.
The warehouse manager is confident that “I could at this stage put anyone anywhere and they would achieve the required KPIs”.
Also, the shop floor people are now coming up with “we” ideas. “They come to me with these ideas and say ‘would it be acceptable if we did this, in which case we would get X result?’ I say, “I don’t care how you do it … you decide.”
Everyone, including the warehouse manager, has grown, and space has been created for career advancement.
The parts operations director said recently that this was by far the best team he had ever had, particularly in terms of productivity and flexibility.
NOTE: All of the above was done in consultation, and in concert with, the parts operations director.
THE BOTTOM LINE
Changes to key results are best summarised by measurements drawn up by the warehouse manager himself, as follows:
COMMENT BY WENDY LAMBOURNE AND NOTHEMBA MXENGE OF LEGITIMATE LEADERSHIP: In our view, there have been two key shifts at the PDC:
Change in leadership from beating the unwilling into minimum compliance (before the advent of the new warehouse manager) toward care and growth leadership (benevolence in the heart but steel in the hand) by the new warehouse manager and, in time, his supervisors.
Change in the mentality of “I”/here to take, to “we”/team, both on the floor and more broadly in the distribution centre (warehouse plus administration).
Things done by leadership which aligned to the care and growth criteria of Legitimate Leadership: