Construction is among the least digitized sectors in the world, McKinsey & Company reports. If your business wants to take a bigger leap towards digital transformation, the next step is to end redundant data entry, automate repetitive processes, and replace paper with electronic transactions.
But where do you start? Coordinating work across departments such as finance, human resources, marketing, etc. can easily result in a mix-up of priorities, in addition to potential loss of time and money.
Here’s a look at the why, who, where, what, and how tracking productivity is essential to streamlining your building supplies business.
Why track productivity?
You might think the answer to this question is obvious. To improve productivity, of course! Since the definition of productivity varies from role to role, with different skill sets, training levels, and location of the employee, improving productivity may not be so easy.
The two key objectives of the initial stage of tracking productivity should be:
- Highlight process differences. As employees in similar roles compare their productivity numbers, you’ll hear the reasons for some of the differences. Nancy circumvents a slow double-check. Bill goes faster but makes more mistakes that need to be corrected downstream. Or perhaps your branches have responded differently to social distancing restrictions of movement between warehouse locations: Branch A uses experienced loaders to pick and pack a full load, whereas Branch B asks less experienced staff to pick by location and stage small packs that are then banded and loaded by an experienced loader. This is a golden opportunity to understand which process is faster and a more cost-effective use of personnel!
- Address obstacles and inefficiencies. Why does Nancy circumvent a step? Is she lacking training or equipment for that step? What can Bill and others learn about downstream impacts? Just ask. Your staff will have long lists of things that they believe are a waste of their time or slow them down from doing their jobs better and faster. The key to having employees be forthcoming with their admissions to process differences is not to judge. The purpose is to understand who is doing what, and which process is more efficient.
“Comparing between staff in similar roles is used as a way to start a conversation,” say Graham Rigby, Sales Director for BisTrack at Epicor. “To ask questions about why one person is more productive than others, and to spot opportunities for additional training or ways for processes to become more lean.”
Whose productivity should you track?
The best way to improve productivity is to track it.
As Harvard Business Review defines it, productivity is about doing more with the same. From the CEO all the way down to warehouse staff, everybody should be aware of how their work performance impacts the company.
The best way to improve productivity is to track it. Everybody should have key performance metrics (KPIs) by which they’re measured and set goals to improve those KPIs. Metrics such as construction time and cost, documenting change orders, and updating project schedules are used to measure and determine performance improvements.
In a webinar aired by LBM Journal titled, “Are you tracking the productivity of your remote team members?” speaker Shane Soule comments, “These [metrics] create a great opportunity to recognize your superstars and give lesser performers clarity around your expectations and best practices. See how training your staff and tracking their performance empowers them to focus on the tasks at hand.
Where can productivity be tracked?
With the variety of data and technologies available today, productivity can be tracked in the office, with remote staff and those working from home, in the yard, and in the warehouse.
“Time is precious,” says Bob Sanford, president at Sanford & Hawley, Inc. “Getting answers quickly is very important to our customers.” Whether it’s online, over the phone, or in the yard, fulfilling customer orders is key to an empowered and productive team.
Increasing productivity in one area frequently gives a productivity boost in another area because they often go hand-in-hand with improved accuracy and data exchange among departments.
What outcomes can you expect?
The outcomes of tracking productivity fall into three categories:
- Reduced wasted time. Reduced waste can come from automating repetitive tasks and other low-value activities. Any basic business system will take care of many of these opportunities. However, the more advanced enterprise resource planning (ERP) systems designed specifically for LBM dealers need to be controlled to reduce the wasted time and effort that comes from cross-functional activities. Sears Trostel Lumber and Millwork uses a data system to monitor stock shortages and delivery times, which helped decrease preparation for purchase orders from 2 hours to about 15 or 20 minutes.
- Improved efficiency. Efficiency improvements will be greater if the system design is more aligned to the way your organization conducts business. Townsend Building Supply has increased productivity numbers through a system that analyzes inventory management. As a result, they’re able to successfully oversee and complete 22 deliveries daily with 12 trucks, drivers, forklifts, and equipment. For LBM dealers with a mix of professional and retail customers, an ERP system may need to include capabilities such as support for multiple sales channels, complex orders types, loyalty and rebate programs, choice of delivery or pickup, and a wide variety of payment methods.
- Engaged employees. When productivity tracking is fair, unbiased, non-judgemental, well-intentioned, and useful, employees will work as a team to improve productivity numbers across the company. You’ll start hearing suggestions about how to streamline processes, eliminate wasteful activities, and help improve everything from the work environment to profits to customer service. HPM Building Supply's automation system has eliminated manual processing and saves employees up to 8 hours a week on invoice entry. With the extra time saved, their accounts payable team is more active and present on key business decisions and projects.
How to measure productivity?
Every effort should be made to reduce the number of errors in receipts, picking, shipments, etc.
Productivity can be measured by either output or efficiency metrics. Output metrics are typically your corporate level financial and operational goals related to revenue, margin, profits, etc. Efficiency is a measure of productivity in a given timeframe—how long it takes you to achieve something.
You can easily imagine tracking efficiency improvements of specific tasks, such as entering orders (lines per hour), picking orders (items or pounds per hour), or delivering orders (miles driven per day). However, comparing the metrics of these varying and different tasks can be difficult.
In addition to tracking the output—i.e. inventory accuracy percentage—a warehouse manager should track the efficiency and output KPIs for each critical task involved in ensuring accurate inventory. Every effort should be made to reduce the number of errors in receipts, picking, shipments, etc. This will lessen the need for wasted effort to perform physical counts, track down the error, and resolve shipment errors. To improve productivity, the efficiency of these tasks should be tracked. For example, how many receipts are made each hour or how many items or pounds of product does each warehouse worker pick in a shift.
If this sounds like a lot of work, rest assured it doesn’t have to be. Using measurable data with a good ERP system gains you visibility to track business performance and improve productivity. As digital processes advance, it’s important for your business to include relevant software technology in your day-to-day tasks. This will make it easier to set clear priorities for your employees and give you more insight into your customers.
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