Incentive structure of employees in supply chain industry or logistics industry?

Hi all, can anyone share with me the incentive structure for employees in the supply chain industry or logistics industry? It's very urgent.

Thank you.

Dear Pawan,

I really don't know what you are seeking. However, for any SCM or Logistics professional, the following are some of the KPI-based targets that can be considered for paying incentives:

1. Transportation Cost
2. Order Fill Rate
3. Logistic & warehousing Cost
4. Delivery Time
5. Value of Slow-moving

The KPIs vary from industry to industry. Hope it helps.

Regards,
Rahul Chhabra

Dear Pavan,

This is in addition to what Mr. Rahul Chhabra has said. Incentives are always based on the attainment of the given targets. These targets could be either costs or ratios associated with the business. However, merely assigning these costs or ratios to the HODs is not adequate. We need to have a mechanism to measure these scientifically as well. Do you have such a mechanism? Otherwise, flawed measurement will do more damage than good.

Thanks,

Dinesh Divekar

Dear Rahul Ji,

I need a sample incentive structure for the marketing and sales department in the logistics industry based on KPIs. Can you help me in providing that?

Dear Pavan Ji,

You need to devise the incentive structure based on the company goals you have set for the year. Company goals can be further broken down to set departmental or individual/role goals.

I suggest you learn and use the MBO (Management by Objective) system. The MBO system uses quantified goals to calculate the performance-linked incentive payout. Each objective is range-bound with a weightage. You can maintain a 30:70 ratio for company goals to role goals. Company goals could be measured in EBITDA, Customer Satisfaction Index, Cash Flow, order book value, etc. Role goals for sales staff could include Net Sales, credit days, etc. Role goals for Marketing should be aligned with the goals assigned to sales employees, and a few examples include the number of campaigns, product development, net sales, cost of POP material, etc.

That's all I can suggest. Hope it helps.

Regards,
Rahul Chhabra