How to Contain Employee Supply Chain Costs Through Effective Leadership

Supply chain and logistics intensive industries multiply the inherent challenge of engaging and motivating employees to successfully contain costs.

Employee Engagement Lowers Supply Chain Costs

Throughout the years, I’ve discovered that money compensation is often the least important employee motivator.

Respect, quality communication, and employee engagement are crucial factors in keeping your employees connected and productive. Companies who add occasional appreciation lunches or dinners, a few gifts, or a CEO speech give only sparse doses of necessary motivation. Real, long-term engagement only happens with tangible, visible changes that an employee can see every day on the job. Just by increasing leadership effectiveness to engage employees, you’ll succeed in achieving measurable logistics cost containment.

Over many years in the industry, I have found 3 main types of employees, all of whom need different understanding as a manager. It is good business to utilize your talent effectively for by doing so, you will reap loyalty and lower costs at the same time by simply treating employees well by respecting them and providing effective communication. Of the typical work force, these are the three main categories I’ve found as a manager:

  1. Employees with good potential. These employees need respect, occasional discipline and regular motivation to improve their performance (not self-driven – rewards-driven).  Treated and managed well, these employees will produce good results and reach set goals. The key is to always communicate respect for what results they accomplish for your organization.
  2. Employees with lower potential.  These employees will thrive only in routine areas which are best suited to them and those in which they are capable of doing their best, even if monotonous, work. Assign them to ‘boring’ jobs that are more routine and automated or your cost of operations will go up. Invest the least development time to this group and succeed by simply matching them to the best placement for their realistic abilities.  These employees need your due respect for their maintaining and completing the jobs your good and top potential employees would find tedious.
  3. Employees with top potential. This group of workers are self-directed and passionate about what they do and are the very best to have on your team ­– they are productive, effective and efficient, taking pride in a job well done. They provide solutions by challenging your thinking and asking questions. Capable of handling any challenge, they must form the core group and there is no harm if other employees see it that way, as they will also recognize the strengths of this core group. Capable of bringing efficiencies and effectiveness to your operations, these are the people who will make you successful. They will always be short in supply, so make it clear you value them so you don’t lose them and don’t bring their motivation down. They need the freedom to have differences of opinion and should be handled with care so you don’t lose them to another firm. These workers are self-motivated, but if you fail to communicate well or don’t respect their contributions, they will lose that motivation. If not motivated, they become completely ineffective and begin to feel betrayed. They must always be present in all major activities, all major projects and decision-making. The doors must always be open for them. They always need total respect for what they contribute and success that they bring to your organization.


Bottom Line for Engaged Employees to Achieve Supply Chain Cost Containment:

  1. Under all circumstances, respect all employees irrespective of race or gender, all need respect for different reasons. When you disrespect your employees and your culture gets away from you, your overall mission and bottom line will suffer.
  2. Once you lose the motivation and trust of your staff, it will take a major effort and lots of time investment to restore goodwill in the ranks. Meanwhile, you will take major hits like employee turnover and customer churn – all which puts an undue burden on your business and increases logistics costs.
  3. After losing valuable staff loyalty, efficiency and profits, it is very difficult and a major investment to attempt a recovery of that loyalty and desired cost containments.
  4. The Type 3 employee is an essential type. Don’t fear to work with this type of employee because of the challenges inherent in working with them such as improvements and change requests to your methods and protocols. Manage them effectively, treat them well and they will provide the desirable results you need for better supply chain cost containment.
  5. Type 1 is also an important employee. It is OK to have someone that is reliable and does what the job specifies. Consistency is a HUGE factor in achieving supply chain cost containment.
  6. Employee Type 2 will need careful placement. This type normally forms a large pool of your employees. Since this group is capable of making major negative contributions, it is vital to regularly reinforce the company mission and create a culture where they feel heard. Otherwise, they can cause undesirable harm to your organization and profit goals.

A 19% study by Towers Perrin, shows an improved bottom line through an engaged employee thus is critical to success.

Have you experienced benefits through employee engagement? Was it vital to controlling supply chain costs within your organization? Comment below:


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