Jeff Larson, vice president of marketing for the company, which is a master distributor of stainless steel and aluminum and which only sells through the steel service center and wholesale supply house industries, says the incentive programs are classified according to job descriptions: one for warehouse employees and another for sales representatives. From an outsider’s perspective, it might merely appear to be a way to get employees to do the job they’re supposed to be doing. In actuality, it’s created a heightened awareness among employees. It’s inspired them to work better, both individually and collectively.
"It brings a certain camaraderie to the workplace," Larson says. "You have to strive for perfection if you want to become excellent."
Ta Chen’s warehouse incentive program started in April 2008, and the employees’ paychecks haven’t been the same since. Their bonuses come from 100 percent error-free shipments. And since its inception, employees have exhibited an attention to detail that might not have existed prior--or at least not to the degree the company is experiencing today.
"Our branch in Los Angeles had two perfect months in a row, in June and July [of 2008]," says Larson. "And one of those months was our busiest of the year."
Each line item carries an equal monetary value that, like a change jar, adds up quickly. "We pay per ton and per line item," he says. "It doesn’t matter if it’s a little elbow part or a $40,000 piece of plate; it’s all treated the same. The smallest of items and the largest of items are equal in the eyes of the employees and are equal in terms of the incentive program."
Employees are motivated to keep a close eye on their own work, as well as monitor others’ work, because the dividends are dispersed according to everyone’s performance on shift. Error-free shipments can happen only if everyone is involved. Incentives are doubled when a warehouse exhibits a perfect month.
"All of the employees have been working smarter," says Juan Rocha, warehouse operations manager at Ta Chen’s Los Angeles facility. "They’re double-checking their work across the board. We have five departments at our Obispo warehouse: the round bar department, the tube department, the welded and seamless pipe department, the plate cut department and the fittings department, and since the initiative started, we’ve minimized mistakes in every area. And it doesn’t just happen on an individual basis. The employees are double-checking one another’s work."
The obvious benefactors of the program are the employees, but they aren’t alone in reaping the benefits. Customer satisfaction increases when orders are correct. And, naturally, perfect shipments are felt at the company level.
"Ta Chen material gets shipped all over," says Rocha. "Orders go into Canada and Mexico, and when orders are error-free, Ta Chen doesn’t pay extra money to rehandle an order. The company saves money in that sense, which goes right back into the incentive plan and the employees’ pockets that are producing the orders."
A few months before the warehouse program kicked off, Ta Chen investigated ways to promote the company’s Web site. At the time, Ta Chen was experiencing 60 percent of its sales through the Web but was aiming for 70 percent to 75 percent. Getting the salespeople on board with the initiative would be integral.
With the Web site, Ta Chen’s customers have a full inventory at their fingertips, as well as the current best price. The scenario benefits the sales representatives in the sense that once a customer has made an order, the next step is simply to take the time to call these customers, making sure that their needs and expectations were met.
Every time an existing customer generates an invoice online, the salesperson of that account cashes in, again on a line-item basis. And every time a salesperson directs a new customer to the Web site to place an order, as opposed to a phone order, a little bit extra goes to the salesperson’s paycheck. Despite having to kick old work habits, the switch to letting customers handle their orders online ultimately leads to an easier workload--and one that pays more.
"Basically, a customer goes to the Web site, looks for what he wants, places an order and it prints up automatically," says Larson. "All the salespeople have to do is look at an e-mail that says an order was placed and then put in a call to that customer and say, ‘Hey, thanks.’ And they get paid for that."
Adopting the new style of customer interaction wasn’t as difficult as one would have thought. Today, Ta Chen’s percentage of online orders outweighs over-the-phone sales 9 to 1. And when customers visit the Web site, they’re shown the extent of Ta Chen’s capabilities.
Pipe and fitting material doesn’t accurately describe all that Ta Chen can supply its customers. The company also provides flat-rolled products. It all comes to light when customers go to the Web site and discover the expansive inventory range.
In terms of bringing the extended product offerings to customers’ attention, Larson says there may be future employee incentive opportunities according to specific products Ta Chen may want to feature. A current example is aluminum. Although Ta Chen has always been known as a top supplier of stainless steel, the company is expanding its expertise to include aluminum.
"When you think about aluminum, it’s really everywhere," Larson says. "It’s a gigantic business, and it makes a lot of sense for us. We’ve captured a nice percentage of stainless steel, but we can certainly capture some of the aluminum business, as well. It’s the perfect companion product for Ta Chen's stainless business. Many service centers handle both products side-by-side, so to speak. Actually, aluminum flat-rolled has been a peripheral product line for Ta Chen for years. However, it was still able to generate approximately 5 percent of the company's sales tonnage even without much real focus on the line. In 2009, we brought the aluminum product to the forefront of our sales and marketing efforts. In the process of transitioning aluminum to become one of our key core product offerings, Ta Chen committed a large amount of investments--both inventory and personnel--to rapidly grow this line in the next couple of years. While we previously marketed sheets, tread bright and limited plate offerings, we’ve dramatically expanded the size ranges that we carry and brought in a full line of coil products."
Ta Chen expects to carry the most comprehensive line of aluminum flat-rolled products at the master distribution level and plans to inventory the material at all eight of its warehouses. With aluminum, the company will follow the same philosophies and discipline that made Ta Chen a respected and responsible player in the stainless market: transparent, consistent and logical pricing policies, dedication to service reliability and commitment to high inventory availability. And Ta Chen continues to build trust with its customers with a business model focused on integrity, striving to eliminate channel conflicts. Ta Chen’s goal is to support its customers’ businesses and not compete with them as Ta Chen doesn’t sell to end users.
Through focus and increased sales incentives, the company doubled its monthly historic sales of aluminum within two months, despite current economic conditions. The Ta Chen sales force is motivated to introduce their clientele to a widened aluminum product line that will be carried at all of Ta Chen's facilities.
The pride that comes from a job well done has everyone at Ta Chen enjoying the workday just a little bit more, and the extra padding that shows up on paychecks will keep them striving for more. MM