1. Compensation and Capital Investments – Priorities, Measures and Successes
Executive Seminar
September, 2005

2. Investments and Compensation
Foundation questions for the supply chain investments and compensation discussion …
Are all appropriate supply chain capital investments being funded? If not, why not?
What are the criteria for an appropriate investment?
How competitive is the market for top supply chain executives and staff? How do you attract the best?
How effective are financial incentives in driving supply chain performance?
Which incentives are the most effective? Which incentives are the least effective?

3. Supply Chain Investment
Where are capital investments being made in the supply chain?
What area has the biggest payback?
What comparisons provide the best indication that adequate funds are being invested.
Is “recapitalization rate” a good rule of thumb in assessing investment levels. What top level reasonableness checks do you use?

4. Investment Criteria
What explicit and implicit criteria do you use in assessing supply chain investments? How do you ensure you get the capital you need to excel in your mission?

5. Investment Hurdle Rates
What is an adequate return for a supply chain investment?
Do high hurdle rates prevent adequate investment?
Do rates adequately consider project risk (i.e. are they too low)?

6. Compensation
How do you determine competitive compensation levels? How important is compensation in attracting and retaining the right team?

7. Effectiveness of Incentive Programs
Which incentives are the most effective in driving supply chain performance?
What is the right mix of team and individual incentives?
If you had complete flexibility to change incentives, what would you do differently?

8. Incentive Compensation
Where is the emphasis on incentives today? Do current programs maximize the potential to reward performance?
Note: The entries in the table represent the average of incentive percentages where an incentive is used (i.e. not an average incentive profile).

9. Turnover
Turnover impacts hiring costs, training, productivity, order fulfillment accuracy and lost time incidents.

10. Reducing Turnover
What strategies are the most effective in reducing turnover?

11. Workforce Issues
How do issues in the general workforce impact an operation’s ability to hire and retain the best people?

12. Investments and Compensation - Learnings
Company growth and customer service are as important as absolute returns in assessing new capital investments.
Corporate profit is widely used as an incentive, but can it drive performance at all levels of the organization?
Are the strategies for reducing turnover emphasizing the right issues?

13. Questions?