This viewpoint is a guest post created by Andy Yearout. Yearout is Vice President of Transportation and Logistics at Mohawk Industries, the largest flooring manufacturer in the world. A 30-year logistics industry veteran, Yearout is responsible for the vision, strategy, execution, and continuous improvement of distribution at Mohawk while enhancing overall operational efficiency and accuracy.

No matter what your industry or your individual role, there seems to be one question everyone is asking these days: When are costs going to come down? For manufacturers, or any company with industrial operations, the answer may be "not for a very long time." 

With the cost of fuel, equipment, labor, and other essentials on the rise, savings are going to be increasingly hard to find. For this reason, optimizing every single component of your operations is more important than ever before. 

Fortunately, the key to unlocking these improvements—high-quality, granular data—is already within reach. At Mohawk Industries, we've been able to use real-time data from the field to optimize how we pay our drivers. We use a system called component pay, where drivers are compensated based on performance and not just hours worked. 

Component pay is nothing new. Over the span of my three-decade career in transportation and logistics, I've seen it become common at a sizable number of companies. What is entirely new, however, is the ability to track and measure a vast array of complex activities—miles, stops, routes, and more—across thousands of drivers and sites to discover ways to improve your operations, all powered by data.  

With data, we're able to administer our component pay program in a way that we couldn't do before. We can pay drivers so that their compensation aligns with the value we provide our customers, which creates a win-win for everyone involved. If you're considering launching a component pay program, or optimizing one you already have, here are four best practices that can help you achieve success.

1. Get the right technology in place to support your component pay program.

Before we made the decision to digitize, our component pay process was done with pen and paper. Drivers would check off components on a paper manifest, and at the end of the day, would turn them into a manager who entered them into our payroll system. 

The manual system was time-consuming—imagine processing paper pay sheets for thousands of drivers—so we implemented new technology, including the Samsara Driver App, that allowed us to set up components and enable drivers to track their activities with an app on a tablet, all of which was integrated with our payroll system. 

We ended up saving hours of work and being able to pay our drivers much faster. With better data visibility, we could also audit our systems to see where slight process shifts had accumulated over the years, leading to inefficiencies and lost revenue. For an effective, modern component pay program, digitizing your processes and connecting your systems on the backend is a must. 

2. Work with drivers to refine and compensate for the right components.

One of the best things about component pay is its flexibility. You can select the components that make the most sense for your business—miles, stops, pieces, delays, and more—to compensate your drivers in a way that makes sense for your business and your industry. 

With a data-driven system, however, selecting components can also be complicated. Better data analysis allows you to start measuring more, which can turn into "component sprawl" where you run the risk of tracking too many components.

To avoid this issue, drivers can be your best source of feedback. If you have many components, drivers can identify the ones that you may not need or components that need to be refined, for example. Open, two-way communication and transparency will help you find the component sweet spot that is most equitable for your drivers. 

3. Build trust with transparency and driver advocates.

Trust is an essential element of any technology-driven change, especially when it comes to compensation. Consistent, transparent communication with your drivers about what is changing, when, and why is the foundation of a successful transition to component pay and ongoing refinement of your system.

One challenge to consider is how to build trust with new drivers who may be skeptical about a new pay structure. To get their buy-in, identify the driver advocates on your team. Your drivers can play a powerful role in shaping their perspective. These advocates can talk about how they've been able to grow their compensation with component pay, and can answer any questions new hires may have. Driver advocates can be a great way to build trust and highlight the benefits of your pay system. 

4. Run components in parallel before making changes.

It's one thing to say that components will deliver greater compensation for drivers, but with data at your fingertips, you can show the actual impact of component changes. This is one reason we often run new or refined components in parallel with the status quo for a set period of time. For example, we'll allow drivers to run different setups side-by-side for 30 days so they can see the difference in compensation for themselves.

However, for this to work, transparency is key. If your company culture is more top-down and holds information closer to the vest, you'll need to work on becoming more comfortable with being open with your drivers. Data can be a great way to guide conversations and ultimately build trust. It can help your teams level set and see eye to eye on what's working and what needs to change for everyone’s benefit.

The interesting thing about digitizing our component pay is that our goal was to minimize paperwork and speed up the process. Later, we realized we were sitting on a store of valuable data that could help us improve much more across our operations. With that in mind, my advice is don't wait: Start digging into how data can help you improve the driver experience—and ultimately help you deliver better service to your customers.

To learn how workflows can help optimize the driver experience, read more about Samsara's Apps & Driver Workflows.