  Kondo insulator FeSb$_2$ with large Seebeck coefficient would have potential
in thermoelectric applications in cryogenic temperature range if it had not
been for large thermal conductivity $\kappa$. Here we studied the influence of
different chemical substitutions at Fe and Sb site on thermal conductivity and
thermoelectric effect in high quality single crystals. At $5\%$ of Te doping at
Sb site thermal conductivity is suppressed from $\sim 250$ W/Km in undoped
sample to about 8 W/Km. However, Cr and Co doping at Fe site suppresses thermal
conductivity more slowly than Te doping, and even at 20$\%$ Cr/Co doping the
thermal conductivity remains $\sim 30$ W/Km. The analysis of different
contributions to phonon scattering indicates that the giant suppression of
$\kappa$ with Te is due to the enhanced point defect scattering originating
from the strain field fluctuations. In contrast, Te-doping has small influence
on the correlation effects and then for small Te substitution the large
magnitude of the Seebeck coefficient is still preserved, leading to the
enhanced thermoelectric figure of merit ($ZT\sim 0.05$ at $\sim 100$ K) in
Fe(Sb$_{0.9}$Te$_{0.1}$)$_2$.
