Metrics,Benchmarking

&BestPractices

IncreasingDCProductivity&Efficiency

www.werc.org
Inthissession
Whyqualitativeandquantitative
benchmarkinggohandinhand
Criticalwarehousemetrics WERCsDC
MeasureStudy.Wheredoesyourcompany
stand?
Astepbystepdescriptionofanapproachto
benchmarking.
WERCsAssessmentProgram

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Ifyoucantmeasureit,
youcantmanageit.
~PeterDrucker

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Benchmarkingis
Theprocessofimprovingperformance bycontinuously
identifying,understanding,andadaptingoutstandingpractices
andprocessesfoundinsideandoutside theorganization.

Benchmarking(seeks)toimproveanygivenbusinessprocess by
exploiting"bestpractices"ratherthanmerelymeasuringthebest
performance.Bestpracticesarethecauseofbestperformance.
Studyingbestpracticesprovidesthegreatestopportunityfor
gainingastrategic,operational,andfinancialadvantage.

TheAmericanProductivityandQualityCenter(APQC)

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Whatweknow
Improve
BottomLine
Improve
Metrics
Improve
Processes

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Howdoweknow? FinancialMetrics
DistributionCostperUnitShipped

>.30
BestinClass

Median .86

$0.00 $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 $0.70 $0.80 $0.90

DistributionCostsasaPercentofSales

>2%
BestinClass

Median
4%

0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00%

Median BestinClass
Source: 11h Annual DC Measures Study, 2014.

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QuantitativeBenchmarkingDatais
GoodbutitisnotGoodEnough

Quantitative

Qualitative

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 LimitationsofTraditionalFinancialMeasures
Financialmeasurestendtobelaggingindicators.

LeadingIndicators(PerformanceDrivers) LaggingIndicators(Outcome)

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LeadingIndicators
OntimeShipments
LostSales(PercentofSKUsStockedOut)
DocktoStockCycleTime,inHours
OrderFillRate
PalletsPicked&ShippedperHour
DistributionCostsperUnitShipped
PeakWarehouseCapacityUsed
MaterialHandlingDamage
PercentofOrderswithOntimeDelivery

Therearehundredsofmetricsreferenced
acrossindustryassociations

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TheWERCResearchTeam&Partners
ResearchTeam:
KarlB.Manrodt,Ph.D.
Professor,GeorgiaSouthernUniversity
DonnieWilliams,Jr.
AssistantProfessorofLogistics,GeorgiaCollegeandStateUniversity
JoeTillman
CTLFounder TSquared LogisticsLLC

ResearchSponsor:
ResearchPartner:

DataLicensedBy:
www.werc.org
10
WhoisinWERCsStudy This years combined survey had over 600
participants of which 424 provided usable

Whosreporting responses

Other
Manager 10% CLevel
42% 5%
SeniorVP
14%

Director
29%

www.werc.org
WhoisinWERCsStudy
Towhomtheyreport
Manager,3.0% Other,8.0%
Director,24.0% CLevel/Board
ofDirectors,
32.0%

SeniorVP,33.0%

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WhoisinWERCsStudy
BreakdownbyIndustry
LifeSciences Medical Wholesale Utilities/Government,
Devices,4.6% Distribution,3.7% 1.8% LifeSciences
Pharmaceuticals,1.8%
ThirdParty
Warehouse,19.7%
TransportationService
Provider,4.6%

Retail,21.1% Manufacturing,32.1%

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WhoisinWERCsStudy
NatureofWorkattheFacility
Majority (66.8%) focus on case picking vs. pallets

%of %Case
TypeofOperation
Total vs.Pallet
BrokenCasePicking 37%
66.8%
FullCasePicking 29.8%

FullPalletPicking 12.9%
33.2%
PartialPalletPicking 20.1%

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WhoisinWERCsStudy
PrimaryCustomerServed
Respondents serve customers across the supply chain

Manufacturer Wholesaler/Distributor Retailer EndUser/Consumer

18.6% 36.7% 22.3% 22.3%

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WhoisinWERCsStudy
DemographicsbyCompanySize
31.9%
<$100Million 37.4%

36.2%
2014
$100Millionto$1Billion
34.8% 2013

31.9%
>$1Billion
27.7%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0%

www.werc.org
The mostpopularmetricsare
MetricInOrderofPopularity 2014 2013 Rank 2012 Rank
1.OnTimeShipments Customer 1 1

2.InternalOrderCycleTime Customer 2 5

3.TotalOrderCycleTime Customer 4 6

4.DocktoStockCycleTime,inHours InboundOperations 3 4

5.OrderPickingAccuracy Quality 5 2

6.LinesPickedandShippedperHour OutboundOperations 6 8

7.%ofSupplierOrdersReceivedDamageFree InboundOperations 8 12

8.AverageWarehouseCapacityUsed Capacity 9 3

9.PeakWarehouseCapacityUsed Capacity 12 7

10.LinesReceivedandPutAwayperHour InboundOperations 7 11

11.BackordersasPercentofTotalOrders Customer NotinTop12 NotinTop12

12.%ofSupplierOrdersRec.w/CorrectDocumentation InboundOps. 11 NotinTop12

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Andthemetricsare

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 OnTimeShipments(1)
CustomerMetrics

100.0% 99.8% 99.8% 99.8% 99.8% 99.8%

99.5%

99.0%
99.0%
98.5% 98.7%
98.5% 98.5% 98.5%
98.0%

97.5%
2010 2011 2012 2013 2014
Median BestinClass

www.werc.org
19
 InternalOrderCycleTime(2)
CustomerMetrics
30.0
24.0
25.0

20.0
16.0
15.0 12.0 13.0 12.0

10.0

5.0 8.2

3.0 4.0 3.4

0.0 2.2
2010 2011 2012 2013 2014
Median BestinClass

www.werc.org
20
SevenStepstoSuccessful
Benchmarking
Step1: Setbenchmarking priorities
Plan
Step2: Identifythekeyprocessestobeassessed

Measure Step3: Collectdata operationalandmanagerial

Step4: Researchandcomparebestinclass
performancetointernal andexternalstandards

Compare Step5: Identifygapsandreasonsforlowperformance

Step6: Developanimprovementroadmapandset SupplyChainVisions

Source:WERCsWarehouseManagers
priorities GuidetoBenchmarking,
2nd Edition(2010)

Act Step 7: Closegapsandimprove/refineprocesses

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Plan Step1:SetBenchmarkingPriorities

Thebestplacetostartiswithavisionstatement
andvalues.

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Plan Step2:IdentifyKeyProcesses

Consider
narrowing
downyourlist
ofwhatyou
wouldliketo
benchmark
against

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Measure
Step3:CollectData Operational&Managerial

Yourself(otherlocations)
Customers
Formalbenchmarkingservices
IndustryAssociations

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Measure
TradeAssociations
Networks

Governments

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CompareQuantitative
Step4:Research&Compare
BestinClassPerformance

2014WERCDCMeasureReport

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CompareQualitative

www.werc.org
Anexampleofthis
ReceivingandInspection ProcessBenchmarks
Process Poor Inadequate Common
GoodPractice BestPractice
Group Practice Practice Practice
Sufficientinspection
Insufficient
Sufficientinspection toidentifynon Inspectionprocess
inspectionto
toidentifynon conformingproduct resultsinquarantine,
identifynon
Noinspection conforming whichisthen immediate
conforming
Inspection processat product.Failing quarantinedto notificationto
product,
receipt productis preventuseor suppliers&carriers
essentially
quarantinedto referredtosuppliers andinitiatesreturn
checkingfor
preventuse withinaprescribed process
damageonly.
timeframe
Formalbutmanual
Systemenabledalerts
Informalprocess processforcross
forincomingproducts
Nocross withmanuallists dockingorimmediate
Noprocessto immediateorder
dockingprocess arekepttosupport replenishment
identifyor requirements,
CrossDocking Informal crossdockingof requirementsfor
expedite creatingacross
expeditingof productsneededfor receivedproductnot
products dockingorimmediate
products currentordersand ininventorybut
replenishmenttask
replenishment, neededforcurrent
uponreceipt
orders

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Compare Step5:IdentifyGaps
Withprocessstandards
youcanrankselected
processesagainstthe
standardandidentifythe
processchangesrequired
toachievethetarget

Scoringofthe
Receiving
InspectionProcess
isAssessedas
InadequatePractice
ReviewProcess
AttributesandScore
EachProcessGroup
Source:WERCsWarehouseManagers
GuidetoBenchmarking,
29 2nd Edition(2010)
 Compare
Step5:IdentifyImprovementRoadmap
Warehouse&Fulfillment:GapAnalysis
Process PoorPractice InadequatePractice CommonPractice GoodPractice BestPractice
Gap
Rank 1 2 3 4 5

Receiving&Inspection

MaterialHandling&Putaway

Slotting

Storage&InventoryControl

WarehouseManagementSystems

Shipping&Documentation

Picking&Packing

LoadConsolidation&Shipping

Source:WERCsWarehouseManagersGuidetoBenchmarking,2nd Edition(2010)

www.werc.org
 Compare
Warehouse&Fulfillment:Road MapRatingTool

Cost/Performance
Process StrategicImpact
Impact
Total Rating Gap

Receiving&Inspection 6

MaterialHandling&Putaway 6

Slotting 4

Storage&InventoryControl 5

WarehouseManagementSystems 5

Shipping&Documentation 2

Picking&Packing 6

LoadConsolidation&Shipping 4

HighImpact HighGap
MediumImpact MediumGap HighestPrioritiesinRed SecondaryPrioritiesinGreen
LowImpact
LowGap Source:WERCsWarehouseManagersGuidetoBenchmarking,2nd Edition(2010)
 Compare
Step6:IdentifyImprovementTargets
Warehouse&Fulfillment:GapReview
Process PoorPractice InadequatePractice CommonPractice GoodPractice BestPractice
Gap
Rank 1 2 3 4 5

Receiving&Inspection

MaterialHandling&Putaway

Slotting

Storage&InventoryControl

WarehouseManagementSystems

Shipping&Documentation

Picking&Packing

LoadConsolidation&Shipping
Source:WERCsWarehouseManagersGuidetoBenchmarking,2nd Edition(2010)

www.werc.org
Compare
Step6:IdentifyImprovementTargets
Major
TwelveKeyMetrics Disadvantage Typical Advantage BestinClass
Opportunity
Ontimeshipments

CustomerMetrics InternalOrderCycle Time

Total OrderCycleTime

DocktoStockCycleTime,inHours

FillRate Line

OperationsMetrics Lines ReceivedandPutAwayperHour

PercentofSupplierOrdersReceived
DamageFree

LinesPickedandShippedPerHour

Averagewarehousecapacityused
CapacityandQuality
OrderPicking Accuracy
Metrics
PeakWarehouseCapacityUsed

Annualworkforceturnover
EmployeeMetrics
Productivehourstototalhours
 Act Step7:CloseGaps
Warehouse&Fulfillment: FinalInitiatives
Process PoorPractice InadequatePractice CommonPractice GoodPractice BestPractice
Gap
Rank 1 2 3 4 5

Receiving&Inspection

MaterialHandling&Putaway

Slotting

Storage&InventoryControl

WarehouseManagementSystems

Shipping&Documentation

Picking&Packing

LoadConsolidation&Shipping

InterimTarget HighestPrioritiesinRed SecondaryPrioritiesinGreen

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Act Step7:CloseGaps
SettingTargets
Benchmark98%

HalfLifeTheory InterimGoal95%
CurrentPerformance92%
Thehalflifetheory
suggeststhatan
interimgoalshould
beselectedwhen
thereisalargegap
toclose InterimTarget

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BenchmarkingChallenges
AstudybyPennStatefoundseveralkeychallengesamong
companiestryingtobenchmark
Accurate/comparabledataisthebiggestbarrier
Implementingresults
Comparableprocesses
Availableresources
Standarddefinitions
ClearGoalsforbenchmarking
Willingnesstoshare
Findingtherightpartner
Seniormanagementsupport

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WERCsAssessment&
CertificationProgram

www.werc.org
Whatareour Automation

challenges? Customer
Justification

Bottlenecks
Relations

Candid
Space
Employee
Utilization
Input
Challenges

Increasing
CuttingCost
Quality

Improving Improved
Productivity Communication
www.werc.org
Doesnttheindustryalready
havethis?... Publications
&White
Papers

TradePress Unbiased Consultants

Assessment

Facility
Tours

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CompareQualitative

www.werc.org
Anexampleofthis
ReceivingandInspection ProcessBenchmarks
Process Poor Inadequate Common
GoodPractice BestPractice
Group Practice Practice Practice
Sufficientinspection
Insufficient
Sufficientinspection toidentifynon Inspectionprocess
inspectionto
toidentifynon conformingproduct resultsinquarantine,
identifynon
Noinspection conforming whichisthen immediate
conforming
Inspection processat product.Failing quarantinedto notificationto
product,
receipt productis preventuseor suppliers&carriers
essentially
quarantinedto referredtosuppliers andinitiatesreturn
checkingfor
preventuse withinaprescribed process
damageonly.
timeframe
Formalbutmanual
Systemenabledalerts
Informalprocess processforcross
forincomingproducts
Nocross withmanuallists dockingorimmediate
Noprocessto immediateorder
dockingprocess arekepttosupport replenishment
identifyor requirements,
CrossDocking Informal crossdockingof requirementsfor
expedite creatingacross
expeditingof productsneededfor receivedproductnot
products dockingorimmediate
products currentordersand ininventorybut
replenishmenttask
replenishment, neededforcurrent
uponreceipt
orders

www.werc.org
SevenStepstoSuccessful
Benchmarking
Step1: Setbenchmarking priorities*
Plan
Step2: Identifythekeyprocessestobeassessed*

Measure Step3: Collectdata operationalandmanagerial*

Step4: Researchandcomparebestinclass
performancetointernal andexternalstandards*

Compare Step5: Identifygapsandreasonsforlowperformance*

Step6: Developanimprovementroadmapandset SupplyChainVisions

Source:WERCsWarehouseManagers
priorities* GuidetoBenchmarking,
2nd Edition(2010)

Act Step 7: Closegapsandimprove/refineprocesses

www.werc.org
Assessment&Certification
Process
Rate,Rank&
Plan
Process
Improvement
Deliveryof Workshop
Results
OnsiteAudit
Day2
PreAudit Day1
Survey
Application

PreAudit

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DeliveryofResults
ProcessbyProcessreviewofthefindings&observations.
Areviewofthe3Wishes.

www.werc.org
 DeliveryofResults

ComparableBaseScoresGapAnalysis
Below Needs Meets Good Best
ProcessGroup
Minimum Attention Standard Practice Practice
Receiving&Inspection 13.0 25.5 38.0 48.3 58.5
MaterialHandling&Putaway 14.0 28.0 42.0 52.5 63.0
Slotting 9.0 18.0 27.0 33.8 40.5
Storage&InventoryControl 16.0 31.5 47.0 59.5 72.0
Picking&Packing 16.0 32.5 49.0 60.5 72.0
LoadConsolidation&Shipping 18.0 33.5 49.0 65.0 81.0
ShippingDocumentation 10.0 20.0 30.0 37.5 45.0
WarehouseManagementSystem 18.0 33.0 48.0 64.5 81.0

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ProcessImprovementWorkshop
Anoverviewofthe7Step
Benchmarking&RoadMapping
Model

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 OpportunitiesResultingfromWarehouseAuditMeetings
ItemNumber

Rate,Rank&Plan RankorPriority
OpportunityName
DetailedDescriptionofOpportunity

Anexercisetorateandrankthe DescribeBenefitofTakingAction

potentialimprovementsbased DescribePotentialRisks

onstrategicimportance,value
andcost.
Thecreationofanactionitem
listwithassigned
responsibilitiesforfurther
research,developmentand
PotentialValue:
DirectSavings
OtherFactors
EstimatedCosttoImplement
TimeRequiredtoImplement
StrategicValue(13)
CostImpact(!3)
PerceivedGAP(15)
Owners:

implementationof Enablers
Individuals
improvements. Processes
Technology

www.werc.org
SevenStepstoSuccessful
Benchmarking
Step1: Setbenchmarking priorities
Plan
Step2: Identifythekeyprocessestobeassessed

Measure Step3: Collectdata operationalandmanagerial

Step4: Researchandcomparebestinclass
performancetointernal andexternalstandards

Compare Step5: Identifygapsandreasonsforlowperformance

Step6: Developanimprovementroadmapandset SupplyChainVisions

Source:WERCsWarehouseManagers
priorities GuidetoBenchmarking,
2nd Edition(2010)

Act Step 7: Closegapsandimprove/refineprocesses

www.werc.org
Benefitsbeyond whatyoucansee

Indentifying
True
Process Morale Differentiator Collaboration
Comparative
Degradation

49
www.werc.org
Whohasit
APLLogistics(ColgatePalmoliveCo.)* LEGACYSupplyChainServices(GE
Aquarius Grupo SID(CP)* Industrial)*
ColgatePalmoliveCo.(13)* NexusDistributionCDC
DHL(Unilever&CP)* OHL(StarbucksCoffeeCompany*)(3)
FCCLogistic Spain(CP)* ScholasticNationalServiceOrganization
FMLogistic Poland(CP)* StarbucksCoffeeCompany(5)*
Frode Laursen Denmark(CP)* SwagelokOFCComponentWarehouse
GEIndustrial* TrojanBatteryCompany
HunterFanCompany Unilever*
IngersollRand/Trane(2) Whirlpool(2)*
Kenco(Whirlpool)* Zimag Logistics(CP)*
*FacilityCertificationpursuedjointlybycustomerandlogisticsserviceprovider

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Resources
www.werc.org/metrics www.werc.org/facility_cert
The2014ConferencePresentation Resources
Linktothe2014DCMeasureStudy

www.werc.org
 MichaelMikitka,CEO
WarehousingEducation&ResearchCouncil
P:630.990.0001/mmikitka@werc.org
www.werc.org

www.werc.org