Warehouse and Distribution Science

WAREHOUSE PERFORMANCE MEASURES CHAPTERS 14 - 15

Activity Profiling
CHAPTER 14

ABC Analysis
80-20 Rule

Ranking by $-volume is financial

Ranking by labor or space needs is operational Often find surprises in examining warehouse activity

ABC Profiling

Statistical Analysis
Data Needs Sku data Order data Warehouse location data

Sku data
May reside in different databases

When in doubt get it all

ID, description, product family, address of storage

locations, dimensions, packing, date introduced, Sku data maximum inventory level

Order Data
Order ID, Skus, customer, special handling,

date/time order picked up, quantity shipped Order data is financial information and usually accurate, but Not necessarily operations focused, e.g. date ordered, not date picked Validate with lines shipped each day Very large quantity of data

Warehouse Layout & Location

Least standardized

Blueprints, sketches, CAD files

Issues with Profiling

Getting the data

Data mining
Discrepancies in the data Validating

Interpreting patterns
Beware of small numbers Beware of sample biases

E. Tuftes The Visual Display of Quantitative

Information

Benchmarking
CHAPTER 15

Benchmarking
What to measure?

With whom to compare?

How to improve? Compare a warehouse with similar warehouses.

Examine its facilities and processes to adopt if better

performing.

Performance Measures
Units of output achieved/Units of input required

Operating cost (cost as % of sales)

Operating productivity (picklines, orders, etc. per

person hour) Response time (order-cycle time) Order accuracy (% of shipments with returns)
Advantages/disadvantages of these measures?

Benchmarking
Comparing warehouse with other warehouses

Internally or externally
Ratio-based benchmarking Aggregate benchmarking

Data Envelop Analysis

Convex combination Efficient Frontier

Pick rates at similar warehouses

Fit a regression line for size versus average picks per person-hour.
Generally, larger warehouses are less efficient Larger warehouses have more travel time

Regression Line

Figure 15.5

Conclusions of GT Study
There was no difference between union and non-

union warehouses. Warehouses with low capital investment tended to outperform those with high capital investment. Inflexible automation. Smaller warehouses tended to outperform larger warehouses.

Are smaller warehouses more efficient?

Pure size hurts efficiency

Size requires process changes

E.g. Walmart Changed the smallest quantity handled, from eaches to cartons, etc. Utilize cross-docking to eliminate double handling.