Warehouse Management:

Measuring and Benchmarking

Warehouse Performances

Warehouse Benchmarking
Setting world-class performance, practices , and
infrastructure goals for the warehouse operations
WBM Permits quantitative assessment of the opportunity
for improvement in

Productivity
Shipping accuracy
Inventory accuracy
Dock to dock time
Warehouse order cycle time
Storage density

Scheme of session
1. Benchmarking & its types?
2. Warehouse performance metrics
3. Warehouse Performance Gap Analysis
(WPGA)

1. Benchmarking & its types?

Benchmarking?
Quantitative assessment of aspects of performance
Process popularized in late 80s ; Xerox Corporation
Aspects
Internal
External
Competitive

1. Benchmarking & its types?

Internal Benchmarking
Focused on the operations of a single company
Case of Gillette
Operation includes
Mexico , Chile ,Brazil ,Colombia, Argentina
Logistic managers are measured against key indicators:

Shipping accuracy
Inventory turns
Fill rate
DC productivity
DC storage density
Order cycle time
Perfect order percentage

Competition among group

Winner teach the group how he/she achieved that success

1. Benchmarking & its types?

2. External Benchmarking
Looks outside the firms industry
Case of Xerox Service Parts
Embarked on major DC reconfiguration
Arranged tours of a variety of DC facilities
Exchanged information from the host company
Performance measurement frame work
Lines shipped per person hours
High score facilities; a beacon of guidance

Focal; L.L. Bean (retail)

Process worked and Xerox Chicago DC has achieved Modern
Material Handlings annual productivity achievement award

1. Benchmarking & its types?

Xerox looked outside the industry
ECR in the grocery is the take-off on QR of Textile
industry
QR is a take-off of JIT from the Japanese automotive
industry
Carousels DC take-off of dry clean industry
How
Benchmarks with logistically similar company

Order value
Average order cube
Average number of items on an order
Transaction volume
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1. Benchmarking & its types?

Case of SBC Telecommunication
Task to reduce material cost by 20 percent maintaining service level
Logistics benchmarking partnership
SBC (t.c), John Deere (agro machinery), United Stationers & Excel
Logistics

Comparison by developing questionnaire

12 questions from each company
Identified ULP of each company

John Deeres work measurement & safety

SBC; customer service excellence
US productivity
Excel ; Quality performance

Teach ULP to other partner

1. Benchmarking & its types?

3. Competitive Benchmarking
Assessment of companys logistics
performance with competitors
Case of wholesale distributor of Health
care

2. Traditional WBM metrics

Operating cost
Warehousing and/or Distribution cost as percentage of sale

Operating productivity
Measured in units lines, orders , pieces and pallets etc handled
per person hour

Customer response time

Shipping accuracy
Annual Warehousing cost
Labor cost (material handling, annual) [labor hrs X WR]
Space cost (storage) [square ft occupied X annual cost of space]
System cost (information handling) [system investment cost X
annual amortization/ depreciation rate
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2. Traditional WBM metrics

Integrating all ,Four important measure
A.
B.
C.
D.

Warehouse Financial Performance

Warehouse Productivity Performance
Warehouse Quality Performance
Warehouse Cycle Time Performance

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2. Traditional WBM metrics

A. Warehouse Financial Performance
Warehouse activity based costing (ABC)

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2. Traditional WBM metrics

B. Warehouse Productivity Performance
Productivity
Labor
Space
Material handling system

Labor periodicity:
Ratio of units , orders, lines or weight shipped out of the
warehouse TO the number of hours spent in operating,
supervising, and managing the warehouse

Storage Density
The Ratio of the amount of inventory storage capacity TO the
square footage inventory stored

Safety
Occurrences
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2. Traditional WBM metrics

C. Warehouse Quality Performance
Four key indicators
Put away accuracy
Inventory accuracy
Picking accuracy
Shipping accuracy

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2. Traditional WBM metrics

D. Warehouse Cycle Time Performance
Dock-to-stock
Time elapse between shipment receiving at
warehouse to readiness for picking

WHS Order Cycle Time (WOCT)

Time elapse between releasing order to WHS
floor to readiness for shipment

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3. Warehouse Performance Gap

Analysis
Productivity
lines per hour

Storage density
Case storage capacity per square foot

Shipping accuracy
Percent line shipped in error

Inventory accuracy
Dock-to-stock
Order Preparation Time (WOCT)
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Warehouse Performance Index

o Material handling system investment vs
Annual working labor hours
o Workforce demographics and Warehouse
performance
o Warehouse size vs. Warehouse
performance
o Level of mechanization & Warehouse
performance
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Warehouse automation & its dos

and don'ts
Automation can resolve complex issues
WHS practices training: is it a for granted
issue?
Analysis of live system
Use of CFT in performance evaluation
Compare & contrast operations
Mechanization & Flexibi9lity
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World Class warehouse Practices

Receiving
Put away
Reserve Storage
Picking
Slotting
Replenishment
Shipping
Work Measurement
Communication
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Thanks
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