Metrics, Benchmarking Best Practices

1 , Benchmarking & best PracticesIncreasing DC Productivity & Why qualitative and quantitative Benchmarking go hand in hand Critical warehouse metrics WERC s DC Measure Study. Where does your company stand? A step by step description of an approach to Benchmarking . WERC s Assessment ProgramIn this If you can t measure it, you can t manage it. ~ Peter The process of improving performanceby continuouslyidentifying, understanding, and adapting outstanding Practices and processes found inside and outsidethe organization. Benchmarking (seeks) to improve any given business processby exploiting " best Practices " rather than merely measuring the best performance.

2 best Practices are the cause of best performance. Studying best Practices provides the greatest opportunity for gaining a strategic, operational, and financial advantage. The American Productivity and Quality Center (APQC) Benchmarking Bottom LineImprove MetricsImprove ProcessesWhat we MetricsSource: 11hAnnual DC Measures Study, do we know? in ClassDistribution Costs as a Percent of SalesMedianBest in Class>2%4%$ $ $ $ $ $ $ $ $ $ in ClassDistribution Cost per Unit Shipped> .30 .86 Benchmarking Data is but it is not Good measures tend to be lagging Indicators (Performance Drivers)Lagging Indicators (Outcome)Limitations of Traditional Financial On time Shipments Lost Sales (Percent of SKUs Stocked Out) Dock to Stock Cycle Time, in Hours Order Fill Rate Pallets Picked & Shipped per Hour Distribution Costs per Unit Shipped Peak Warehouse Capacity Used Material Handling Damage Percent of Orders with On time DeliveryThere are hundreds of metrics referencedacross industry associations Team:Karl B.

3 Manrodt, Professor, Georgia Southern UniversityDonnie Williams, Jr. Assistant Professor of Logistics, Georgia College and State UniversityJoe TillmanCTL Founder TSquared Logistics LLC10 The WERC Research Team & Sponsor:Research Partner:Data Licensed Level5%Senior VP14%Director29%Manager42%Who is in WERC s Who s reportingThis year s combined survey had over 600 participants of which 424 provided usable is in WERC s To whom they reportOther, Level / Board of Directors, VP, , , is in WERC s Breakdown by IndustryWholesale Distribution, , Sciences Pharmaceuticals, Service Provider, , , Party Warehouse, Sciences Medical Devices, is in WERC s Nature of Work at the FacilityMajority ( ) focus on case picking vs.

4 PalletsType of Operation% ofTotal% Casevs. PalletBroken Case Picking37% Case Pallet Pallet User/ConsumerRespondents serve customers across the supply chainWho is in WERC s Primary Customer > $1 Billion$100 Million to $1 Billion< $100 is in WERC s Demographics by Company In Order of Popularity 20142013 Rank 2012 Rank1. On Time Shipments Customer112. Internal Order Cycle Time Customer253. Total Order Cycle Time Customer 464. Dock to Stock Cycle Time, in Hours Inbound Operations345. Order Picking Accuracy Quality 526. Lines Picked and Shipped per Hour Outbound Operations687.

5 % of Supplier Orders Received Damage Free Inbound Operations 8128. Average Warehouse Capacity Used Capacity939. Peak Warehouse Capacity Used Capacity12710. Lines Received and Put Away per Hour Inbound Operations 71111. Backorders as Percent of Total Orders CustomerNot in Top 12 Not in Top 1212. % of Supplier Orders Rec. w/ Correct Documentation Inbound in Top 12 The most popular metrics the metrics Time Shipments (1)Customer in Order Cycle Time (2)Customer in Supply Chain VisionsSource: WERC s Warehouse Manager s Guide to Benchmarking , 2ndEdition (2010)PlanStep 1:Set Benchmarking prioritiesStep 2:Identify the key processes to be assessedMeasure Step 3:Collect data operational and managerialCompareStep 4:Research and compare best in class performance to internal and external standardsStep 5:Identify gaps and reasons for low performanceStep 6.

6 Develop an improvement roadmap and set prioritiesActStep 7:Close gaps and improve/refine processesSeven Steps to Successful Benchmarking .. Step 1: Set Benchmarking PrioritiesThe best place to start is with a vision statement and values. narrowing down your list of what you would like to benchmark againstPlan Step 2: Identify Key Step 3: Collect Data Operational & Managerial Yourself (other locations) Customers Formal Benchmarking services Industry QuantitativeStep 4: Research & Compare best in Class Performance2014 WERC DC Measure example of and Inspection Process BenchmarksProcessGroupPoor Practice Inadequate PracticeCommon PracticeGood Practice best PracticeInspectionNo inspection process at receiptInsufficient inspection to identify non conforming product, essentially checking for damage inspection to identify non conforming product.

7 Failing product is quarantined to prevent useSufficient inspection to identify non conforming product which is then quarantined to prevent use or referred to suppliers within a prescribed timeframeInspection process results in quarantine, immediate notification to suppliers & carriers and initiates return process Cross DockingNo process to identify or expedite productsNo cross docking processInformal expediting of products Informal process with manual lists are kept to support cross docking of products needed for current orders and replenishment, Formal but manual process for cross docking or immediate replenishment requirements for received product not in inventory but needed for current orders System enabled alerts for incoming product s immediate order requirements, creating a cross docking or immediate replenishment task upon receipt29 Compare Step 5.

8 Identify Gaps Review Process Attributes and Score Each Process Group Scoring of the Receiving Inspection Process is Assessed as Inadequate PracticeWith process standards you can rank selected processes against the standard and identify the process changes required to achieve the targetSource: WERC s Warehouse Manager s Guide to Benchmarking , 2ndEdition (2010) Step 5: Identify Improvement RoadmapWarehouse & Fulfillment: Gap AnalysisProcessRankGapPoor Practice1 Inadequate Practice2 Common Practice3 Good Practice4 best Practice5 Receiving & InspectionMaterial Handling & PutawaySlottingStorage & Inventory ControlWarehouse Management SystemsShipping & DocumentationPicking & PackingLoad Consolidation & ShippingSource: WERC s Warehouse Manager s Guide to Benchmarking , 2ndEdition (2010)Warehouse & Fulfillment.

9 Road Map Rating ToolProcessStrategic ImpactCost/Performance ImpactTotal RatingGapReceiving & InspectionMaterial Handling & PutawaySlottingStorage & Inventory ControlWarehouse Management SystemsShipping & DocumentationPicking & PackingLoad Consolidation & ShippingCompareHigh ImpactMedium GapLow ImpactHigh GapLow GapHighest Priorities in RedSecondary Priorities in GreenMedium Impact66455264 Source: WERC s Warehouse Manager s Guide to Benchmarking , 2ndEdition (2010) 6: Identify Improvement TargetsWarehouse & Fulfillment: Gap ReviewProcessRankGapPoor Practice1 Inadequate Practice2 Common Practice3 Good Practice4 best Practice5 Receiving & InspectionMaterial Handling & PutawaySlottingStorage & Inventory ControlWarehouse Management SystemsShipping & DocumentationPicking & PackingLoad Consolidation & ShippingSource: WERC s Warehouse Manager s Guide to Benchmarking , 2ndEdition (2010)CompareStep 6.

10 Identify Improvement TargetsTwelve Key MetricsMajor OpportunityDisadvantageTypicalAdvantage best in ClassCustomer MetricsOn time shipmentsInternal Order Cycle TimeTotal Order Cycle TimeOperations MetricsDock to Stock Cycle Time, in Hours Fill Rate LineLines Received and Put Away per HourPercent of Supplier Orders Received Damage FreeLines Picked and Shipped Per Hour Capacity and Quality MetricsAverage warehouse capacity used Order Picking AccuracyPeak Warehouse Capacity UsedEmployee MetricsAnnual work force turnover Productive hours to total hours Step 7: Close GapsWarehouse & Fulfillment.