DC Velocity - April 2015

inbound

What goes up must come down … and based on what we’re hearing from respondents to this year’s study of distribution center metrics, that may well be the case when it comes to warehouse and DC performance.

The 2015 research—our 12th annual study—was conducted among DC VELOCITY readers and members of the Warehousing Education and Research Council (WERC). Respondents were asked what metrics they use and how well their facilities performed against more than 40 metrics in 2014. We’ll detail the results in DCV’s May issue, but in the meantime, here are a few highlights.

With respect to how facilities are performing against the metrics tracked in the study, improvement seems to have stalled after last year’s peak. In the 2014 study (which asked about performance in 2013), respondents reported that they had improved (or at least maintained) their performance on a year-over-year basis across a majority of the metrics. For instance, both the “best-in-class” respondents (the top-per-forming 20 percent of survey participants) and the “major opportunity” respondents (the bottom 20 percent) improved or maintained performance on 32 of the 44 metrics tracked. The “median” performers (the middle 20 percent) made even greater strides, improving or maintaining performance on 36 of the 44 metrics.

The 2015 survey (which covers performance in 2014) indicated that both the “major opportunity” and “median” performers had lost some of that momentum, with the “major opportunity” companies improving or maintaining performance against only 21 metrics, and the “median” performers just 26. Of the three groups, the “best-in-class” performers made the best showing, improving or maintaining performance on 29 metrics.

Where did they make those improvements? In the case of “major opportunity” performers, much of the progress was made against metrics associated with the “Perfect Order”— order completeness, timeliness, condition, and documentation. Interestingly, the “major opportunity” performers were the only group that improved against all four of these measures.

The survey results also pointed to improvements in operational performance. Both “best-in-class” and “median” performers made gains against what the study categorized as “operational” metrics—measures used to assess internal performance, such as order fill rates and lines received and put away per hour.

In addition to the upcoming DCV article, the study results will be presented at WERC’s annual conference, scheduled for May 3–6 in Orlando, Fla. For more information, go to www.werc.org.

Highlights from our 12th annual
DC metrics study

Transporting materials from remote parts of northern Finland is a logistics challenge with a few extra hurdles—extreme temperatures and icebergs in the harbors, among them. But the steady rise in global temperatures over recent years has thawed out a path to a new shipping option.

A proposed Arctic railway line (similar to the one shown above) across the northern reaches of the Nordic countries could make it possible to transport heavy cargoes such as mineral ore from the landlocked region of Rovaniemi, Finland, to ports like Kirkenes and Narvik on Norway’s Arctic coastline, which are newly accessible thanks to warmer water that’s keeping ice at bay for longer periods. Currently, oceanbound shipments have to travel overland to the southern coasts of Finland or Sweden to reach the sea.

Three developments have converged to encourage this modern version of the Polar Express, according to business leaders who spoke at a February conference on Arctic development, held in Kirkenes, Norway.

First, new ocean shipping routes have opened up as Arctic sea ice melts. Second, Finnish and Swedish mining engineers have developed rich deposits of valuable ores, which then have to be hauled out. And third, rising global demand for fuel could make it profitable to use the railway as a “rolling pipeline” to deliver Norwegian liquefied natural gas (LNG) to European markets in the south, according to Felix Tschudi, chief executive officer of the Tschudi Shipping Co. AS, of Oslo, Norway.

Other cargoes that might benefit from the new trade route include export commodities from the Baltic countries and natural gas from Russian oil companies, planners said.