DC Velocity - July 2017

well behind their performance in other
critical areas, like safety and productivity.

The survey’s scope went well beyond labor retention, however. The overall purpose of the study, which was part of an ongoing series of research projects by DCV and ARC, was to identify best practices in warehouse management—that is, to determine what high-performing warehouses are doing that is different from other distribution operations.

As a framework for the analysis, the research team chose a “balanced scorecard” approach that looked at a variety of performance dimensions. Based on previous research, ARC selected the following four measures as the basis for its assessments: productivity, safety, customer service, and people. “A well-run warehouse is productive, [is] safe, contributes to high customer service, and develops the skills of its purpose,” wrote survey author Steve Banker, vice president of supply chain services at ARC, in his report.

As for how the respondents stacked up against those criteria, the results were decidedly mixed. While the majority managed to earn high scores in at least one of the four areas, very few (less than 17 percent) performed well across all of the dimensions studied. (See Exhibit 1.) Overall, the respondents did best when it came to safety, with a full 87. 6 percent earning high marks in this area. At the other end of the scale was their performance in what ARC called the “people” dimension (their treatment of employees). Only 39. 2 percent excelled against this metric—defined for purposes of the study as having a turnover rate of less than 10 percent per year.

THE SCOPE OF THE PROBLEM

Given the drag that high turnover can have on a warehouse operation, the research team decided to take a closer look at the problem, and what they found was dismal indeed. When respondents were asked about their operation’s turnover rate, the majority of the answers were in the double digits. Nearly one-third ( 29. 5 percent) reported turnover of between 10 and 25 percent, and an almost equal proportion ( 29 percent) reported turnover of between 25 and 100 percent. At the bottom of the scale, 2. 3 percent reported turnover of over 100 percent per year. (See Exhibit 2.)

The picture was even gloomier when it came to turnover
among temporary workers (temps are considered to have
“turned over” if they decide to leave before the end of the

Performance dimension

Safety 87.6% Safety: Managers report that >75% of their
workers would say the warehouse is safe
Customer service Picking accuracy > 99.5% 59.6%

Productivity 48.0% Labor productivity: Managers rate their
warehouse as being “above average” or
“well above average”
People Employee turnover <10% per year 39.2%