DC Velocity - May 2013

shipments,” “average warehouse capacity used,” and “order picking accuracy”—have appeared on the list since the study was launched.

But that’s not to say the situation is static. As Exhibit 1
shows, there have been some changes in the list of the
Top 12 most commonly used metrics compared with the
previous year’s lineup. Not only were there some shifts in
the rankings, but we also noted some shuffling among
the entries themselves. For instance, this year’s list
includes two metrics that didn’t make it onto last year’s
roster: “order fill rate” and “percentage of supplier orders
with correct documentation.” They displaced “fill rate—
line” and “annual workforce turnover.”
The disappearance of “annual workforce turnover”
from the lineup is worth noting. As recently as 2010, it
ranked fourth on the list of most popular metrics. One
possible explanation is that it simply wasn’t a top-of-
mind concern for companies last year—performance
against this metric improved across the board. However,
companies should be aware that losing sight of a facili-
ty’s most valuable asset—its employees—may eventually
lead to performance issues in other areas.

That being the case, we would encourage DCs and warehouses to keep a close eye on job numbers. The unemployment rate dropped to 7. 7 percent in February, and as the recovery picks up steam, more employees may become confident enough about the job market to start seeking other opportunities.

As for the overall list of most widely used
metrics, it’s also important to note that in
some cases, decisions about which metrics
to use are dictated by company policy and
may not reflect what the respondents
themselves would choose. For that reason,
the survey included a question asking, “If
you were the boss, what metrics would you
use to run the DC or warehouse?”
As it turned out, there were some dispar-
ities in the metrics respondents were using
and the ones they would personally select.
Although two metrics—“order picking
accuracy” and “order fill rate”—appeared
on both lists, the respondents’ top five
picks included three that did not figure
among the Top 12: “inventory count accu-
racy by location” as well as two financial
metrics, “distribution costs as a percentage
of sales” and “distribution costs per unit shipped.”
Clearly, the focus for warehouse managers is on veracity,
value, and velocity.

HOLDING THEIR OWN

As for how facilities are performing against those metrics, the news is generally good. A comparison of this year’s results with median performance numbers from the 2012 study shows that companies either maintained or improved their performance against 25 of the 44 metrics studied. Best-in-class performers were able to either maintain or improve their performance on 29 of the 44 metrics. The “major opportunity” respondents made a particularly strong showing this year, narrowing the performance gap with their more advanced brethren on 25 of the 44 metrics.

That raises the question of where the biggest improvements were made. In the past, we’ve looked at performance against all 44 metrics when compiling the rankings. But this year, we decided to do things a little differently. In light of respondents’ intense interest in all things

EXHIBIT 1

The Top 12: The most commonly
used DC metrics

Metric (by rank in 2013 survey) and category 1. On-time shipments (Customer) 2. Internal order cycle time (Customer) 3. Dock-to-stock cycle time, in hours (Inbound operations) 4. Total order cycle time (Customer) 5. Order picking accuracy (Quality) 6. Lines picked and shipped per hour (Outbound operations) 7. Lines received and put away per hour (Inbound operations) 8. of supplier orders received damage free (Inbound operations) 9. Average warehouse capacity used (Capacity) 10. Order fill rate (Outbound operations) 11. of supplier orders received with correct documentation (Inbound operations) 12. Peak warehouse capacity used (Capacity)