operational, we’ve narrowed our focus to performance
against operations-related metrics.
Exhibit 2 identifies the operational metrics that saw the
biggest performance improvements over last year. If nothing else, the findings indicate that respondents’ efforts to
streamline operations are paying off. Take “lines received
and put away per hour,” for example. In this area, both
median and “major opportunity” respondents were able to
improve their performance by over 30 percent.
That’s not to say the picture is totally rosy, however. The
study also identified areas where performance has
slipped—the so-called “points of pain.”
The metrics that took the biggest hit this year were “back
orders as a percentage of total orders” and “lost sales as a
percentage of total inventory.” (See Exhibit 3.) Why these?
We think the slippage in performance could be related to a
drop in inventories. After the stock buildup from the Great
Recession, inventories seem to have returned to more nor-
mal levels (in fact, the study pointed to an across-the-board
drop in days of finished-goods inventory on hand).
Incidentally, those low inventories and the resulting need
for facilities to quickly replenish stock to avoid back orders
might also help explain the heightened interest in the velocity of inbound operations.
GETTING BETTER ALL THE TIME
Overall, it appears most warehouses and DCs are moving in
the right direction as far as performance is concerned.
Whether the momentum can be sustained or not, especially as companies experiment with same-day delivery, only
time will tell. In the meantime, we invite you to send us
your comments, suggestions, and insights into the research
and your own use of measures. We can be reached by e-mail: Joe Tillman at joseph_tillman@scvisions.com and
Karl Manrodt at kmanrodt@georgiasouthern.edu. ;
About the authors: Karl Manrodt is a professor at Georgia
Southern University. Joseph Tillman is senior researcher
and consultant for Supply Chain Visions. Kate Vitasek is
founder of Supply Chain Visions.
EXHIBIT 2
On the right track: Where DC operational performance improved
Metric
of supplier orders received
with correct documentation
Major opportunity
< 90.0%
Typical
>= 95.0 and < 98.0%
Best in class
>= 99.0%
Median 2013
97.4%
Median 2012
96.0%
of supplier orders received
damage free
< 95.0%
>= 98.0 and < 99.0%
>= 99.5%
98.5%
98.0%
Lines received and put away
per hour
< 7. 74 lines/hour
>= 14.88 and < 24. 4
>= 50.0
20.0
15.0
Order fill rate
< 94.0%
>= 98.0 and < 99.0%
>= 99.8%
98.3%
98.0%
Note: Survey responses have been divided into quintiles to make it easier for companies to determine where they stand in comparison with other operations. For example, the “best in class” companies represent the top
20 percent of all respondents, while “major opportunity” companies represent the lowest-performing 20 percent.
EXHIBIT 3
Points of pain: Where DC performance declined
Metric Major opportunity
Back orders as a of total orders > 9.52%
Typical
>= 2.0 and < 5.0%
Best in class
< 0.55%
Median 2013
3.0%
Median 2012
1.9%
Lost sales (as a of total inventory) > 6.0%
>= 1. 8 and < 3.34%
< 0.37%
2.1%
2.0%
Lines picked and shipped per
person hour
< 11. 76
>= 22. 6 and < 43. 8
>= 74. 25
28.0
29. 9
Cases picked and shipped per
person hour
< 23.0 cases/hour
>= 46.8 and < 97.2
>= 160.6
67. 5
99.4
Dock-to-stock cycle time, in hours
> 24.0 hours
>= 5.0 and < 9. 64
< 2. 22
8.0
6.0
Note: Survey responses have been divided into quintiles to make it easier for companies to determine where they stand in comparison with other operations. For example, the “best in class” companies represent the
top 20 percent of all respondents, while “major opportunity” companies represent the lowest-performing 20 percent.
