38 DC VELOCITY MAY 2015 www.dcvelocity.com
strategicinsight BY STEVE BANKER
VISIBILITY AND CONTROL
IT’S THE RARE WAREHOUSE THESE DAYS THAT
hasn’t engaged in some type of cost cutting or performance
improvement program. Some have turned to technology in
a bid to streamline operations. Others have taken the process route, putting programs like continuous improvement
plans in place. Still others have changed up their personnel
(for example, bringing in highly effective managers to run
their facilities), pulled up stakes and moved to a location
with lower labor costs or tax advantages, or in the case of
shippers, outsourced their warehousing operations.
Which of these changes is likely to produce the biggest
payoff? To find out, ARC partnered with DC VELOCITY
and eft (eyefortransport) to conduct a study that asked
this core question: “Over the last five years, what change
led to the greatest improvement in distribution costs per
unit shipped?” The survey was conducted among 150 valid
respondents from a variety of sectors: 34 percent hailed
from the wholesale business, 33. 3 percent from third-party
logistics service providers (3PLs), 14. 7 percent from man-
ufacturing, and 14.0 percent from retail. The remaining 4
percent fell into the “other” category. Slightly over half the
facilities profiled in the study ( 54. 3 percent) were located
in North America, while the remainder were in Europe, the
Middle East, Africa, Asia, and Latin America.
In considering the results that follow, readers should keep
in mind that the benefits reflect what respondents identified
as their “most effective” tactic for reducing costs over the
past five years. The way this question is worded means that
these are atypical results. These should not be considered the
results the typical company would get from implementing
technology or a process change program. Rather, this is an
analysis comparing the relative benefits of highly successful
technology projects to highly successful process programs.
DIFFERENT STROKES
So where have companies gotten the most bang for their
buck when it comes to DC cost cutting initiatives? As it
turns out, the answer depends on whether the company is
a shipper or a 3PL.
For the shippers who participated in the survey, technology projects proved to be the hands-down winner. Nearly
half ( 48 percent) reported that their greatest improvements
When it comes to boosting DC performance, are you better off
focusing on process or technology? According to a recent study,
the answer depends on whether you’re a shipper or a 3PL.
WAREHOUSE
PERFORMANCE
IMPROVEMENT PROGRAMS:
What works best?
