DC Velocity - May 2015

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V IS I BI LI TY AND CON T RO L

40 DC VELOCITY MAY 2015 www.dcvelocity.com important to note that both voice and labor management systems are often built on a WMS platform and rely on that system to direct their operations. That is, without a WMS in place, it’s much more difficult to implement voice and LMS technology, and more difficult to get stellar results from those implementations.

When it came to process programs, continuous improvement projects were the most common, representing more than two-thirds (67 percent) of all process initiatives.

EFFECT ON CUSTOMER SERVICE

Of course, cost is not the only measure of a project’s success.

If cost savings come at the expense of service, it would be hard to argue that a project was truly successful. To get a better idea of how these technology and process projects had affected customer service, we asked respondents whether their programs had resulted in changes to on-time shipping performance. For purposes of the survey, we defined orders shipped “on time” as orders shipped at the planned time (“shipped” meaning off the dock and in transit).

As Exhibit 3 indicates, the respondents’ improvement initiatives posed very little threat to service. Projects that improved companies’ cost position usually improved their on-time shipping performance as well.

As for how the two main types of projects stacked up, once again, technology projects performed both better and worse than process projects—they were more likely to boost on-time shipping by over 5 percent and more likely to result in a drop in performance. None of the “process” respondents reported that service had deteriorated as a result of their project.

Based on improvements in on-time shipping, it’s not surprising that high percentages of both technology and process respondents reported better performance against the “perfect order” metric: 75 percent and 66 percent, respectively. (To be considered “perfect,” an order must arrive complete, be delivered on time, arrive free of damage, and be accompanied by the correct invoice and other documentation.) Similarly, 82 percent of process respondents and 64 percent of technology respondents reported improvements in order cycle time.

Successful projects tend to be successful on multiple dimensions. Exhibit 4 indicates some of the other benefits respondents realized from their warehouse improvement programs. In many cases, technology projects and process projects produced essentially the same results.

There were a few differences, however. For instance, tech-
nology projects substantially outperformed their process
counterparts when it came to the warehouse’s ability to
implement other technologies in the future. For their part,
process projects outperformed technology with respect to
executive time devoted to overseeing warehousing and sup-
plier relationships.

PAYBACK, STARTUP ISSUES, AND CONTINUOUS IMPROVEMENT

A payback period is a classic way to measure the success of a project (a payback period being the length of time required for a company to recoup its initial investment through cost savings). In this area, process clearly beat technology. With process programs, over 20 percent of respondents reported that they had been able to launch a program at minimal cost.