Of course, payback would logically be related to how a
warehouse was performing before the technology or process program was introduced. If a warehouse is significantly
underperforming, the greater the chances that a project will
result in significant improvements.
Of the two groups, the process respondents were more
likely to say their warehouses had been “significantly underperforming” before the project began; 20 percent of process
respondents said that had been the case, compared with
only 11 percent of technology respondents.
As for the startup process, ARC asked respondents whether they had experienced “significant issues” in launching
the project or program. Not surprisingly, perhaps, software
projects were more likely to be associated with startup
glitches ( 60. 7 percent) than process projects ( 56 percent)
were. Technology projects based on the implementation of
equipment—as opposed to software—created the fewest
significant issues.
Another way to assess the success of a project is to deter-
mine whether it resulted in a one-time cost reduction or in
ongoing distribution cost savings. In this area, process proj-
ects appeared to perform just slightly better than technol-
ogy projects. That finding came as something of a surprise
given that the most common type of process project was
the implementation of a continuous improvement program
and the whole point of these initiatives is to drive gains on
an ongoing basis.
SUCCESS FACTORS
Finally, to gain some insight into what worked and what
didn’t when it came to implementing a warehouse improvement program, ARC asked respondents what factors had
contributed to their project’s success. With respect to technology projects, the respondents identified two factors as
the most important: 1) the process changes the company
put in place to support the technology, and 2) the training
and culture-change program the company implemented to
support the implementation.
As for the process projects, respondents said the biggest
factor in a continuous improvement project’s success was
the company’s culture—that is, whether it had already
committed to a continuous improvement regimen. This
should probably come as no surprise. When you talk to
companies that are proud of their continuous improvement capabilities, they’re sure to tell you that for them,
operational excellence (OpX) is no “one and done” deal;
it’s something they’ve embedded into their culture.
Steve Banker heads up the Supply Chain & Logistics consulting team at ARC
Advisory Group.
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