So faced with the competitive pressure to reduce overall expenses… what do the best companies actually do to render warehouse improvements?
As hinted at earlier, Aberdeen Research took a “PACE” – framed approach, as illustrated in the table below:
According to their research, the Number One answer among top-performing companies was to adopt more efficient order fulfillment processes. In fact, across the entire spectrum of company “types” reported (i.e., Best of Class, Average, and Laggards) this was cited by roughly 70%. Collaborating with customers to better predict demand came in a distant second. Among Best in Class firms, offering additional value-added services ranked a close third.
Five characteristics of action stood out among all firms:
Process: Here, accurate knowledge of true on-hand inventories was very important. A perpetually updated and accurate inventory executed via automation and cycle counting was cited as delivering nearly 5% higher inventory accuracy, compared to firms with manual inventories.
Organization: Centralized allocation of warehouse tasks, directions and processes was prevalent in twice as many Best of Class firms as it was in the Laggards. Those Best of Class firms ended up with better improvement than others in on-time delivery improvement as well as under budget performance.
Knowledge Management: In essence, Best of Class companies had better trained warehouse staff. And with people accounting for 35% of warehouse overall costs, a better trained staff yielded over 3% better pick accuracy and over 4% better on-time shipments.
Technology: Best of Class companies used bar-code scanning and related automation strategies for warehouse transactions to accomplish somewhat higher pick accuracy but also dramatically improved order turnaround – about 2 days versus 4.
Performance Management: Rigorous performance monitoring and benchmarking should be combined with an intelligent design of warehouse tasks and movements, designs and processes. Best of Class companies use Engineered Labor Standards to ensure compliance and improvement in the warehouse.
In our next and second-to-last post: Aberdeen’s recommendations for the warehouse. What YOU need to know to improve your warehouse performance.