Lec .5 Measuring & Benchmarking Warehouse Performance
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Transcript of Lec .5 Measuring & Benchmarking Warehouse Performance
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Warehouse Management:Measuring and Benchmarking Warehouse Performances
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Warehouse Benchmarking
• Setting world-class performance, practices , and infrastructure goals for the warehouse operations
• WBM Permits quantitative assessment of the opportunity for improvement in– Productivity – Shipping accuracy – Inventory accuracy – Dock to dock time – Warehouse order cycle time – Storage density
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Scheme of session
1. Benchmarking & its types?
2. Warehouse performance metrics
3. Warehouse Performance Gap Analysis (WPGA)
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1. Benchmarking & its types?
Benchmarking?• Quantitative assessment of aspects of performance• Process popularized in late 80s ; Xerox Corporation• Aspects
– Internal – External – Competitive
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1. Benchmarking & its types?Internal Benchmarking• Focused on the operations of a single company
Case of Gillette• Operation includes • Mexico , Chile ,Brazil ,Colombia, Argentina• Logistic managers are measured against key indicators:
– Shipping accuracy – Inventory turns– Fill rate– DC productivity– DC storage density– Order cycle time– Perfect order percentage
• Competition among group• Winner teach the group how he/she achieved that success
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1. Benchmarking & its types?
2. External Benchmarking• Looks outside the firm’s industry
Case of Xerox Service Parts• Embarked on major DC reconfiguration• Arranged tours of a variety of DC facilities • Exchanged information from the host company• Performance measurement frame work
– Lines shipped per person hours– High score facilities; a beacon of guidance
• Focal; L.L. Bean (retail)• Process worked and Xerox Chicago DC has achieved Modern
Material Handling’s annual productivity achievement award
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1. Benchmarking & its types?
• Xerox looked outside the industry• ECR in the grocery is the take-off on QR of Textile
industry• QR is a take-off of JIT from the Japanese automotive
industry• Carousels DC take-off of dry clean industryHow• Benchmarks with logistically similar company
– Order value– Average order cube – Average number of items on an order– Transaction volume
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1. Benchmarking & its types?
Case of SBC Telecommunication• Task to reduce material cost by 20 percent maintaining service level• Logistics benchmarking partnership
– SBC (t.c), John Deere (agro machinery), United Stationers & Excel Logistics
• Comparison by developing questionnaire• 12 questions from each company• Identified ULP of each company
– John Deere’s work measurement & safety– SBC; customer service excellence– US productivity– Excel ; Quality performance
• Teach ULP to other partner
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1. Benchmarking & its types?
3. Competitive Benchmarking
• Assessment of company’s logistics performance with competitors
• Case of wholesale distributor of Health care
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2. Traditional WBM metrics
• Operating cost – Warehousing and/or Distribution cost as percentage of sale
• Operating productivity– Measured in units lines, orders , pieces and pallets etc handled
per person hour
• Customer response time• Shipping accuracy• Annual Warehousing cost
– Labor cost (material handling, annual) [labor hrs X WR]– Space cost (storage) [square ft occupied X annual cost of space]– System cost (information handling) [system investment cost X
annual amortization/ depreciation rate
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2. Traditional WBM metrics
Integrating all ,Four important measure A. Warehouse Financial Performance B. Warehouse Productivity Performance C. Warehouse Quality Performance D. Warehouse Cycle Time Performance
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2. Traditional WBM metrics
A. Warehouse Financial Performance
• Warehouse activity based costing (ABC)
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2. Traditional WBM metrics
B. Warehouse Productivity Performance• Productivity
– Labor– Space– Material handling system
• Labor periodicity: – Ratio of units , orders, lines or weight shipped out of the
warehouse TO the number of hours spent in operating, supervising, and managing the warehouse
• Storage Density– The Ratio of the amount of inventory storage capacity TO the
square footage inventory stored• Safety
– Occurrences
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2. Traditional WBM metrics
C. Warehouse Quality Performance
• Four key indicators– Put away accuracy– Inventory accuracy– Picking accuracy– Shipping accuracy
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2. Traditional WBM metrics
D. Warehouse Cycle Time Performance
• Dock-to-stock– Time elapse between shipment receiving at
warehouse to readiness for picking
• WHS Order Cycle Time (WOCT)– Time elapse between releasing order to WHS
floor to readiness for shipment
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3. Warehouse Performance Gap Analysis
• Productivity – lines per hour
• Storage density – Case storage capacity per square foot
• Shipping accuracy – Percent line shipped in error
• Inventory accuracy • Dock-to-stock• Order Preparation Time (WOCT)
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Warehouse Performance Index
o Material handling system investment vs Annual working labor hours
o Workforce demographics and Warehouse performance
o Warehouse size vs. Warehouse performance
o Level of mechanization & Warehouse performance
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Warehouse automation & its dos and don'ts
– Automation can resolve complex issues– WHS practices training: is it a for granted
issue?– Analysis of live system– Use of CFT in performance evaluation– Compare & contrast operations– Mechanization & Flexibi9lity
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World Class warehouse Practices
• Receiving• Put away• Reserve Storage• Picking• Slotting• Replenishment• Shipping• Work Measurement• Communication
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Thanks