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Warehouse performance improvement programs: What works best?

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.

By Steve Banker

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 manufacturing, 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.

 

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Logistics Engineering, LLC
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Email: rjcudnik@logisticsengineering.com

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