Cliff Holste, Materials Handling Editor

As usual, the 2010 DC Metrics report was released last week at the annual Warehouse Education and Research Council conference in Anaheim, CA (See Warehouse Education and Research Council (WERC) 2010 Day 1 and 2 Video Review.)

The respondents were roughly broken into thirds between companies over $1 billion in sales (31.9%), those between $100 million and $1 billion (30%), and those under $100 million (38.15).

That is probably a larger proportion of smaller companies than most supply chain surveys, and certainly has an impact on the subsequent numbers. The published version of the report does not really break out the analysis by company size, though in another annual study done by Manrodt he has observed that supply chain performance is generally better the larger a company is.

Manrodt and Vitasek say that one trend in this year's data is that companies tended to move more towards internal measures, versus those focused on customers.

"There is a continued shift from taking a balanced approach to measures to focusing on the internal operations of the warehouse, first noticed last year," they note in the WERCWarch report available to conference attendees and soon on the WERC website. "Firms may feel the need to cut costs and become more efficient in the short term. However, losing site of the customer could cause reductions in loyalty or satisfaction."

Second, as with many other recent studies, this one shows a growing gap between best-in-class peformers and laggards, the authors say.

"Best in class performers did not attain this status serendipitously. They do not simply use benchmarking data to set targets," Manrodt and Vitasek say. "They tend to look behind the numbers to understand how their level of performance was reached by identifying the unique processes, tools, and methods required to achieve best-in-class performance."

What are the Top DC Metrics?

Each year, the study develops a list of the top 10 DC metrics, based on the percent of respondents using a given metric to measure performance.

The list is surprisingly dynamic, in our view, and whether that is the reality or more reflective of a changing respondent base from year to year is unclear.

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This year, the top 10 were as follows: (percentage equals the number of respondents using each metric):

1. On-time shipment to customer: 85.8%

2. Order picking accuracy: 73.2%

3. Warehouse capacity utilization: 70.4%

4. Employee turnover: 60.2%

5. On-time ready to ship: 58.8%

6. Peak warehouse capacity used: 58.7%

7. Fill rate (at order line level): 57.7%

8. Dock to stock cycle time: 56.2%

9. Inventory accuracy by location: 53%

10. Order fill rate: 50.7%

There are a couple of interesting things in these numbers. First, the only one of the top 10 not on the 2009 list was "Inventory accuracy by location." Why this critical metric would not be on the top 10 is not clear. All told, 5 of the 10  for this year (numbers 5-9, as it turns out) were not on the 2005 list of the top 10 metrics used.

"Warehouse capacity used" rocketed from number 10 to number 3, likely a reflection of companies in the recession trying to assess their asset performance and looking for DC consolidation opportunities.

Overall Data

The heart of the data is a series of metrics that compare performance across different quintiles (or five groupings of 20% of performance from the worst (major opportunity) to the best-in-class quintile for each metric).  A median (half above, half below) is also calculated for each metric. Further, the 50 metrics are organized into different types (customer focused, operational, financial, etc.).

Source: WERCWatch 

The end of the report contains a nice summary of how each of these metrics is defined and calculated.

Any reaction to this year's DC Metrics study? Do you believe the gap in performance between the best and the rest is growing or not? Are big companies usually just better? Let us know your thoughts at the Feedback button below.

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