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Feature Article from Our Distribution and Materials Handling Subject Area - See All

From SCDigest's On-Target E-Magazine

- May 27, 2015 -

 

Supply Chain News: The Top Distribution Center Metrics for 2015


Dr. Karl Manrodt and Company Identify the Top Dozen Once Again; Primary Strategies Don't Much Impact Metrics or Performance

 

SCDigest Editorial Staff

 

Dr. Karl Manrodt and the Warehouse Education and Research Council (WERC) are back with the annual "DC Metrics" report, first launched in 2003.

 

Manrodt has recently switched teams, if you will, moving from his long time position at Georgia Southern University to Georgia College and State University. He was assisted in the 2015 report by Dr. Donnie William, also of Georgia College, and Joseph Tillman, founder of TSquared Logistics.


SCDigest Says:
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the companies saying they were customer service focused didn't score really any better on customer-service focused metrics that did companies that said they were cost focused.
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The report covers a wide range of results across many different metric areas. It is based on survey responses from about 450 logistics professionals.

 

One of the most popular sections each year is a list of the 12 most commonly used metrics for DC performance, provided below for 2015 along with the changes from 2014 and 2013.

 

Top DC Metrics Used 2015 vs Prior Years

 

Metric
2015 Rank
2014
2013
On-Time Shipments
1
1
1
Internal Order Cycle Time
2
2
2
Dock to Stock Cycle Time
3
4
4
Total Order Cycle Time
4
3
3
Order Picking Accuracy
5
5
5
Average Warehouse Capacity Used
6
8
9
Peak Warehouse Capacity Used
7
9
12
Backorders as Percent of Total Orders
8
11
-
Backorders as Percent of Total Lines
9
-
-
Percent of Suppler Orders Received Damage Freee
10
7
8
Lines Picked and Shipped per Person Hour
11
6
6
Lines Received and Putaway per Hour
12
10
11

 

 

SCDigest recommends that next year the survey should distinguish between a metric for on-time shipments and another for on-time delivery. These are two very different things, as many companies have learned when moving from a focus on on-time shipping to on-time delivery, and it would be interesting to see how many companies are using the more challenging metric - and what that performance is.

 

In a section at the end of the report that provides definitions of dozens of metrics, on-time shipping and on-time delivery are really sort of combined, which we believe is incorrect.


(Distribution/Materials Handling Story Continues Below )

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The report - available for free to WERC members - as it has done for quite awhile looks at the numbers in part based on what companies say is their primary strategic differentiation: low cost focus, customer service focus, product differentiation focus, or trying to excel at all of these things.

This dates back to a very poplar 1997 book titled "The Discipline of Market Leaders," by Michael Treacy and Fred Wiersema, which argued the most successful companies only put a primary focus on one of those three main areas (cost, service, or product), and while such companies had to be good in the other two areas, they did not have to be great at them.

 

For this year's DC metrics report, the top strategy was customer service, with 42% of respondents, followed closely by the "all things to all people" hybrid type of strategy, at about 37%.

 

Perhaps surprisingly, cost focus and product innovaton focus each only polled around 10% of respondents.

 

Maybe more interestingly, Manrodt says that regardless of which strategy respondents said their companies were pursuing, not only did they use the same metrics, their performance on the metrics were about the same too.

 

In other words, the companies saying they were customer service focused didn't score really any better on customer-service focused metrics that did companies that said they were cost focused.

 

Now go figure that one.


Anything you think should be in the top 12 DC metrics list that isn't? Is the key really being "all tings to all people" today, versus Discipline of Market Leaders thinking? Let us know your thoughts at the Feedback button (email) or section (web form) below.

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