Does your DC measure up?
WERC's fourth-annual benchmarking study provides a ruler for measuring the performance of your distribution center.
By Corinne Kator, Associate Editor -- Modern Materials Handling, 5/1/2007
It’s statistically impossible for everyone to be better than average. But according to a benchmarking report published by the Warehousing Education and Research Council (WERC, www.werc.org), the majority of people running distribution centers rate their own performance “above average.”
“People inherently think they’re better than they are,” says Kate Vitasek, managing partner of Supply Chain Visions (www.scvisions.com) and an author of the report. And that’s why benchmarking is so important.
The WERC study compares data on 45 operational metrics provided by 975 survey respondents. The respondents represent a variety of industries, company sizes and customers served. The majority focus on full-case or broken-case picking (64.5%) as opposed to full-pallet or partial-pallet picking (35.5%).
When it comes to metrics, Vitasek recommends companies focus on improving those measures that are most important to their customers. A place to begin, she suggests, is with the four generally accepted elements of the “perfect order”:
- percent of orders delivered on time
- percent of orders shipped complete
- percent of orders shipped damage free
- percent of orders sent with correct documentation (ASN/invoice)
According to the WERC report, which was released last month at the organization’s annual conference in Nashville, Tenn., the following performance levels are considered “best practice” for these metrics (see “Performance classification of Perfect Order metrics” table on the next page for more detail):
- delivering 99% of orders on time
- shipping 99.3% of orders complete
- shipping 99.8% of orders free of damage
- sending 99.99% of orders with correct documentation
To be considered best practice, the level of performance had to fall within the top 20% of all respondents.
Not all companies provided data for all metrics, so the authors of the report note these might be particularly high benchmarks.
“It is our hypothesis,” they write, “that companies that do not collect data are probably not performing as well as those that do collect the data.”
More than 85% of survey respondents report tracking on-time shipments, making this the most popular metric for the second year in a row. Vitasek notes that far more companies track on-time shipments than on-time deliveries. Perhaps it’s this focus on internal metrics rather than customer-facing metrics, she says, that leads companies to an inflated view of their own performance.
The full benchmarking report, titled “DC Measures 2007” is available to WERC members at www.werc.org.
| Perfect order metric | Major opportunity | Disadvantage | Typical | Advantage | Best in class | Median |
| Orders delivered on time | Less than 92% | 92% to 95% | 95% to 98% | 98% to 99% | 99% or greater | 97% |
| Orders shipped complete | Less than 92% | 92% to 96% | 96% to 98.5% | 98.5% to 99.3% | 99.3% or greater | 98% |
| Orders shipped damage free (outbound) | Less than 96.24% | 96.24% to 98.5% | 98.5% to 99% | 99% to 99.8% | 99.8% or greater | 99% |
| Orders sent with correct documentation | Less than 98% | 98% to 99% | 99 to 99.54% | 99.54 to 99.99% | 99.99% or greater | 99% |
| Source: WERC, DC Measures 2007 | ||||||
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