Warehouse management: John Hill's tips for tough times

In the current economy, companies are scrambling to cut costs, maintain service levels and increase productivity.

John M. Hill, vice president,TranSystems -- Modern Materials Handling, 12/18/2008 10:18:00 AM

With revenue and margin challenges not expected to diminish for another 12 to 24 months and bailout support an unlikely option for any organization without a fairy godmother, companies are scrambling to cut costs, maintain service levels and increase productivity. Part of the answer is inspired leadership that gains buy in and support from all employees by clearly articulating the challenges – and, collaboratively building and implementing action plans for addressing them that show specifically how individual performance impacts results.

 What we’re talking about here is developing and using internal performance metrics that are directly linked to the company’s business strategy and achievement of corporate short- and longer-term goals. During the past several years, no end of data has been published on productivity performance measurement, metrics and benchmarking. 

 Tools and programs for display of order throughput, accuracy, delivery and cost performance abound as well as a host of indices for comparing that performance against alleged industry standards. That said, for many companies, the urgency of present crises precludes investment in lengthy external benchmarking exercises. Rather, corporate energy needs to be focused on developing, maintaining and broadcasting the internal performance profiles that show all employees how they and the organization are doing on a daily, if not hourly basis – and, what needs to be done to stay on target.

 As you develop your metrics, don’t overlook the importance of addressing the reality that improvement in one area may in fact negatively impact performance in another and adjust your targets accordingly; e.g., an increase in orders per hour will improve on-time deliveries and order cycle times, but may lead to accuracy and damage issues.

 It’s a bit like cutting sideburns, but once you have balanced the trade-offs, the real value of your efforts will not be significant breakthroughs in one or two areas, but the impact of combined contributions from each area that will show up in corporate financials – as good a measuring tool as you can find – while, equally important, keeping the wolves from your doors for the next couple of years and beyond.

 To learn more about metrics that improve your business, be sure to attend John Hill’s presentation, Warehouse Performance Measurement: A Step-by-Step Guide, at ProMat at noon, January 14 in Theater A on the show floor.