This month in Modern: Still doing more with less

When we shared the 2010 findings of the Supply Chain Group’s annual Warehouse & Distribution Center Operations Survey, our readers told us they had finally turned a psychological corner and were feeling more upbeat about their prospects for equipment investment and systems expansion inside their four walls.

In fact, those findings revealed that inventory turns had increased, more projects were going back on the books, and incentive programs were being dusted off and re-employed to offer a much-needed boost to an already weary workforce. We reported that finally the specter of continued cost reduction was being exorcised and warehouse and DC managers were allocating investment to where it was most needed.

How quickly things can change.

When we dove into the findings of our 2011 survey last month, we realized that much of last year’s optimism had been tempered. The still unstable U.S. economy already had many back on their heels. But now the growing crisis in Europe and a call for even more belt-tightening in light of continued global volatility has pushed them flat on their backs in terms of new investment. According to these results, the new mantra is the old 2008 mantra: Do more with less.

The high-level findings gathered from 598 respondents (consisting of mid-level, upper-level, and senior-level warehouse and DC decision makers) revealed that inventory turns are not improving, more DCs are closing rather than opening, and many companies are opting to be more cautious, leveraging cost reduction measures that require little or no investment. Editor at large Maida Napolitano and our research team put all of the 2011 findings into context starting with our feature article “2011 Warehouse/DC Operations Survey; Still doing more with less.”

Research partner Norm Saenz of supply chain consultancy TranSystems tells Napolitano that the “more with less” mantra was heard loud and clear in this year’s results. “In fact, most companies are trying to do more with fewer people, fewer buildings and less automation investment,” says Saenz. And as a result, he adds that they’re operating with a reduced staff, consolidating facilities and taking the more conventional route in terms of storage and picking.

A finding that immediately leaped out at the team is that after years of decrease, there are more respondents operating single-facility networks this year than the past year—from 30% in 2010 to 35% in 2011. However, Napolitano reports that consolidation is just one tactic being adopted.

To lower operating costs, more than 75% of respondents say they’re improving warehousing processes, 60% are improving inventory control, and nearly half have changed racks as well as their layouts. “And when compared to last year’s results, significantly more companies are reducing staff—43% compared to last year’s 36%,” adds Napolitano.

But while this year’s results may offer a quick flashback to 2008, especially in terms of staff reduction, research partner Don Derewecki of TranSystems says that much of these cost-cutting best practices have been long overdue—an indication of a more enlightened management community functioning in a new world. “If you ask me, that is just sound management,” says Derewecki. “The ‘more with less’ mantra will be and should be the chant for U.S. logistics operations moving into the future.”