2012 Warehouse/DC Operations Survey: Mixed signals

A record response reveals that readership is divided in terms of investment: One side remains cautious, while the other is on the verge of making significant changes to their warehouse/DC operations.
By Maida Napolitano, Contributing Editor
November 01, 2012 - MMH Editorial

What’s trending?
Despite the mixed signals, there’s one clear conclusion that both Derewecki and Saenz derived from this year’s survey: Corporate is making its presence felt inside the warehouse and DC.
“There’s an increasing recognition of the importance of the supply chain and how much money is being spent on it,” says Derewecki. “Corporate managers have become increasingly focused on the details that make the difference, even at the DC level.”

According to Saenz, this fact is never more evident than in the number of respondents who say they’re using their enterprise resource planning (ERP) system’s warehouse management system (WMS) functionally in the DC (27%)—twice the number of respondents using best-of-breed WMS (13%). “Corporate does not want to play around with expensive WMS packages,” speculates Saenz. “They made a commitment to use an ERP system, so they want to use everything these systems can offer—even though it may not be the best thing for the warehouse.”

Derewecki agrees, adding that the WMS being offered today by the big ERP players “isn’t as bad for the warehouse as it used to be.” He says that 10 years ago some of his clients were forced to use ERP at the DC level because corporate wanted everyone to integrate with the company’s ERP system. “All of the functionalities that managers used to have with their stand-alone WMS just weren’t there,” says Derewecki. “In some cases, they had to switch back to more manual operations.” But these days, he adds, developers have significantly improved the functionality of ERP’s WMS packages. 

“As more companies run their businesses with an ERP system, it’s easier and less costly to simply use that ERP’s WMS,” adds Saenz. “I think this is a trend that’s going to continue.”

There’s also a trend toward a more consolidated network. Since 2010, the percentage of respondents with three or fewer buildings has been steadily increasing, while the percentage with four or more buildings has been steadily decreasing. Saenz believes that it’s all part of a continuing push by companies to do more with less.

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“However, with fewer facilities, you may achieve savings in operating costs, but you may be potentially increasing your freight,” Saenz cautions. “This is not a particularly good move with today’s inflating gasoline prices.”

Even more mixed signals surface from this year’s findings. While some networks may be contracting to fewer facilities, about 60% of respondents are planning to do some sort of expansion this year. Twenty-six percent are increasing their number of SKUs, and 25% are increasing the number of employees.

Despite these plans for expansion, average inventory turns have not improved and remain steady at 8.2. Derewecki offers a possible explanation: “At many companies, in spite of the emphasis on inventory control and the improvement in information systems tools, the proliferation of SKUs has prevented the overall turn ratios from improving.” 

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About the Author

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Maida Napolitano
Contributing Editor

Maida Napolitano has worked as a Senior Engineer for various consulting companies specializing in supply chain, logistics, and physical distribution since 1990. She’s is the principal author for the following publications: Using Modeling to Solve Warehousing Problems (WERC); Making the Move to Cross Docking (WERC); The Time, Space & Cost Guide to Better Warehouse Design (Distribution Group); and Pick This! A Compendium of Piece-Pick Process Alternatives (WERC). She has worked for clients in the food, health care, retail, chemical, manufacturing and cosmetics industries, primarily in the field of facility layout and planning, simulation, ergonomics, and statistic analysis. She holds BS and MS degrees in Industrial Engineering from the University of the Philippines and the New Jersey Institute of Technology, respectively. She can be reached at .(JavaScript must be enabled to view this email address).


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