Ten Years in Measurement - WERC Presentation - 2013 - ATL.pdf · Ten Years in Measurement 2013©MANRODT/TILLMAN/VITASEK ... A Primer – What is “Best in Class”? Best-in-Class

Results of the 2013 Study!

Ten Years in Measurement

2 0 1 3 © M A N R O D T / T I L L M A N / V I T A S E K

The Research Team

!  Karl B. Manrodt, Ph.D. -  Professor

!  Joe Tillman -  Senior Researcher -  Supply Chain Visions !

!  Kate Vitasek -  Founder -  Supply Chain Visions

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Our Discussion Today

!  Why, how, and what

!  Who’s in the data

!  What did we learn

!  Ten years in measurement

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Why – The Purpose!

To eradicate bad

warehousing practices

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Before We Begin….!

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I agree benchmarking can add some value but I am very skeptical of the amount of energy, time and resources put against it. First, I find most benchmark their own industry (which is stated above). What if the entire industry really stinks? What if you find you just stink a little bit less? What you may find is someone who comes in and totally rocks the industry will kill you as a competitor if all you try to do is be a bit better. Would the iPad or iPhone have been invented if Steve Jobs "benchmarked" then tried to be a bit better? I doubt it. Once he realized that the industries were horrible at what they were doing he reinvented the industry. I highly encourage supply chain managers to do just that. Realize the industry is woefully lacking in innovation, service and cost (Cost as % of GDP has remained stagnant) and then forget the competition and set your own path. That is what disruptive innovation is all about.!

Email comment, October 26, 2013


How – The Process!

! Engage!-  Capture performance on 44 key distribution metrics!

! Examine!-  To determine differences in performance based on

people, practices, and technology!! Exchange!

-  How do you use the data?!-  Where do you get it from?!-  Which 2 – 3 metrics are most critical? !

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What – The Results

! Benchmarks of key measures by industry and type of business

! Understand how performance of key measures has changed over time

! Link key measures to various demographics to help companies better compare themselves to organizations similar to their own

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WHO’S IN THE DATA


Breakdown By Industry

This year’s combined survey had over 800 participants of which 535 provided usable responses

Retail 16.5%

Manufacturing 35.4%

Life Sciences - Pharmaceuticals

3.7%

Life Sciences - Medical Devices

4.9%

3rd Party Warehouse

18.9%

Transportation Service Provider

2.4%

Other 7.3%

Utilities / Government 1.8%

Food distribution 1.2% Wholesale distribution

7.9%

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Nature of Work at the Facility

Type of Operation % of Total % Case

vs. Pallet Broken Case Picking 38.1%

69.2% Full Case Picking 31.1% Full Pallet Picking 12.1%

30.8% Partial Pallet Picking 18.7%

Majority (69.2%) focus on case picking vs. pallets

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Primary Customer Served

Manufacturer Wholesaler/ Distributor

“Always the Low Price”!

Retailer

15.3% 40.5% 22.7% 21.5%

End User/ Consumer

Respondents serve customers across the supply chain

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Demographics by Company Size

37.4%

34.8%

27.7%

29.6%

39.3%

31.1%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0%

< $100 million

$100 million -$1 billion

> $1 billion

2012 2013

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What Did We Learn?

Highlights of Results!


Network Design!

How Often Do You Review Your Network Design?

Percent Of All Respondents

Every 6 months or less 14% On an annual basis 31% Between 1 to 2 years 13% Between 2 to 5 years 10% More than 5 years 5%

Only when we have a significant change (e.g. merger/acquisition/divestiture) 18%

We have not reviewed our network design 9%

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Some Things Never Change……

*New metric added in 2007

Top 12 Most Popular Measures Used by Respondents in 2013 Metric In Order of Popularity – 2013 2012 Rank 2011 Rank

1. On time shipments – Customer 1 1

2. Internal order cycle time – Customer 5 6

3. Dock-to-stock cycle time, in hours – Operational 4 5

4. Total order cycle time – Customer 6 7

5. Order picking accuracy – Quality 2 3

6. Lines picked and shipped per hour – Operational 8 8

7. Lines received and put away per hour – Operational 11 9

8. Percent of supplier orders received damage free – Operational 12 10

9. Average warehouse capacity used – Capacity 3 2

10. Order Fill Rate – Operational Not in Top 12 Not in Top 12

11. Percent of supplier orders received with correct documentation – Operational Not in Top 12 Not in Top 12

12. Peak warehouse capacity used – Capacity 7 4

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A Primer – What is “Best in Class”?

Best-in-Class Metric Performance level among the

top 20% of the reported metrics

Industry Average (for metric)

Industry Median (for metric)

Top 20%

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Metric Major

Opportunity Disad-

vantage Typical Advantage Best in Class Median

QUINTILE RANKINGS These columns split all data responses into 5 equally divided

groups. Each quintile ranking indicates 20% of the responses, with the 5 groups divided categories representing

This represents the metric that is

being examined (metrics

definitions can be found in

the complete WERCWatch

report)

Represents the lowest

20% of responses

Represents responses ranging in the 20-40th percentile

Represents responses ranging in

the 40-60th percentile

Represents responses ranging in

the 60-80th percentile

Represents top 20% of

all responses

This indicates the

actual median

performance of all

respondents

One More Time A Guide to Reading the Benchmark Quintile Reports

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Top 12 Overall Quintile Benchmarks

Metric Major

Opportunity Disadvantage Typical Advantage Best in Class Median

On Time Shipments! Less than 96.3%! >= 96.3 and <

98.1%! >= 98.1 and <

99.1%! >= 99.1 and

< 99.8%! >= 99.8%! 98.7%!

Internal Order Cycle Time

Greater than 27.2 Hours! >= 24 and < 27.2!

>= 10.8 and < 24!

>= 4 and < 10.8! < 4 Hours!

16.0 Hours!

Dock to Stock Cycle Time, in Hours!

Greater than 24 Hours! >= 9.6 and < 24!

>= 5 and < 9.6!

>= 2.2 and < 5! < 2.2 Hours! 8.0 Hours!

Total Order Cycle Time !

Greater than 72 Hours! >= 36 and < 72!

>= 24 and < 36!

>= 8 and < 24! < 8 Hours!

24.0 Hours!

Order Picking Accuracy!

Less than 98%! >= 98 and <

99.01%! >= 99.01 and

< 99.8%! >= 99.8 and

< 99.9%! >= 99.9%! 99.5%!

Lines Picked and Shipped per Hour!

Less than 11.8 Lines per Hour!

>= 11.8 and < 22.6!

>= 22.6 and < 43.8!

>= 43.8 and < 74.2!

>= 74.2 Lines per

Hour!

28.0 Lines per Hour!


Top 12 Overall Quintile Benchmarks

Metric Major

Opportunity Disadvantage Typical Advantage Best in Class Median

Lines Received and Put Away per Hour

Less than 7.7 Lines per Hour! >= 7.7 and < 14.9!

>= 14.9 and < 24.4!

>= 24.4 and < 50!

>= 50 Lines per Hour!

20 Lines per Hour!

Percent of Supplier Orders Received Damage Free

Less than 95%! >= 95 and < 98%! >= 98 and <

99%! >= 99 and <

99.5%! >= 99.5%! 98.5%!

Average Warehouse Capacity Used

Less than 71.5%! >= 71.5 and <

80%! >= 80 and <

85%! >= 85 and <

92.2%! >= 92.2%! 85.0%!

Order Fill Rate Less than 94%! >= 94 and < 98%! >= 98 and <

99%! >= 99 and <

99.8%! >= 99.8%! 98.3%!

Percent of Supplier Orders Received with Correct Documents

Less than 90%! >= 90 and < 95%! >= 95 and <

98%! >= 98 and <

99%! >= 99%! 97.4%!

Peak Warehouse Capacity Used

Less than 85%! >= 85 and < 92%! >= 92 and <

98%! >= 98 and <

100%! >= 100%! 95.0%!

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Ten Years of Measurement


DC Measures Timeline!!  2003

-  Identified key metrics in warehousing/DC industry

!  2005 -  Provided benchmarks for best-in-class and median performers

!  2006 -  Started comparing trends and linking to demographics

!  2007 -  GMA/FMI Perfect Order metric added to the survey -  Created quintile tables to display benchmarks

!  2008!-  Focused on technology and impact on performance!

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DC Measures Timeline!

!  2009 -  Explored five year trends on Top 12 and most changes

!  2010 -  Compared good and bad warehouses and their performance -  Re-examined technology and it’s impact on specific metrics

!  2011 -  Importance of moving beyond numbers – focused on driving

performance gains through Seven Step Process

!  2012 -  Explored importance of soft metrics and measuring the impact of

performance on relationships

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Critical Trends !

! Plateauing near perfection!-  Best in Class performers reaching the top!

! March of the median!-  The difference in performance between best in

class and median performers continues to grow smaller over time!

! Quintile squint!-  Compression in quintiles as overall performance

improves!

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On Time Shipments!

97.0%&

97.3%&

97.6%&

97.9%&

98.2%&

98.5%&

98.8%&

99.1%&

99.4%&

99.7%&

100.0%&

2005& 2006& 2007& 2008& 2009& 2010& 2011& 2012& 2013&

Percen

t'of'O

n'Time'Shipmen

ts'

'On'Time'Shipments'

Median&

Best&in&Class&

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Median Picking Up Accuracy!

98.4%&

98.6%&

98.8%&

99.0%&

99.2%&

99.4%&

99.6%&

99.8%&

100.0%&

2005& 2006& 2007& 2008& 2009& 2010& 2011& 2012& 2013&

Percen

t'of'O

rder'Picking'Accua

rcy'

'Order'Picking'Accuracy'

Median&

Best&in&Class&

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An Improving Economy?!

0.0%$

1.0%$

2.0%$

3.0%$

4.0%$

5.0%$

6.0%$

2005$ 2006$ 2007$ 2008$ 2009$ 2010$ 2011$ 2012$ 2013$

Percen

t'of'B

acko

rders'

Backorders'as'a'%'of'Total'Orders'

Median$

Best$in$Class$

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Customers Still Impatient!

0.00%$

0.50%$

1.00%$

1.50%$

2.00%$

2.50%$

3.00%$

3.50%$

2005$ 2006$ 2007$ 2008$ 2009$ 2010$ 2011$ 2012$ 2013$

Percen

t'of'Lost'S

ales'

Lost'Sales'(Percent'of'SKUs'Stocked'Out)'

Median$

Best$in$Class$

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Order Fill Rate!

94.0%&

95.0%&

96.0%&

97.0%&

98.0%&

99.0%&

100.0%&

2005& 2006& 2007& 2008& 2009& 2010& 2011& 2012& 2013&

Percen

t'of'O

rder'Fill'Rate'

Order'Fill'Rate'

Median&

Best&in&Class&

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Climbing A Crowded Mt. Everest!

90 91 92 93 94 95 96 97 98 99

100

On time Supplier orders

received damage free

Order pick accuracy

Order fill rate

Best in Class Advantage Typical Disadvantage Major Opportunity

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Squint To See The Difference!

0

1

2

3

4

5

6

7

8

9

10

Lost sales Backorders

Major Opportunity Disadvantage Typical Advantage Best in Class

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.37 .6

I’m Special


Who Are You?!! Questions we are asked!

-  What does the average respondent look like?!-  What metrics do they use?!-  How many and the size of facilities?!-  How often do you review network design!

! We looked at:!-  All!-  Industry – Manufacturing!-  Strategy – Be all things to all people (Mix)!-  Operations – Broken case!-  Primary Customer – Wholesaler!-  Sales – Less than $100 Million!

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Respondents Are Different?!

Respondent Group SKUs Median Number of Facilities

Median Square Feet of Facilities

All 8,000 5 250,000 Industry – Manufacturing 5,000 5 100,000 Strategy – Be all things to all people (mix)

5,600 5 300,000

Operations – Broken Case

13,000 5 218,000

Customer – Wholesaler 5,000 6 300,000 Sales – < $100 million 6,050 4 100,000

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_______ – It Doesn’t Matter Performance – On Time Shipments!

Respondent Group

Major Opportunity Disadvantage Typical Advantage Best in

Class Median

Industry – Manufacturing Less than

96.3% >= 96.3% and <

97.8% >= 97.8%

and < 98.4% >=98.4% and <

99.5% >= 99.5% 98.1%

Strategy – Be all things to all people (mix)

Less than 97.12%

>= 97.12% and < 98.34%

>= 98.34% and < 99.1%

>=99.1% and < 99.7% >= 99.7% 99.0%

Operations – Broken Case Less than 96% >= 96% and <

98.08%

>= 98.08% and <

99.16%

>=99.16% and < 99.8% >= 99.8% 98.7%

Customer – Wholesaler Less than

96.2% >= 96.2% and <

98.08% >= 98.08% and < 99.1%

>=99.1% and < 99.7% >= 99.7% 98.4%

Sales – < $100 million Less than

95.72% >= 95.72% and

< 98.39% >= 98.39% and < 99.5%

>=99.5% and < 99.86% >= 99.86% 99.0

Median Response

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Manufacturers Lag BehindInternal Order Cycle Time, in Hours!

Respondent Group


Class Median

Industry – Manufacturing Greater than

28.8 Hours >= 24 and <

28.8 >= 12.2 and

< 24 >=1.3 and <

12.2 < 1.3 Hours 24.0 Hours


Greater than 24 Hours

>= 24 and < 24

>= 12.4 and < 24

>=6 and < 12.4 < 6 Hours 16.0 Hours

Operations – Broken Case Greater than

24 Hours >= 19.2 and <

24 >= 8.24 and

< 19.2 >=3.2 and <

8.24 < 3.2 Hours 14.0 Hours

Customer – Wholesaler Greater than

24 Hours >= 24 and <

24 >= 12 and <

24 >=4.2 and <

12 < 4.2 Hours 15.5 Hours

Sales – < $100 million Greater than


24 >= 7.6 and

< 24 >=2.4 and <

7.6 < 2.4 Hours 14.0 Hours

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Manufacturers Make Up Time Dock to Stock Cycle Time, in Hours!

Respondent Group


Class Median

Industry – Manufacturing Greater than

24 Hours >= 6 and < 24 >= 3.6 and < 6

>=1 and < 3.6 < 1 Hours 4.6 Hours


Greater than 24 Hours

>= 11.704 and < 24

>= 6 and < 11.704

>=2.32 and < 6 < 2.32 Hours 8.0 Hours

Operations – Broken Case Greater than

20 Hours >= 11.124 and < 20

>= 5.76 and < 11.124

>=3 and < 5.76 < 3 Hours 8.0 Hours

Customer – Wholesaler Greater than


24 >= 5.2 and

< 12 >=2 and <

5.2 < 2 Hours 8.0 Hours

Sales – < $100 million Greater than

24 Hours >= 5.7 and <

24 >= 4 and <

5.7 >=1 and < 4 < 1 Hours 4.0 Hours

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The Next Ten Years


Mind The Gap

!  Median performance continues to improve

!  Trend towards greater improvement as differences in the quintiles are erased

!  What are you doing to improve performance

!  What new areas do we need to start measuring due to the changing environment?

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Performance As Table Stakes!

! As performance improves, and becomes less of a differentiator, greater need to focus on softer skills!

-  Communication!-  Collaboration!-  Leadership!-  Relationship building!

! 360 degree feedback!-  Suppliers!-  Direct reports!-  Supervisor!-  Customers!

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And Finally…

! What metrics matter to me? -  Can’t be best in everything

! What is my performance on critical metrics? -  How good is ‘good’?

! Quantitative and qualitative benchmarking

Use the conference to start Karmic benchmarking

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Where To Go From Here?

Pick Up a Copy of the

Complete Report and Start your

Benchmarking Journey!

Or, find it in the Resource Center at www.werc.org

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For Further Information

!  Karl B. Manrodt, Ph.D. -  [email protected] -  www.manrodt.com

!  Joseph Tillman -  [email protected] -  www.scvisions.com

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