@ Supply Chain Management

Logistics Management has a new article titled – How does your warehouse stack up? by Maida Napolitano. The survey was conducted jointly by Logistics Management and Gross & Associates, a consulting firm specializing in materials handling and logistics – First Annual Warehousing Trends Survey.

The survey was designed to help today’s warehouse managers get a clearer picture of the challenges they face today and give them an opportunity to see how their warehouse operations compare with the industry average.

The composition of the survey involved:

The results of the Warehouse & DC Trends Study are based on the responses of 485 participants involved in making warehouse-operations decisions at North American companies.

The key findings of the survey are broken down along the following lines:

• Typical Characteristics
• Goals
• Need for speed
• Operations
• Finding a solution
• Technology

Typical Characteristics of an American Warehouse

A typical North American warehouse
is privately owned (77 percent) with either an end consumer (32 percent) or a manufacturer (26 percent) as its primary customer.

1. is less than 250,000 square feet
2. receives and ships a wide variety of products, such as electronics, computers and software (25 percent); paper, packaging, and office supplies (24 percent); and chemicals and raw materials (21 percent).
3. the most common units handled are pallets (87 percent) and cartons (79 percent), with rack storage (86 percent) as the primary storage module, followed by floor storage (62 percent).
4. Over 90 percent of warehouses still pick orders manually using carts and pallet jacks, while 20 percent have evolved to some form of mechanized picking to a conveyor.
5. 3 percent of warehouses have fully automated picking requiring no human intervention. The typical warehouse uses some form of warehouse management system (WMS).
6. Thirty six percent of respondents developed their WMS in-house, 22 percent purchased a stand-alone package, and another 22 percent purchased their WMS as part of an ERP module.
7. Surprisingly, 23 percent of all warehouses still have no WMS, relying mostly on spreadsheets and order-pick sheets.
8. 35 percent of respondents have annual budgets of less than $25,000 for continuous improvement programs and 8 percent don’t even have such a budget.
9. Of the warehouse managers who have a budget of less than $100,000 (59 percent of all respondents), 37 percent said they would spend some of it on materials handling equipment, while 23 percent planned to invest in information management systems.
10. Warehouse managers with budgets of $1 million or more (7 percent of total respondents) focused more of their spending on IT. Of the respondents in this category, 41 percent reported that they would spend on information management systems, while only 21 percent planned to buy materials handling equipment.

Goals
So what are American warehouse managers’ goals?

1. The top objective pursued by warehouse decision-makers this year was increasing customer satisfaction (40 percent).
2. Reducing costs came in second at 32 percent, validating the continuing cost-control burden on today’s warehouse manager.
3. Only 7 percent of respondents reported that they were expanding their operations,
4. 1 percent said they primarily focused on maximizing efficiency by buying new equipment and systems.

And what are customer’s expectation of warehouse providers?

1. 97 percent of respondents said order accuracy was most important.
2. On-time delivery came in second at 94 percent,
3. damage-free shipment was in third place with 91 percent.

Need for speed
As seen from the above customer expectation where on-time delivery was a key customer demand (94% of the time)

1. 82 percent can ship orders in one day or less
2. an impressive 23 percent said they can ship in less than four hours
3. 4 percent of warehouse managers reported that they are still taking more than one week to ship merchandise

The key differentiator between players who are able to respond fast to orders seems to be technology – WMS, bar coding and RF technology (RFID?)

Operations
When surveyed about operational challenges and issues, the survey was further divided into:

• Receiving and shipping
1. ability to depend on truckers being at the appropriate dock door when needed-was deemed most critical by 43 percent of respondents
2. 40 percent reported that shipping productivity was another critical issue
• Picking accuracy
1. the majority of respondents (64 percent) rated order accuracy as a highly critical issue for picking
• Metrics
1. 42 percent of respondents said that they track the percentage of orders with errors
2. 40 percent track the percentage of orders shipped complete
3. value-added services, such as ticketing and customization, were rated as very critical by only 19 percent of respondents
• Overall issues
1. warehouse safety was considered most critical by 44 percent of survey respondents,
2. warehouse security (32 percent)

Finding a solution
How do warehouse managers plan to solve their problems?

1. 46 percent of respondents said they had purchased materials handling equipment.
2. 40 percent purged obsolete/overstock inventory

Technology
So what are the technology issues and solutions high up on a warehouse manager’s list of things?

1. Bar coding led the way with 52 percent
2. WMS followed closely with 48 percent of respondents

Continuous improvement is also making an appearance in the warehousing space if it hasn’t been there for a while already.

1. 56 percent of respondents reporting that they have implemented this strategy
2. 24 percent saying that they are making implementation plans.

Strong interest in relatively new strategies such as “lean” warehousing (34 percent), RFID (33 percent), and Six Sigma certification (30 percent) is apparent, yet few reported implementing these strategies or technologies. Many warehouse managers are adopting a “wait and see” attitude regarding new concepts, and are waiting for further proof of their value for their own warehouses.

I found this survey of warehousing to be quite illuminative in that it highlights what is going well in the warehouse space, the goals that are being formulated and the different programs and technologies employed to meet and/or surpass customer expectations.

Tags: Warehouse Study, Customer Demands, Warehousing, WMS, Continuous Improvement, Bar Coding, Picking accuracy, On-time delivery, Material handling system, Information Technology, lean warehousing, RFID, Six sigma, Obsolete inventory, Order accuracy