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Manufacturing & Distribution Professionals Pressured to “Deliver More Value”

distribution center conveyor system

The Integrated Systems and Controls (ISC) Council of Material Handling Industry of America has released a new report titled An Evaluation of Operational Performance in Warehousing, Distribution and Manufacturing., and it has some interesting information for those who operate warehouses, distribution centers, manufacturing, and commercial operations.

The key thing? You’re still being asked to squeeze more value from your operation – and you need to be able to do it with fewer resources.

The report states that many respondents anticipate growth in orders, business, and customer demand in 2011, even with the economy still shaky. This makes sense, as certain pent-up demand in the economy must be met at some point. I saw a billboard the other day with this gem: “The thing about recessions is this: they end.” And that’s a true statement. But even if this recession is technically over, everyone understands that the employment and growth numbers are still low. Some of that demand must increase in 2011, and most everyone thinks it will.

Survey respondents also expressed concern about the their ability to recruit & retain a qualified workforce – even in this economy. While it’s true that many candidates are available, companies have worked hard to retain their best employees. Prying those higher performers out of their existing jobs may be more difficult in this economic climate.

What are you expected to do?

The bulk of the MHIA respondents express satisfaction with their current systems and processes, but an equal number stated that they were clearly not excellent at critical metrics such as on-time deliveries, picking, shipping, and receiving. These conflicted findings tell us that people aren’t satisfied with what they are doing, but perhaps lack the resources or management approvals to upgrade. Some respondents also believed that their operations could optimize further with automation, identification systems, as/rs, robotics, and other enhancements.

  • Overall, lowering costs seems to be the top macro focus, at 42%.
  • Following that, productivity improvements at 30%
  • Profit margin improvement came in at 20%,
  • Improved inventory management: 20%
  • Greater inventory accuracy 20%

The most important metrics vs benchmarking partners, per survey respondents:

  • On time delivery: 30%
  • Cost per order: 21%
  • Order fill rate: 20%
  • Labor costs: 10%
  • Inventory on hand: 10%
  • Order accuracy: 10%

The vast majority of manufacturers (89%) and warehousing/distribution professionals (85%) plan to undertake process improvements during the next 12 months. More than half of all respondents (54%) plan to make a capital equipment investment in material handling and logistics equipment, systems and software during the next 12 months. While warehouse  racks, lift trucks, dock equipment, and totes/containers topped the list of planned expenditures for the coming year, more than half of manufacturing and warehousing/distribution respondents voluntarily associated automation with the types of solutions that would improve the performance of their operational performance.

Click here to view a summary report of the survey results. (This is a PDF File, and it opens a new window when clicked).

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Scott Stone Cisco-Eagle's Director of Marketing. He has over 25 years of experience in the industry.