E-Commerce Propels 2019 Distribution Center Metrics Study
Accuracy and capacity highlight the WERC/DC Velocity 2019 distribution center survey
August 6, 2019
The annual DC Velocity/WERC (Warehousing Education and Research Council) DC Metrics Survey is out for 2019. This research is conducted every year and offers us insight into what measurements are most critical according to DC managers. As we know, the only constant is change, and this year showcases how e-commerce pushed accuracy and capacity to the forefront of DC managers’ minds.
What performance metrics are DC managers focused on for 2019?
- Order picking accuracy:Â After a couple of years in second place, order picking accuracy landed the top spot. Not only do customers expect accurate shipments of the goods they’ve ordered, but accurate returns and the reverse logistics involved also fuel the need for picking efficiency that meets such strong demand. This shouldn’t be a surprise, as customer preferences boil down to performance, and accurate shipments are near the top of the demand curve.
- Average warehouse capacity used: Dropping from the top spot last year, this e-commerce focused metric is a direct result of such explosive growth in the warehouse and DC sectors. When you buy or expand a facility, you have to maximize every aspect of the space and performance of the operation. It’s too expensive not to maximize every inch, particularly in high-cost areas where land and labor are costly. Each increase can yield better customer satisfaction and profitability. [See: The Final Frontier – Using Space Efficiently]
- Peak warehouse capacity used: Always a priority, but unchanged from last year. You can see this highlighted in the quarterly reports on how much warehouse space is being used and how slow current construction of new space is failing to keep up with demand. Similar to our second metric, how are you utilizing every inch of your space?
- On-time shipments: Moving up from 2018 for good reason. With Amazon announcing that 1-day shipments will be the norm soon, customers are conditioned to expect nothing less than on-time fulfillment and facilities have to improve all aspects of operations to continue to meet the new normal. [See: Ways to Increase Order Picking Speed]
- Inventory-count accuracy by location: This fast-rising metric starts a string of e-commerce oriented newcomers to the top 10. With an increase in smaller orders as customers look to fulfill everyday needs as well as big-ticket items, the need to reduce picking and packing mistakes associated with those orders has taken on greater importance for many operations. [See: The Top Causes of Inventory Inaccuracy]
- Percent of supplier orders received damage-free: Another rising factor in quality customer service. Once thought (even as recently as last year) as a metric sufficiently handled by DCs, with more and more customers using e-commerce for all aspects of daily life, more orders are being pushed through, meaning more chances for damaged items. Since bad shipments directly impact customer service, and because return systems are difficult and expensive, it’s surprising to see this one come in at number six. [See: Ways to Reduce Product Damage in Your Warehouse]
Order fill rate: Outside the Top 10 for the last 2 years, this metric moves up on the back of yet another e-commerce satisfaction issue. The amount of orders filled (and filled accurately) per day is uniquely tied to repeat business and revenue. Keep your orders filled at a certain rate and with a certain accuracy, and you can dominate. [See: Order Fulfillment is the First Line of a Great Customer Experience]- % of supplier orders received with correct documents: An outlier in previous studies, one can assume this represents yet another specific area of customer fulfillment in online orders. Mismatched or missing documents will only lower an order experience and possibly lead to a bad review or worse, a loss of future orders.
- Dock-to-dock cycle time, in hours: Remember on-time shipments (our #4 metric) and 1-day shipping? Well, they and other factors have increased the demand for faster, more accurate delivery. None of this is surprising in the 2019 e-commerce landscape.
- On-time ready to ship: Again, with faster shipping times, higher consumer demand for goods ordered and the need for better fulfillment strategies, seeing this metric round out the top 10 is no surprise. Your supply chain must be ready at all times to meet these needs for bigger growth.
- Part-time workforce to total workforce: So THIS is where the labor metrics went! Despite so many articles and news on labor shortages, this is the first one to show on the survey. More operations are experimenting with automation and ways to reduce the need for a workforce so they can reduce the need for part-time or seasonal help. [See: Days Of Future Past – The Impact Of Industrial Robots On Your Workforce]
- % of cross-trained workers: Honestly, I thought this one would rise higher than its 8th spot last year, but apparently cross-training isn’t as high of a demand as it was. With Amazon announcing they will be re-training a significant amount within their labor force, this one might move back into the top 10 for 2020.
So labor metrics slipped, what gives?
Order fulfillment controls basically every aspect of the Top 10 metrics on the 2019 survey. While labor shortages and workforce issues continue to show up in various media, one could assume that many facilities are learning to use new employment-centric strategies, and as such are focusing more on keeping the customer happy and fulfilled. By implementing automation, a more efficient operational layout or even making little departmental changes that can add up, DCs and warehouses are focused on meeting customer demands with the new reality of an augmented or reduced labor pool.
It will be interesting to see how the industry handles the e-commerce related issues, and if labor creeps back into top considerations.
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Tags: e-commerce, ecommerce, distribution center, warehouse
Evan Fleishacker