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July Roundup: Distribution Center Metrics, The State of Logistics

What we're reading this month that you might find useful

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Every month, we curate the best of what we’ve read, watched or downloaded in the world of manufacturing, distribution, logistics, storage and handling. Here’s what we have seen in July.

WERC releases 2021 distribution center measures report

While the adage “You can’t improve what you can’t measure” is actually not what Peter Drucker said or meant, it’s still important to measure what you can. The Warehousing Education Research Council’s 2022 DC measures report—packed with 36 key operational metrics for distribution center operators—may be the group’s most important in years.

We’ve watched the world’s shift toward distribution and ecommerce faster than ever in the last few years, so the report’s focus is one you should consider if you operate a distribution center, ecommerce fulfillment operation or warehouse. 

WERC 2022 distribution center report cover

The report breaks the study into these categories:

  • Customer metrics
  • Inbound operational metrics
  • Outbound operational metrics
  • Financial metrics
  • Capacity and quality metrics
  • Employee metrics
  • Perfect order metrics
  • Cash to cash metrics

WERC defines these metrics and shows you how to calculate each. This should help you create a balanced approach to authentic, verifiable operations analysis.

What should matter most for you? This depends on your current operation, KPIs and business goals that will always be different from operation to operation. The best place to start is to focus first on what impacts your customers most. If it’s quality, if it’s on-time delivery, if it’s anything in particular, focus on that area.

The WERC report is $550, but costs members $175.

The state of Logistics in 2022: “out of synch”

warehouse aerial view

Logistics Management reports, as we all might expect, that logistics are a mixed bag in 2022, with higher expenses and demand driving the industry. Consumers are still buying and demanding on-time deliveries, whether that is to retail locations or their front porches. We see this on the ground level in warehousing and distribution. Manufacturers see it from both sides as well: they need raw materials and components from a strained supply chain on one side, and experience pressure to produce finished goods on the other.

The pressure is described as “extraordinary” by author John Schulz.

Key takeaways

  • The U.S. cost of logistics rose by 22.4% last year. That’s 8% of America’s 2021 GDP.
  • Warehousing market is now estimated at $80 billion, with continued double-digit annual growth. Demand for warehouse capacity will continue to grow in 2022 and beyond.
  • If your company hasn’t focused on its warehousing capacity, it’s past time to do so. Since warehousing is so much more than a place to store, ship and handle things, it’s time for businesses to understand and capitalize on it.
  • This report has a sunny view of inflation, projecting a peak in 2022, and a drop in 2023—which is one of the brightest projections you’ll find. Since shipping and logistics are a primary inflation driver, this is a particularly important notion.

Logistics Management: “Companies that long viewed warehousing as a sleepy backwater need to recognize it’s now an essential, strategic competency,”

Working with Gen Z and millennials

Workers in a warehouse of various ages.

It’s reality, according to Gallup: 46% of the United States workforce is made of Gen Z and millennials. The way they see work and understand leadership are very different from Gen X and Baby Boomers, and you need to know how to work with them if you want to adequately staff your operation. Every year, this group expands its share of the workforce as boomers accelerate toward retirement.

Key takeaways

  • Your labor pool is getting younger: Because physical work like manufacturing and order picking will likely take younger and more active workers, this is particularly important for people in our business.
  • Ethics vs. wellbeing: Gen X and Baby Boomers say ethical leadership is their primary concern, but Gen Z and millennials rank company’s consideration of their well-being as people. These are not competing goals, as ethical leaders tend to more fully value their employees’ welfare. Make sure your floor managers understand and work within that balance. Also: younger workers also prize ethical leadership, so this can be a win-win for organizations that practice it.
  • Financial stability vs. diversity: Where the two groups differ is that older workers prioritize the organization’s financial stability, while younger ones believe that diversity and inclusion are more critical. In competitive employment markets, you’ll be leading a variety of people from many backgrounds, so becoming adept at this is critical.
  • Gen Z and millennials prize transparent and open leadership: They were deeply affected by the 2008 financial crisis and the opaque processes that helped lead to it. Companies that want to compete for these employees should implement processes that enhance information sharing. This works for open book companies, which share financial information freely. Create defined processes that are communicated through many channels. Don’t leave it to emails and break room notices. Use meetings, town halls, newsletters and other channels. Survey your people and respond to the results.

The key takeaway according to Gallup: “Employees experience your organization through their manager. If your managers aren’t doing it, it’s not your culture.”

More of interest this month

Scott Stone is Cisco-Eagle's Vice President of Marketing with more than thirty years of experience in material handling, warehousing and industrial operations. His work is published in multiple industry journals an websites on a variety of warehousing topics. He writes about automation, warehousing, safety, manufacturing and other areas of concern for industrial operations and those who operate them.

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