A combination or automation, best practices sharing, a robust visibility initiative and consistent WMS upgrades are keys to top warehouse performance, says Aberdeen’s new report, Warehouse Productivity Benchmark.

“Warehousing is no longer the siloed operation where product is moved inefficiently from one point to another,” says Jeff O’Neill, Aberdeen Supply Chain analyst and report author. “Top performers are recognizing the importance of warehouse automation and are finding ways to diminish costs and ramp up customer service.”

Difficulty lowering costs
Six out of 10 companies report they have been unable to lower warehouse costs in the past two years—despite growing pressures to reduce costs. The median annual warhousing expenditure for survey respondents was 4 percent of sales.

Top cost performers, the 25 percent of companies that have been able to lower costs by more than 10 percent since 2004, are take distinct actions. These include:

• Creating an agile warehouse environment to support customer-specific demands.
• Capturing warehouse metrics and activities and sharing them in real-time.
• Updating their current WMS system to take advantage of the new generation of technology that is service-oriented.
• Using warehouse dashboards and analytics technology.
• Formally cross-training employees on several tasks/technologies.
• Investing in more material handling automation, especially carousels.

Cycle time plateaus
Fifty-eight percent of companies reported that they have not been able to shorten their order fulfillment times since 2004. The median customer order cycle time for survey respondents is two days—from time of order receipt to warehouse shipment.

Top performers have been able to cut cycle times, however, with 11 percent reducing cycle times by more than 20 percent. From time of order receipt to warehouse shipment, 23 percent of respondents accomplished this task in less than one day, and approximately 30 percent did this within two days.

WMS
Almost 60 percent of companies are planning to update or replace their WMS in the next 18 months; companies of all sizes were equally as likely to be planning to invest in warehouse technology. According to the study, companies are looking for more agility and visibility capabilties in their new WMSs.

“Operating a legacy WMS (more than 4 years old) is hindering operations not taking advantage of top platform functionality,” O’Neill said.

Best in Class companies
The report finds that Best in Class companies, defined as those companies that reported operating top warehouse enterprises, have been able to reduce their warehousing costs while the average respondent saw costs stay flat or rise by as much as 20 percent since 2004. Best in Class companies have also reduced cycle times. Additionally:

• Best in Class are twice as likely to have decreased warehousing costs by 11 percent–20 percent since 2004 versus their peers.
• Best in Class are more than twice as likely to have an RFID tagging support system versus their peers.

The key takeaway, O’Neill told Logistics Management: “Automation is breeding productivity gains within the warehouse space.”