Warehouse Management Productivity - How do you stack up?
We all know that striving to “keep up with the Joneses” isn’t a great way to live. Still, when you see your neighbor Mr. Jones with a shiny new Mercedes in his driveway you just have to wonder what he is doing differently with his investments than you are. The same applies to your warehouse management strategy. Although you know that every company is different and what is right for one might not be for others, you still wonder how the “other guy” is running his DC, and how does your productivity compare with his? Could a warehouse management system (WMS) or other supply chain management software bring you in-line with the best-in-class?
Below are some warehouse management industry averages that you can use as a comparison. These were researched by F. Barry & Company and represent metrics from a cross section of some better-run companies in the direct-to-consumer industry.
- Warehouse cost per order:
Good productivity is around $4 per order (which includes direct and indirect labor, occupancy costs and packaging). Highly efficient businesses may be as low as $2.25. However, we’ve seen highly automated facilities that don’t yield low cost per order when the systems investment wasn’t well planned or when product type varied widely.
- Order processing turnaround times:
The time to pick, pack and ship an order is 24 hours or less. Since the dot-com revolution, however, many businesses are processing 50 percent or more of orders the same day.
- Returns and receiving processing turnaround times:
Within 24 hours.
- Functional area productivity:
Picking averages 115 units per man-hour, and packing is 36 boxes per man-hour for conventional warehouses. But small-product picking rates may range from 275 to 800 units per hour. Highly automated facilities may achieve picking of 150 to 175 units per hour, and packing of 75 to 90 boxes per hour. Of course, compare your business with those that are similar to yours.
6.5 is the average.
- Net sales per square foot of warehouse space:
$750 is the average, and varies by product size and value. This is down from $1,000 net sales per square foot 10 years ago, even though most companies’ average order sizes have increased.
Sooo – how does your organization stack up against the industry average? If you’re looking for ways to improve your warehouse and inventory, let us know. We’re here to help your business grow!
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(Source: F Curtis Barry & Company, & Wesley Arentson)