internal bench marking

8/4/2019 Internal Bench Marking

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y Internal Benchmarking This is important to optimize the internal operations of the company.o Shipping Accuracy o Inventory Accuracy o Refillo DC Productivity o DC StorageDensity o Order Cycle Time o Perfect Order percentage o Optimized Pickingo o Units shipped per man hour o Distribution cost as a percentage of sales o Inventory turns o Inventory accuracy o Operating productivity typically measured in units(lines, orders, cases, pieces, pallets,

pounds and so on) handled per person-hour. o Renewed emphasis on customer service and quality have raised response time and

shipping accuracy as critical measures. o WH and distribution costs as a percentage of sales varies directly and widely with

product pricing and sales volume o Cost as a percentage of sales figures also vary widely across industries. o WH costing can vary from 10% to 50% of the total logistics cost as per industry and

products. Cost Category as a % of sales Cost as a % of sales % cost of the total cost

Transportation 3..31 41.74

Warehousing 2.03 25.59

Inventory Carrying 1.82

Customer service and order processing .56

Administration .39

Other .19

Total 7.93

Warehousing Costs can be sum of three major WH resources

y L

aborC

ost - Annual hours worked per year multiplied by wage rate

y Space Cost - Sq Foot occupied multiplied by annual cost of space y Systems Cost(MaterialHandling, Storage and information Handling - System investment cost

multiplied by annual amortization/depreciation rate. Still there is little or no impact of the above cost in optimizing the WH processes. It makes sense only

when the above resources are utilized in an efficient way considering the

y Perfect shipping y Right quality y On time



y Damage free y Right paperwork y And all.

It is very important to understand that if the WH could not be at the best of its world class

benchmarking then theWHwould become really expensive and the thought of going with 3PL

always is sensible. And therefore it is very important to justify the costing on the WH compared to

competition given by the 3PL.

WH Financial Performance

Labor Cost Space Cost MHS Cost WMS Cost Measuring parameter

Receiving $ per receipt

Put away $ per line

Storage $ per SKU

Picking $ per line

Consolidation $ per load

Delivery $ per load

Marketing $ per piece

Returns

WH Productivity Performance

y Overall Labor productivity as ratio of units, order lines, or weight shipped out theWH, No of

hours spent on operating, supervising and managing theWH. y Storage Productivity as the ratio of amount of inventory storage capacity to the SQ foot in the

WH. It should be value, cube, pieces per sq foot.o

Additionally

o LocationUtilization: WH should monitor % of available storage locations that are

occupied o Cube Utilization

WH Quality Performance

y Put Away Accuracy y Inventory Accuracy y Picking Accuracy y Shipping Accuracy

WH Cycle time performance

y Dock to Stock Time(DTS) - The elapsed time from when a receipt arrives on the WH until it is

ready for picking or shipping.

y WH Order Cycle Time(WOCT) - The elapsed time from when an order is released to theWH

floor until it is picked, packed, and ready for shipping. WH Performance Gap Analysis

y External Benchmarking

This is important to optimize the distribution or connecting to external WH or Supply-Chain

companies.



o y Competitive Benchmarking y Traditional Benchmarking

internal bench marking

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