hillmcginnis whperformanceassessment promat presentation 6up 2003

8/13/2019 HillMcGinnis WHPerformanceAssessment Promat Presentation 6up 2003

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The On-Floor Seminar Series Welcomes You to:SESSION 208

WAREHOUSE PERFORMANCEWAREHOUSE PERFORMANCEASSESSMENTASSESSMENT

&&BENCHMARKINGBENCHMARKING

John M. Hill Dr. Leon McGinnis

SINGLESINGLE--FACTORFACTOR

PRODUCTIVITY METRICPRODUCTIVITY METRICCOMPARISONS CAN BECOMPARISONS CAN BE

RISKY, BUT YOUVERISKY, BUT YOUVE

GOT TO STARTGOT TO STARTSOMEWHERE!SOMEWHERE!

PREMISEPREMISEPREMISE

n Order Fill Rates

n Order Cycle Times

n Lines and Orders/Hour

n Errors

n Inventory Accuracy

n Damage

n Cost/Order

n Cost as % of Sales

n

Days on Hand

n Order Fill Rates

n Order Cycle Times

n Lines and Orders/Hour

n Errors

n Inventory Accuracy

n Damage

n Cost/Order

n Cost as % of Sales

n Days on Hand

THE PROCESS BEGINS WITHBENCHMARKING

THE PROCESS BEGINS WITHTHE PROCESS BEGINS WITHBENCHMARKINGBENCHMARKING

MEASURE ORDERFULFILLMENT PERFORMANCE

MEASURE ORDERMEASURE ORDERFULFILLMENT PERFORMANCEFULFILLMENT PERFORMANCE

On-Time DeliveryOrders On-Time

Total Orders Shipped% % $

Orders Filled CompleteTotal Orders Shipped

Order Fill Rate % % $

Error -Free OrdersTotal Orders Shipped

Order Accuracy % % $

Error -Free LinesTotal Lines Shipped

Line Accuracy % % $

Actual Ship Date MinusCustomer Order Date

Order Cycle Time Hrs Hrs $

Perfect DeliveriesTotal Orders Shipped

Perfect Order

Completion% % $

MEASURE CALCULATION TODAY FUTUREVALUE

AUDIT INVENTORYMANAGEMENT PERFORMANCE

AUDIT INVENTORYAUDIT INVENTORYMANAGEMENT PERFORMANCEMANAGEMENT PERFORMANCE

Inventory Accuracy Actual Qty per SKUSystem Reported Qty

% % $

Total Damage $$$Inventory Value (Cost)Damaged Inventory

% % $

Avg. Occupied Sq. Ft.Total Storage Capacity

Storage Utilization % % $

Total Dock to Stock HrsTotal Receipts

Dock to Stock Time Hrs Hrs $

Receipt Entry Time -Physical Receipt Time

Inventory Visibility Hrs Hrs $

MEASURE CALCULATION TODAY FUTURE VALUE

Avg. Month Inventory $Avg. Daily Sales/Month

Days On Hand Days Days $

Orders per Hour Orders Picked/PackedTotal Whse Labor Hrs

Total Warehouse CostTotal Orders Shipped

Lines per Hour

Items per Hour

Cost per Order

Cost as % of Sales

Ord/Hr

$/Order

% %

$

$

$

$

$

Ord/Hr

Lines/Hr

Items/HrItems/Hr

Lines/HrLines Picked/Packed

Total Whse Labor Hrs

Items Picked/PackedTotal Whse Labor Hrs

Total Warehouse CostTotal Revenue

$/Order


ASSESS WAREHOUSEPRODUCTIVITY

ASSESS WAREHOUSEASSESS WAREHOUSEPRODUCTIVITYPRODUCTIVITY


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On-Time Deliveries On-Time DeliveriesTotal Deliveries

% $%

Damage % % $Shipment Damage $

Total Shipment $

Frt. Bill Accuracy % % $Billing Error $

Total Transport Costs

Assessorials $Assessorial CostsTotal Transport Cost

% %

Demurrage $% %Demurrage CostsTotal Transport Cost

Missed AppointmentsTotal Appointments

Appointments $% %

EVALUATE TRANSPORTATIONPERFORMANCE

EVALUATE TRANSPORTATIONEVALUATE TRANSPORTATIONPERFORMANCEPERFORMANCE TMSW/LMSMHADCSCVAOMFcast/Plan

Total Logistics CostsTotal RevenueCOST % OF SALESTotal Logistics CostsTotal OrdersCOST PER ORDER

Lines Picked & Packed

Total Labor HoursLINES / HOUR

Orders Picked & Packed

Total Labor HoursORDERS / HOUR

Receipt Data Entry-Time of Physical ReceiptVISIBILITYAverageDock- To-Stoc kHours per ReceiptDOCK-TO-STOCK

Avg. Inventory Sq. Ft.

Storage Capacity Sq. Ft.STORAGE USAGE

Avg. Inventory Value

Avg. Daily SalesDAYS ON HAND

Total Damage $Total Inventory $DAMAGEShip Date -(minus)Customer Order DateCYCLE TIME

Error-Free Lines

Total Lines ShippedLINE ACCURACY

Error-Free Orders

Total Orders ShippedORDER ACCURACY

Orders Filled CompleteTotal Orders ShippedORDER FILL RATE

Orders On-TimeTotal Orders ShippedON-TIMEDELIVERY

ENABLING TECHNOLOGY & SYSTEMSENABLING TECHNOLOGY & SYSTEMSENABLING TECHNOLOGY & SYSTEMS

METRICSMETRICS

MATCH OPPORTUNITIES TO SOLUTIONSMATCH OPPORTUNITIES TO SOLUTIONSMATCH OPPORTUNITIES TO SOLUTIONS

QUANTIFY PERFORMANCE IMPROVEMENT POTENTIALQUANTIFY PERFORMANCE IMPROVEMENT POTENTIALQUANTIFY PERFORMANCE IMPROVEMENT POTENTIAL

$1.8 Million$1.8 MillionProbable CostProbable Cost$2.4 Million$2.4 MillionAnnual SavingsAnnual Savings

See above2.7%3.1%Total Warehouse Costs /Total RevenueCost % of Sales

See above$3.624.26Total Warehouse Costs /Total OrdersCost per Order

See above54/Hr40/HrTotal Lines Picked /

Total Whse . Labor HrsLines per Hour

$864,00020/Hr15/HrOrders Picked & Packed /

Total Whse . Labor HrsOrders per Hour

$100,00085%78%Avg. Inventory Sq. Ft. /

Storage Capacity Sq. Ft.Storage Utilization

$1 Million42 Days50 DaysAvg. Inventory Value ($) /Average Daily Sales $Days on Hand

$100,000.50%.75%Total Damage $$$ /Total Inventory ValueDamaged Inventory

See above99%96%Actual Quantity by SKU/Reported Qty. by SKUInventory Accuracy

$100,0008 Hrs12 HrsActual Ship Date (minus)Customer Order DateOrder Cycle Time

See above98%92%Errorless Orders /Total Orders ShippedOrder Accuracy

$250,00095%87%Total Orders On Time /Total Orders ShippedOn-Time Delivery

ValueValueTargetTargetCurrentCurrentCalculationCalculationMeasureMeasure

Logistics measures must be in harmony with

a company's overall business strategy. If

Amazon.com drove its logistics activities withmeasures focused solely on reducing

delivery costs, it would cripple its ability to

serve customers. (Smart managers) are

fusing logistics plan(s) with their business

strategies, ensuring that what is measured in

the field is valued at the top of theorganization.

Logistics measures must be in harmony with

a company's overall business strategy. If

Amazon.com drove its logistics activities with

measures focused solely on reducing

delivery costs, it would cripple its ability to

serve customers. (Smart managers) are

fusing logistics plan(s) with their business

strategies, ensuring that what is measured in

the field is valued at the top of the

organization.

KEEPING METRICS IN PERSPECTIVEKEEPING METRICS IN PERSPECTIVEKEEPING METRICS IN PERSPECTIVE

Keep ing S co r e : Measu r ing t he Bus iness Va lue o f Log is t i c s in t he Sup p ly Cha in , CLM, 1999

Is it possible to assess the

system performance of a

warehouse, and compare

system performanceacross warehouses, or

across time periods?

Is it possible to assess the

system performance of a

warehouse, and compare

system performanceacross warehouses, or

across time periods?

THE GEORGIA TECH CHALLENGETHE GEORGIA TECH CHALLENGETHE GEORGIA TECH CHALLENGE

Ranking Rating

WHAT TO DO WITH ALL THOSE SINGLEWHAT TO DO WITH ALL THOSE SINGLEFACTOR PRODUCTIVITY METRICS?FACTOR PRODUCTIVITY METRICS?


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What we need is ahandicapping system

for warehouseperformance

What we need is ahandicapping system

for warehouseperformance

ONEPERFORMANCE

INDEX

ONEPERFORMANCE

INDEX

DATA ENVELOPMENT ANALYSISDATA ENVELOPMENT ANALYSIS

ResourcesResources

ServicesServices

ActivitiesActivitiesTotal StaffingTotal Staffing

EquipmentReplacementCost

EquipmentReplacementCost

Warehouse areaWarehouse area

Lines ShippedLines Shipped

Storage FunctionStorage Function

AccumulationAccumulation

Resource/InputResource/Input

Production/Output

Production/Output

For One Input, One OutputFor One Input, One Output

PRODUCTION FUNCTION THEORYPRODUCTION FUNCTION THEORY

Resource/InputResource/Input

Production/Output

Production/Output

OO

BBAA

System efficiencyof warehouse B isthe ratio

OAOB

System efficiencyof warehouse B isthe ratio

OAOB

SYSTEM EFFICIENCY CONCEPTSYSTEM EFFICIENCY CONCEPT

DEA is a mathematicaltechnique that does this

same kind of analysis,but with multiple inputsand multiple outputs.

DEA is a mathematicaltechnique that does this

same kind of analysis,but with multiple inputsand multiple outputs.

DATA ENVELOPMENT ANALYSISDATA ENVELOPMENT ANALYSIS

Html

documents

Solver

Database

At your siteAt your site

Georgia Tech ServerGeorgia Tech Server

Over the InternetOver the Internet

WEBWEB--BASED TOOLBASED TOOL


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Results to DateResults to Date

OVER 150 QUALIFIED USERSOVER 150 QUALIFIED USERS


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RetailRetail

30%30%

WholesaleWholesale

22%22%

ManufacturingManufacturing

33%33%

DistributionDistribution

15%15%

USER PROFILEUSER PROFILE OUTPUT SEGMENTATIONOUTPUT SEGMENTATION

Broken Case: 49 Full Case: 32

Pallet: 13

Mix: 65

Total: 159

Broken Case: 49 Full Case: 32

Pallet: 13

Mix: 65

Total: 159

Input Efficiency Compared Within

(49/49)


(49/49)

0.10.1 0.20.2 0.30.3 0.40.4 0.50.5 0.60.6 0.70.7 0.80.8 0.90.9 1.01.0

00

1010

2020

Frequency

Frequency

BROKEN CASEBROKEN CASE

Lines/Labor hour(Broken Case)Lines/Labor hour(Broken Case)

0055

1010151520202525

0.00.0 10.010.0

20.020.0

30.030.0

40.040.0

50.050.0

60.060.0

70.070.0

80.080.0

90.090.0

100.0100.0 Mo

reMo

re

Frequency

Frequency

Ave = 17

SD = 27

Ave = 17SD = 27

Pick RatesPick Rates

BROKEN CASE PICKINGBROKEN CASE PICKING

0.10.1 0.20.2 0.30.3 0.40.4 0.50.5 0.60.6 0.70.7 0.80.8 0.90.9 1.01.0

00

11

22

33

44

55

66

77

88

Frequency

Frequency


(32/32)


(32/32)

FULL CASEFULL CASE

0.40.4 0.50.5 0.60.6 0.70.7 0.80.8 0.90.9 1.01.0

00

55

1010

Frequency

Frequency

Input Efficiency Compared within

(13/13)

Input Efficiency Compared within

(13/13)

PALLETPALLET


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0.150.15 0.250.25 0.350.35 0.450.45 0.550.55 0.650.65 0.750.75 0.850.85 0.950.95 1.051.05

00

1010

2020

Frequency

Frequency


(65/65)


(65/65)

MIXEDMIXED

No matter how we segment the data,

a very large proportion ofwarehouses are operating at or

below 50% system efficiency. While

this may reflect industry or business

differences, it still represents a very

significant opportunity for

improvement.

No matter how we segment the data,

a very large proportion ofwarehouses are operating at or

below 50% system efficiency. While

this may reflect industry or business

differences, it still represents a very

significant opportunity for

improvement.

RESULTS & CONCLUSIONSRESULTS & CONCLUSIONS

The opportunity for improvement

seems largest for the segment of

warehouses doing predominantly full

case picking. In that segment, a

smaller proportion of the warehouses

are "efficient' than in any other

segment, and a larger proportion are

operating below 50% efficiency.

The opportunity for improvement

seems largest for the segment of

warehouses doing predominantly full

case picking. In that segment, a

smaller proportion of the warehouses

are "efficient' than in any other

segment, and a larger proportion are

operating below 50% efficiency.

RESULTS & CONCLUSIONSRESULTS & CONCLUSIONS WHERE DO WE GO FROM HERE?WHERE DO WE GO FROM HERE?

Interpret the system efficiency score

Enhance the ability to benchmark fortechnology, practice, & requirements

Interpret the system efficiency score

Enhance the ability to benchmark fortechnology, practice, & requirements

THE BENCHMARKING TOOL, v2.0THE BENCHMARKING TOOL, v2.0

6426731642673164267316426731

Components of (In)EfficiencyComponents of (In)Efficiency


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MarkerAnalysis

MarkerAnalysis

VERSION 2.0VERSION 2.0

Performance Marker AttributePerformance Marker Attribute

DEA

PerformanceS

core

DEA

PerformanceS

core

MARKER ANALYSISMARKER ANALYSIS

Performance Marker PracticePerformance Marker Practice

DEA

Performance

Score

DEA

Performance

Score

MARKER ANALYSISMARKER ANALYSIS

Industry

Total # SKUs

SKU turnover

Pick seasonality

Pick variability

Planning lead time

Value adding activities

Cube/order

Weight/order

Space utilization

Industry

Total # SKUs

SKU turnover

Pick seasonality

Pick variability

Planning lead time

Value adding activities

Cube/order

Weight/order

Space utilization

Response time

Rush orders

Multi-floor?

Total # of suppliers

WMS?

Compliant shipping?

Velocity-based slotting?

Pick-to-light?

RF dispatching?

other...

Response time

Rush orders

Multi-floor?

Total # of suppliers

WMS?

Compliant shipping?

Velocity-based slotting?

Pick-to-light?

RF dispatching?

other...

VERSION 2.0 MARKERSVERSION 2.0 MARKERS

Participate in the study, learn about your

own system performance, and work

with us to improve the practice of

warehousing.

Participate in the study, learn about your

own system performance, and work

with us to improve the practice of

warehousing.

On-Line at:

www.isye.gatech.edu/ideas

On-Line at:

www.isye.gatech.edu/ideas

GETTING STARTEDGETTING STARTED

Thanks for comingThanks for coming

Questions?Questions?

hillmcginnis whperformanceassessment promat presentation 6up 2003

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