“How do you measure warehouse productivity?” The ultimate measurements I would use for a distribution center would be units – cartons or pieces, for instance – shipped per labor hour. That would be the same for direct labor, indirect labor, or direct and indirect labor together. If you want an overall glimpse of warehouse productivity, that encompasses it all. And the principle is the same whether the warehouse or DC is automated or manual.
In fact, the principle doesn’t change when you look at more specific areas. In receiving you would still measure productivity by the units processed per labor hour; in picking it would probably be lines (which is just short for SKU line) or SKUs processed per hour. As you know, picking usually accounts for between one-half and 65% of all labor. Ideally you would see a report in which figures were independently expressed for each of these areas.
What’s happened in the last ten years is that the average number of pieces per order has decreased, that is, the orders are smaller, which is pretty much what you’d expect as a result of the increase in Internet orders and automation.
A large number of operations may still be surprisingly manual, but I think what’s going to happen is that 3PLs will continue to be manual for a while but then they’ll switch to automation. Third-party providers have become more necessary because of the need for e-commerce fulfillment. When 3PLs have established clients who are willing to sign long-term contracts, they’ll be able to automate because then they’ll have the funds to do it. Who wants to spend a lot of cash on automating when your clients could walk away tomorrow? Alan Fisk W & H. Systems Inc. Carlstadt, NJ
Basically, we just count everything everybody does. We’re distributors of videotapes. We use pick sheets and time is recorded for those automatically. A picker logs in with a pick sheet, and the computer knows how many lines there are on that sheet and starts a clock. Then when the picker is done, he logs in again and the computer records that. That’s how we track picking productivity. We have an IT department that developed that program in-house.
For order packing, we know how many boxes a packer packs – that’s one of the areas where we allow workers to record their time manually. We know they can fudge the figures somewhat, but that’s just one of the areas for which we haven’t gotten around to developing an automated measurement program.
It’s the same in receiving: We keep track of how many lines a receiver does per day. If one person is doing 600 lines a day and one is doing 1,500 lines a day, then it’s clear we have a problem. That kind of difference generally only occurs when someone new is learning how to do the job. Then we can show them the difference in productivity and help them figure out how to work more efficiently. Randy Warfel Fulfillment Center Manager Library Video Company Wynnewood, PA
Well, in my view, productivity and measurement are independent. To measure productivity, first of all you have to have in place a set of well-defined processes. Then you need to know a reasonable rate for those processes, a benchmark, if you will.
Once you have those factors in place and defined, then you need to teach people to do the work correctly in order to understand and to meet those standards. In other words, you need to do what it takes to enable people with help – on-the-job coaching, for instance.
Then you can set up measurement and data capture systems that actually allow you to measure productivity accurately. It’s probably true that you’d have to have a certain number of people in a warehouse to make an automated measurement solution practical – maybe as many as 30 or 40. Don Hutchinson Supply Chain Practice Leader KPMG Darien, CT