What’s the Perfect Warehouse Like? Answers From an Expert

May 28, 2003 9:30 PM  By

Warehouses come in all shapes and sizes, but the best ones have certain factors in common. A new study conducted by logistics guru Dr. Ed Frazelle and The Logistics Institute at Georgia Tech compares the performance of 212 warehouses in a variety of industries, highlighting the leaders in productivity, accuracy, cycle times, use of technology, and quality. The average facility in the study measures 239,985 square feet; has 57,735 SKUs; and ships 544,345 orders a year. Seventy-seven percent of the respondents use a warehouse management system.

Here are some of the survey’s key findings:

Because of their efficiency and manageability, small warehouses perform better than large ones. Of the top ten performers, only one comes in at more than 300,000 square feet.

The greater the number of measurements used, the better the facility’s performance. Of the warehouses that use 11 to 15 measures, 66.9% are high performers. By contrast, 87% of the facilities with one to five measures are poor performers, and 74.6% of the warehouses with six to ten measures are just average in terms of performance.

People and management are key to performance. Low turnover yields high quality. Facilities scoring high on Dr. Frazelle’s warehouse quality index (shipping accuracy multiplied by inventory accuracy) have a turnover rate of less than 5%; the lowest scorers on the WQI have turnover rates of 25% or more.

More SKU movement equals more productivity. The average survey respondent has 78.2% active SKUs; the median number is 85.1%. Dr. Frazelle urges facilities to purge all dead SKUs frequently: “The average U.S. company goes five years without pruning.”

The operator-to-supervisor ratio should be low. The best ratios are 12:1 for productivity and 8:1 for quality.

Putting all of the survey’s findings together, the perfect warehouse would be 671 feet long, 447 feet wide, 30 feet clear, 300,000 square feet in size, and located inside a free trade zone with 24-hour delivery to U.S. zip codes. It would have 80% normal occupancy and 90% peak occupancy, boast a fully cross-trained workforce, maintain an operator-to-supervisor ratio of 12:1, and get more than 1,000 hits a year for its SKUs.