Executive Briefings

Opinion: Distribution Industry Is Falling Behind in Improvement Practices

Yikes. No way. Holy Moly. Those are the top three polite reactions to the results of the just-released 2017 MPI Distribution and Logistics study.

The non-polite reactions can't be included here. Suffice to say that they involve saltier terms for numbskullery and dogged inattention. As in: how can companies across an entire sector be leaking so many profits, and not know it?

The new data suggests that manufacturers, distributors, and retailers are losing millions of dollars annually — simply because their distribution centers and warehouses haven't implemented easy-to-use strategies that already improve customer service and profitability in many other industries.

Even worse, some key warehouse metrics — such as perfect order fulfillment — are worse now than they were 10 years ago.

How is this possible? Maybe because:

-Distribution centers and warehouses don’t generally apply common practices that could improve their operations. For example, only 53 percent of facilities have a continuous-improvement program in place — and this is the most widely used practice.

-Only 41 percent of distribution centers/warehouses have adopted lean thinking — a much lower implementation rate vs. manufacturing plants.

-A majority of facilities train each employee 20 hours or less annually — even though 40 hours is a benchmark for world-class performance across industries.

-A majority of facilities have adopted at least some IoT technologies, but much more remains to be done — especially given that 39 percent have no application of the IoT.

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The non-polite reactions can't be included here. Suffice to say that they involve saltier terms for numbskullery and dogged inattention. As in: how can companies across an entire sector be leaking so many profits, and not know it?

The new data suggests that manufacturers, distributors, and retailers are losing millions of dollars annually — simply because their distribution centers and warehouses haven't implemented easy-to-use strategies that already improve customer service and profitability in many other industries.

Even worse, some key warehouse metrics — such as perfect order fulfillment — are worse now than they were 10 years ago.

How is this possible? Maybe because:

-Distribution centers and warehouses don’t generally apply common practices that could improve their operations. For example, only 53 percent of facilities have a continuous-improvement program in place — and this is the most widely used practice.

-Only 41 percent of distribution centers/warehouses have adopted lean thinking — a much lower implementation rate vs. manufacturing plants.

-A majority of facilities train each employee 20 hours or less annually — even though 40 hours is a benchmark for world-class performance across industries.

-A majority of facilities have adopted at least some IoT technologies, but much more remains to be done — especially given that 39 percent have no application of the IoT.

Read Full Article