Study: Distribution center productivity losses top 3,000 hours a year
Intermec research reveals cost of inefficient processes, highlights challenges
The warehouse and distribution center is under increasing pressure to reduce cost and increase margins. Recent Intermec research reveals that in the last six months alone, nearly eight out of ten warehouse managers have been tasked with finding an average 19% cost saving from existing operations. Despite this mounting pressure to cut costs and the need to find efficiency gains in every process, managers admit to losing time and money through known inefficient workflows.
Workflow performance company Intermec Inc. commissioned a survey of 250 supply chain, warehouse and distribution managers conducted by Vanson Bourne. The study revealed that over an eight hour shift, each worker loses an average of 15 minutes of productivity due to inefficient process. For a small to medium-sized warehouse with 50 workers, this adds up to nearly 3,000 hours a year, and could be a significantly higher number in larger organizations.
Although most managers have been tasked with finding cost savings, 30% have not conducted a review of workflow processes in their distribution center within the past year. This is the first step in identifying areas for improvement.
The majority of managers questioned believe the most inefficient workflow in an eight hour shift to be packing and loading (20%), followed by picking and inventory control (both 18%). The research also found that in companies that have not taken action to improve workflow productivity, there are high levels of resistance to the idea of carrying out a full review.
Managers who have not held a review in the past year say that only compliance (28%) or poor performance (27%) would prompt them to do so today. The latter point is in stark contrast to those companies that have recently conducted a review, and implemented process improvements as a result, who say that they are mostly motivated by compliance issues (26%) or continuous improvement programs (22%) and rate poor performance as a very low (9%) driver for their action.
Another 16% of companies said they would not review their workflow processes until after a customer complaint has been received.
Meeting cost targets: Every second counts
Whether they are prepared to conduct a review or not, the survey identified the pressures that warehouse and distribution center managers are under.
When asked how to improve performance across the warehouse and distribution center, 89% of managers said investment in new technology would enable them to regain their lost time and ensure greater worker productivity.
“Warehouse managers are faced with significant cost saving challenges, which means they can’t afford to let such levels of time wastage continue,” said Bruce Stubbs, Intermec industry marketing director for distribution center operations. “Businesses should be looking at every workflow in detail, on a regular basis, to claim back the minutes and seconds they need to achieve these savings. As this research shows, reviewing their technology infrastructure may be the perfect place to start.”
For a complete review of the survey, go to www.intermec.com
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In a year when manufacturing continued to lead the economic rebound, it makes sense that plant manager bonuses rebounded. Plant Engineering’s annual Salary Survey shows both wages and bonuses rose in 2012 after a retreat the year before.
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