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Investigating Warehouse Operations Chapter 3 Measuring & Benchmarking Performance

Investigating Warehouse Operations Chapter 3 Measuring & Benchmarking Performance. Chapter 2 dealt with “ Profiling” There we were identifying problems and revealing opportunities for improvement “benchmarking” against World-Class operations Look at performance - looks at practices

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Investigating Warehouse Operations Chapter 3 Measuring & Benchmarking Performance

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  1. Investigating Warehouse Operations Chapter 3Measuring & Benchmarking Performance Chapter 2 dealt with “Profiling” There we were identifying problems and revealing opportunities for improvement “benchmarking” against World-Class operations Look at performance - looks at practices - look at infrastructure - set goals at or above world-class

  2. Investigating Warehouse Operations Chapter 3Measuring & Benchmarking Performance Benchmarking was made popular in the late 80’s by xerox Benchmarking is a key component of TQM Benchmarking has been successfully applied by a variety of businesses & industries There is an international Benchmarking clearinghouse supported by over 100 companies.

  3. Investigating Warehouse Operations Chapter 3Measuring & Benchmarking Performance Goal setting opportunities productivity improvement Shipping accuracy Inventory accuracy Dock-to-stock time Warehouse order cycle time Storage density

  4. Investigating Warehouse Operations Chapter 3Measuring & Benchmarking Performance Benchmarking and goal setting Measured in Annual Dollar Benefits Annual Dollar Benefits as compared with prescribed Corporate Payback Period Provides estimate of affordable investments for improvement The estimate helps define possible alternatives & resources available

  5. Investigating Warehouse Operations Chapter 3Measuring & Benchmarking Performance • Benchmarking is a QUANTITATIVE assessment of the performance of the organization • Benchmarking involves: • gathering information based on assessments • Sharing assessments • Developing improvement plans

  6. Investigating Warehouse Operations Chapter 3Measuring & Benchmarking Performance Benchmarking has 3 perspectives: • Internal: • Focuses on operations within a single company • External: • Looks outside the firm’s industry • Competitive: • Looks at competitors in the same industry

  7. Investigating Warehouse Operations Chapter 3Measuring & Benchmarking Performance Example of internal benchmarking: • Gillette – Latin America • manufactures & Distributes in • Mexico, Chile, Brazil, Colombia, Peru, Argentina, Venezuela, & Ecuador • Each manager is measured against 12 logistics performance indicators: • Shipping accuracy; inventory; accuracy; inventory turns; fill rate; Distr Ctr productivity; distr ctr storage density; order cycle time; & perfect order percentage • A prize is awarded in each category, and • The manager gives a presentation on how the success was achieved.

  8. Investigating Warehouse Operations Chapter 3Measuring & Benchmarking Performance Example of EXTERNAL benchmarking: • Xerox • Toured a variety of distribution facilities in other industries • Shared performance information • Shared distribution practices information • Discussed lessons learned by the host in the design and operation of their facilities • Then logistics engineers measured each organization’s performance using : annual lines shipped/annual labor hours spent (lines shipped/labor hour) • Result: as result of excellent customer service & DC performance; L L Bean became benchmark focus for Xerox.

  9. Investigating Warehouse Operations Chapter 3Measuring & Benchmarking Performance EXTERNAL benchmarking: • Most breakthroughs in logistics performances & practices has been through crossing industry lines (external benchmarking): • ECR (efficient customer response) – prevalent in the grocery industry, evolved from CFR (continuous flow replenishment ) • CFR popular in the electronics industry. • CFR is a take-off from QR (quick response) used in the textiles industry. • QR is a take-off from the textiles industry & is itself is a take-off from JIT • JIT from the Japanese automobile industry • Also, Use of Carousels in DC operations grew out of the Dry Cleaning industry and office operations.

  10. Investigating Warehouse Operations Chapter 3Measuring & Benchmarking Performance EXTERNAL benchmarking: • Cooperation for external benchmarking is easier to gain than competitive benchmarking. • Benchmarking partners should be: • Strong in areas you are weak • Sensitive to confidentiality requirements • Willing to admit weaknesses – share lessons learned • Willing to share strengths and share lessons-learned • Open minded • Logistically similar • Be in a different industry/different country

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