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Warehousing Best Practices: How Close are You to Best-in-Class?

Posted by Dr. Paul Dittmann on Apr 29, 2015 12:25:00 PM

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Logistics professionals who operate distribution centers (DCs) have a tough job. Management constantly challenges them to cut cost, which means doing more with less. While focused on that, they need to make sure that customer responsiveness does not suffer and even improves. Clearly this calls for a highly advanced management skill set.

Not everyone fully realizes how critical the efficiency of DC operations is to the overall success of the firm and it’s shareholder value. World class distribution centers pick, pack and ship undamaged goods quickly, responding to demanding customers, and they do that at minimum cost. They also pick and ship orders that are error free with flawless inventory accuracy. Without that, the wheels come off quickly, customers revolt, and costs skyrocket.

Building World-Class Warehousing Best Practices

Most companies need to pay more attention to their DC operations and implement warehousing best practices.

They need to ask themselves how they compare to the benchmark of best practice in industry today. In our research at the University of Tennessee, we found that there are eleven areas that must be considered to operate a world-class DC.

  1. Receiving

  2. Picking/Order Fulfillment/Shipping

  3. Lean Warehousing

  4. Cross Docking

  5. Metrics and Planning

  6. Warehouse Information Systems

  7. Warehouse Layout and Space Optimization

  8. Warehouse Network Optimization

  9. Safety and Security

  10. People

  11. Sustainability


The How-to Guide

In our white paper, The ABCs of DC’s, we discuss each of these themes, and include a short review of warehousing best practices for supply chain professionals to consider as they develop a DC management strategic plan. Clearly DCs come in many shapes and sizes, from case picking to individual item, highly automated to mainly manual, small in square footage to just plain huge. To cover this scope in one white paper is daunting, but the warehousing best practices described in the paper are intended to apply to the broadest possible range of DC types. 

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Also included is a self-test at the end of the white paper that is intended to help you consider how good you are in each of these areas. If your DC operation is deficient, we suggest you benchmark best in class operations and develop a multi-year plan to upgrade your operation. On the other hand, if you have outstanding, approaching world-class distribution centers, it’s still a challenge to keep them that way. Everyone is raising the bar everyday. The best today won’t be good enough tomorrow.

To Sum It All Up

The incredible scope of DC management clearly requires the best and brightest of management personnel. This job demands innovation, technical acumen and human resource skills. DC managers must manage upward to respond to very tough management goals and customer expectations. They must also manage downward to engage all employees in a journey of continuous improvement. The relentless challenge for companies is to find and retain talented people who can manage the incredibly difficult, ever-changing DC operations of the future.

Ready to find how close you are to best-in-class practices? Download The ABC's of DC's for a comprehensive guide of warehousing best practices. 

Download the Most Comprehensive Collection of Warehouse Best Practices

Dr. Paul Dittmann

Written by Dr. Paul Dittmann

Paul Dittmann is Executive Director of The Global Supply Chain Institute at the University of Tennessee. In addition, he teaches supply chain courses in the business school, and lectures in the executive education programs.