2005 TLI/WERC

Warehouse Benchmarking Report

Edward H. Frazelle, Ph.D.
President & CEO, Logistics Resources International
www.LRIConsulting.com
Director, Logistics Management Series, Georgia Tech
www.tli.gatech.edu

2005 TLI/WERC Warehouse Benchmarking Survey - Edward H. Frazelle, Ph.D.

 Participating Companies
180s, LLC Conoco Phillips Hunter Industries Pactiv
Allstate Cooper Tools Intel Panama Canal Authority
American Distribution Centers Craft Supplies USA International Truck & Engine Pendleton Woolen Mills
American Honda Crate and Barrel JohnsonDiversey N.A. Pernod Ricard
Andersen Windows Creative Storage System JuL Logistics Petra Industries
APL Logistics Crystal Warehouse Corp. K.L.Harring Trans & Whse Plaid Enterprises Inc.
Applied Industrial Cytec Industries Inc. Keylogistics Chile S.A. Planar Systems
Technologies DFS/Eddie Bauer, Inc. King and Prince Seafood Pocket Nurse
ARAMARK DHL Solutions L.L. Bean PPL Services Corp.
ASAP Automation DIRECTV Lanxess Inc. Premiumwear Inc
Associated Grocers of Maine Disney Direct LDS Distribution Progistix Solutions
Augusta Sportswear Disneyland Limited Brands Purity Life Health Products
Avanti Press Inc. Distribution Technology Inc Limited - Bath & Body Works Reid Supply Company
Avon Dollar Tree Stores Lucent Rinnai
Barr Laboratories, Inc. Eagle Global Logistics Mays chemical Co. Rockline
Barrett Distribution Centers Emerson Ecologics Maytag Services, LLC Romark Logistics
BAX Global ESAB Welding & Cutting Products Merial Limited Russell Corporation
Bayer HealthCare Evans Distribution Systems MindWare sabare Usa Inc
BC Liquor Distribution Branch Fairfield Language Tech MMM Shippers Warehouse Co., Inc.
BlessOF GmbH Fuji Photo Film, Inc. Mobil Producing Nigeria Shire Pharmaceuticals
BLOOMBERG Fulton County Schools Morningstar Foods Simply Fashion Stores LTD
Blount International Gati NACCO Materials Handling Steiner System Inc.
Blue Diamond Growers GENCO NCR Suncor Energy Inc
Blyth Homescents Boden General Warehouse NCS SureSource
Borders Group Inc. Georgia Pacific Netafim Swagelok Co.
BRAZILIAN CANADIAN GESTOCK LTDA NFI Industries The Antioch Company
COFFEE CO. LTD GlaxoSmithKline Norwesco, Inc the crosby group inc
Briggs & Stratton GlaxoSmithKline Novartis Nutrition corp The Schwan Food Company
Cardinal Health Graebel Relocation Nu Skin International The Service Center, LTD.
CarDomain Grand & Toy Oak Ridge Labs Tilia Inc
CARE International Grohe America, Inc. Ocean Air Enterprises, Inc Transouth Logistics
CertainTeed Corporation Home Interiors & Gifts Office Depot U. S. Department of State
ChemPoint.com hpshopping.com Orgill UncommonGoods
Coca-Cola Hub One Logistics Owens Corning UPS Mail Innovations
Columbia House Huffy Sports PACAM US Army

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 2

 Issues Addressed in
Warehouse Benchmarking Survey
Warehouse Mission Inventory Management
„ Primary Unit of Measure „ Inventory Turns
„ Primary Ship-To Type „ Fill Rates
„ Merchandise Types Material Handling Systems
Distribution Network „ Pallet Storage/Retrieval Systems; Case
„ Inbound-Outbound Modes Handling Systems; Broken Case Storage
„ Network Configurations Retrieval Systems
„ Overflow Warehouses WMS/Information Handling Systems
Building Configuration „ WMS - Yes/No, Package or In-House
„ Square Footage „ WMS Plans
„ Building Dimensions „ WMS Satisfaction
„ Clear Height „ WMS Impact
„ Dock Doors „ Communication Systems
Facility Management Workforce
„ Owned vs. Leased „ Workforce Turnover
„ In-sourced vs. Outsourced „ Workforce Issues
„ Satisfaction with 3PL Services „ Operator to Supervisor Ratio
„ Impact of 3PL Services Metrics
„ Occupancy Levels „ Productivity Metrics
Facility Activity „ Quality Metrics
„ Number of Total/Active SKUs „ Cycle Time Metrics
„ Number of Orders, Lines, Cases Practices
The “Perfect” Warehouse

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 3

 The “Median” Warehouse
Size Shipping
„ 150,000 sq. feet „ 564,000 lines/year
Length to Width „ 60,500 orders/year
„ 1.7 to 1 „ 9 lines/order
Clear Height SKUs
„ 28.0 ft. „ 5,001 total
Dock Doors „ 3,502 active
„ 15 Occupancy
Staffing „ 82% normal
„ 60 FTEs „ 96% peak
Outsourcing? Turn Rate
„ Insourced (75%) „ 5.1
WMS Fill Rate
„ Yes (70%) „ 97.1%

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 4

Warehouse Quality Index (WQI)
Warehouse Quality Index =
Shipping Accuracy x Inventory Accuracy
Shipping Accuracy =
% Order Lines Shipped without Errors
Inventory Accuracy =
% Warehouse Locations without Discrepancies
All warehouses were ranked based their WQI and a
WQI rank % calculated as the ratio of the rank to the
total warehouses. Those warehouses with lower WQI
rank %s have the highest quality performance.

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 5

Warehouse Productivity Rank %
All warehouses were classified as piece shipping or case shipping
warehouses.
All piece shipping warehouses were ranked based on their productivity
performance calculated as the ratio of the annual number of order lines
shipped to the annual total person-hours expended in the warehouse.
The warehouse with the highest productivity received the rank of 1;
the warehouse with the second highest productivity received the rank
of 2; and so on. The warehouse productivity rank % is the ranking
divided by the number of warehouses in the classification with
legitimate responses in the survey. The LOWER the RANK %, the
HIGHER THE PRODUCTIVITY.
All case shipping warehouses were ranked based on their productivity
performance calculated as the ratio of the annual number of cases
shipped to the annual total person-hours expended in the warehouse.
The warehouse productivity rank % is the ranking divided by the
number of warehouses in the classification with legitimate responses in
the survey. The LOWER the RANK %, the HIGHER THE
PRODUCTIVITY.

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 6

 Inventory Status for
Survey Warehouses

Finished Goods 87.9%

Work-in-Process 5.3%

Raw Materials 6.8%

0% 20% 40% 60% 80% 100%

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 7

 Primary Unit of Measure for
Shipping for Survey Warehouses

Full Pallets 18.3%

Full Cartons 38.2%

Less than a Full

43.5%
Carton

0% 10% 20% 30% 40% 50%

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 8

 Box Size for
2005 Survey Warehouses
10,000+ 26.4%
100,000+ 37.1%
Warehouse Size (Square Feet)

200,000+ 10.1%
300,000+ 9.0%
400,000+ 7.9%
500,000+ 2.8% Themedian
The mediansize
sizeofofaa
600,000+ 1.7% warehouseininthe
warehouse thesurvey
survey

700,000+ 1.7%
isis147,500
147,500square
squarefeet.
feet.
Themaximum
The maximumsize
sizeisis
800,000+ 1.7% 1,500,000square
1,500,000 squarefeet.
feet.
900,000+ 0.6%
1,000,000+ 1.1%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0%

% of Warehouses

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 9

 Building Configurations
Clear SF per Length to No. of SF per
Square Height Clear Length Width Width Dock Dock
Footage (Feet) Height (Feet) (Feet) Ratio Doors Door
Minimum 3,300 12 40 87 25 0.4 1 567
Average 238,554 32 7,482 806 421 2.2 27 13,046
Median 150,000 28 5,000 500 300 1.7 15 10,238
Maximum 1,516,720 98 34,286 1700 990 5.5 582 69,394

1
0 .9
0 .8
Productivity Rank %

0 .7
0 .6
0 .5
0 .4
0 .3
0 .2
0 .1
0
0 .5 1 1 .5 2 2 .5
L e n g t h t o W id t h R a t io

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 10

 Desired Changes to
Building Configurations
Fewer Dock Doors 2.3%

More Dock Doors 57.8%

Shorter Building 6.3%

Longer Building 25.0%

Shallower Building 7.0%

Deeper Building 30.5%

Lower Ceilings 1.6%

Higher Ceilings 31.3%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0%

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 11

 North American Network Configuration
30.0% 27.9%

25.0% The median number of warehouses

in the North American network is 3.
% of Respondents

20.0%

14.9%
15.0%
11.0% 11.0%
10.0%
7.1% 6.5%
5.2% 4.5%
5.0% 3.9% 3.9%
2.6%
1.3%
0.0%
75-100

8-10

6-7

1
50-74

25-49

15-24

11-14

Number of North American DCs

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 12

 Survey Warehouse Locations

The “average” network is comprised of 3 warehouses.

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 13

 Order Line Shipping Volume
for Survey Warehouses

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 14

Number of Overflow Warehouses
Overflow Warehouses
4+ 3%
The “average” warehouse has
0.67 overflow warehouses with it.
3 3%

2 9%

1 28%

0 57%

0% 10% 20% 30% 40% 50% 60%

% of Warehouses

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 15

 Foreign-Domestic
Inbound-Outbound
50.0%

43.6%
Foreign Inbound %
40.2%

45.0%
Foreign Outbound %
40.0%

35.0% On average, 32% of the inbound volume arrives from

28.3%

30.0%
a foreign country while 11% of the outbound volume
ships to a foreign country.
25.0%
15.9%

20.0%
11.5%

15.0%
7.1%

7.1%

7.1%
6.8%

6.2%

6.2%
10.0% 5.3%

3.5%
2.6%

1.7%

1.8%

1.7%
0.9%

0.9%

0.9%

0.9%
5.0%

0.0% 0.0%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 16

 Inbound-Outbound
Mode Disposition
Inbound Mode Outbound Mode

Railcar 0.9%
0.9%

Ocean Container 0.9%

17.1%

Full Truckload 40.4%

53.8%

LTL 29.8%
19.7%

Next Day Ground 25.4%

7.7%

Overnight 2.6%
0.9%

Next Flight Out 0.0%

0.0%

0% 10% 20% 30% 40% 50% 60%

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 17

 Inbound-Outbound Disposition
Inbound From Outbound To

stockroom 4.3%
0.9%

19.7%
distributor 9.5%

factory or factory DC 3.4%

78.4%

wholesaler's DC 5.1%
6.0%

retailer's DC 14.5%
2.6%

store or dealership 30.8%

0.9%

house or office 22.2%

1.7%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 18

 Insourcing vs. Outsourcing
Current
Current, 25% Future

Outsource Future, 27%

Current, 75%
Insource Future, 73%

0% 20% 40% 60% 80%

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 19

 Satisfaction with
Third-Party Logistics Services
FALLS FAR BELOW 5.0% 2003
expectations 0.0% 2005

FALLS BELOW 2.0%

expectations 20.0%

35.0%
MEETS expectations
48.0%

37.0%
EXCEEDS expectations
16.0%

GREATLY EXCEEDS 21.0%

expectations 16.0%

0% 10% 20% 30% 40% 50% 60%

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 20

 Impact of
Third-Party Logistics Services
7.4%
13.6%
Aggregate 30.8%
35.1%
13.2%
0.0%
26.7%
Workforce Capability 26.7%
26.7%
20.0%
0.0%
8.3%
Inform ation System s 50.0%
25.0%
16.7%
13.3%
26.7%
Inventory Accuracy 20.0%
33.3%
6.7%
20.0%
0.0%
Shipping Accuracy 20.0%
40.0%
20.0%
0.0%
20.0%
Custom er Service 40.0%
40.0%
0.0%
18.2%
0.0%
Productivity 45.5%
27.3%
9.1%
0.0%
13.3%
Costs 13.3%
53.3%
20.0%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0%

% of Warehouses

Significantly Better Better No Difference Worse Significantly Worse

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 21

 It pays to measure!
0.0%
WQI % Improvement vs. Baseline 0.0%
14.7%

34.0%
WQI 34.0%
29.0%

0.0%
Productivity % Improvement vs. Baseline 4.3%
28.3%

46.0%
Productivity Rank % 44.0%
33.0%

0.0%
Overall % Improvement vs. Baseline 0.0%
22.5%

80.0%
Overall Rank % 79.0%
62.0%

11+ 8 to 10 Less than 8 0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 22

 Order Lines per Total Person-Hours
for Piece Shipping Warehouses

93.9%

100.0%
87.7%
100.0%

81.6%
90.0% % of Warehouses

73.4%
Cumulative % of Warehouses

71.4%
80.0%

61.2%
70.0%

57.1%
53.0%
49.0%
60.0%

40.8%
50.0%

34.7%
28.5%
40.0%
20.4%
18.3%

30.0%
12.2%
10.2%

10.2%
20.0%
8.2%

8.2%

8.2%
6.1%
6.1%

6.1%

6.1%

6.1%

6.1%

6.1%

6.1%
4.1%

4.1%

4.1%

4.1%
2.0%

2.0%

2.0%
10.0%

0.0%
<1 1+ 2+ 3+ 4+ 5+ 6+ 7+ 8+ 9+ 10+ 11+ 12+ 13+ 14+ 15+ 20+ 30+
Lines per Man-Hour

Average = 12.8 Median = 9.4

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 23
 Outbound Cases per
Total Person-Hour
Average = 64.8 cpph Median = 51.7 cpph

92.5%

100.0%
100.0%

87.5%

87.5%
85.0%
82.5%
90.0%

77.5%
% of Warehouses

72.5%
70.0%
80.0% Cumulative % of Warehouses

67.5%
62.5%
70.0%

60.0%
47.5%
45.0%
42.5%

50.0%
37.5%
35.0%
35.0%

40.0%

30.0%
15.0%

20.0%

7.5%
5.0%

5.0%

5.0%

5.0%

5.0%
2.5%

2.5%

2.5%

2.5%

2.5%

2.5%

2.5%
10.0%

0.0%
0.0%
<10 10+ 20+ 30+ 40+ 50+ 60+ 70+ 80+ 90+ 100+ 110+ 120+ 130+ 140+ 150+
Cases per Man-Hour

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 24

 Quality Metrics in
2003 Survey Warehouses

Location Inventory A ccuracy 78.8%

Line Item P icking A ccuracy 67.3%

Item Inventory A ccuracy 62.4%

Order S hipping A ccuracy 59.4%

Line Item S hipping A ccuracy 59.4%

D amage % 44.2%

P utaway A ccuracy 41.2%

C ase P icking A ccuracy 39.4%

C ase S hipping A ccuracy 34.5%

20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0%

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 25

 Quality Metrics in
2005 Survey Warehouses
Order Shipping Accuracy 81.3%

Item Inventory Accuracy 77.7%

Location Inventory Accuracy 73.2%

Line Item Picking Accuracy 70.5%

Line Item Shipping Accuracy 58.0%

Putaway Accuracy 54.5%

Damage % 52.7%

Case Shipping Accuracy 38.4%

Case Picking Accuracy 38.4%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 26

 Order Line Shipping Accuracy
in Survey Warehouses
Average = 98.59%
Median = 99.5%
25.0%
21.3%
20.0% 18.0%
% of Warehouses

16.9%
15.7%
15.0%

10.0% 7.9%
6.7%
4.5% 4.5%
5.0%
2.2% 2.2%

0.0%

+
+

+
+

0
5

9
.5

.9
80

90

95

98

99

10
.9

.9
99

99

99

99
Shipping Accuracy (% of Orders Lines Shipped with Errors)

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 27

 Location Inventory Accuracy
in 2005 Survey Warehouses
25.0%
Average = 94.9%
Median = 98.0%
19.2%
20.0%
% of Warehouses

15.0%
12.3%12.3%
11.0%
10.0% 8.2% 8.2%

4.1% 4.1% 4.1% 4.1% 4.1% 4.1%

5.0% 2.7%
1.4%

0.0%

5+

9+
+

0
60

70

80

90

95

96

97

98

99

10
.5

.9

.9

.9
99

99

99

99
Location Inventory Accuracy

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 28

 Warehouse Quality Index =
Shipping Accuracy x Inventory Accuracy
100.00%
99.00%
98.00%
97.00%
96.00%
95.00%
94.00%
93.00%
Warehouse Quality Index

92.00%
91.00%
90.00%
89.00%
88.00%
87.00%
86.00%
85.00%
84.00%
83.00%
82.00%
81.00%
80.00%

Average = 93.2%
79.00%
78.00%
77.00%
76.00%

Median = 97.1%
75.00%
74.00%
73.00%
72.00%
71.00%
70.00%
69.00% Average for Top Quartile = 99.65%
Median for Top Quartile = 99.76%
68.00%
67.00%
66.00%
65.00%
64.00%
63.00%
62.00%
61.00%
60.00%
12
435
67
8
1109
1121
3
11154
1176
1298
2210
222243
222765
2398
3310
3332
3354
333687
4409
444132
4454
4476
4598
555210
5543
555765
5698
6610
6632
666654
6687
7709
777132
7754
7776
887098
8821
8843
888576
8998
999210
9943
9965
11099879
0
1100021
1110043
110056
110078
11109
1111121
1143
11111165
111178
1290
11122221
112234
5
1122276
8
2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 29
Warehouse Inventory Turn Rates
Average = 9.9

17.2%

17.2%
20.0%
18.0% Median = 5.1
16.0%
% of Warehouses

14.0%
10.3%

12.0%
10.0%

6.9%

6.9%

6.9%
5.7%

5.7%

5.7%
8.0%

4.6%
6.0%

3.4%

3.4%

2.3%

2.3%
4.0%
1.1%

2.0%
0.0%
1+ 2+ 3+ 4+ 5+ 6+ 7+ 8+ 9+ 10+ 11+ 12+ 13- 16- 21+
15 20
Warehouse Inventory Turn Rate

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 30

 Warehouse Fill Rates
Average = 93.75%
20.0%
17.9% Median = 97.17%
18.0%
16.0% 14.3% 14.3%
% of Warehouses

14.0% 13.1% 13.1% 13.1%

12.0%
9.5%
10.0%
8.0%
6.0%
3.6%
4.0%
2.0% 1.2%

0.0%
60+ 70+ 80+ 90-94 95-97 98+ 99+ 99.5+ 99.9+
Warehouse Fill Rate

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 31

 Occupancy Levels at
Normal and Peak Inventory
2003 Survey Results
2.9%
99% +
33.5%

7.6%
95% to 99%
25.3%

11.0%
90% to 95%
16.5%
% Occupancy

23.3%
85% to 90%
11.8%
N orm al

15.7%
The “average” Peak
80% to 85%
7.1% warehouse in the
survey is 82% full at
16.9%
75% to 80%
4.1% “normal” inventory
levels and 96% full
at “peak” inventory
10.5%
70% to 75%
1.8%

levels.
12.2%
Less than 70%
0.0%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0%

% of W arehouses in R ange

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 32

 Dock to Stock Time
Average = 12.3
25.0% Median = 4.0
21.6%
20.0% 18.6%
% of Warehouses

15.0% 13.7% 12.7%

11.8%

10.0% 7.8% 6.9%

5.0% 3.9%
2.9%

0.0%
<1 1+ 2+ 3-4 5-8 9-12 13-24 25-48 49+
Dock to Stock Time (Hours)

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 33

 Workforce Turnover

100.0%
90.1%
100.0%

87.7%
83.9%
% of Warehouses
90.0%

74.1%
Cumulative % of Warehouses
80.0%

65.4%
70.0%

60.0%

43.2%
42.0%
50.0%

40.0% 28.4%
23.5%

22.2%
30.0%
17.3%
13.6%

13.6%

20.0%
9.9%

9.9%

9.9%
8.6%
6.2%

4.9%
3.7%
3.7%

3.7%

3.7%

2.5%
1.2%
10.0%

0.0%
<1 1+ 2+ 3+ 4+ 5+ 6+ 10+ 15+ 20+ 30+ 40+ 50+

Workforce Turnover %
Average = 16% Median = 10%
2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 34
 Workforce Turnover vs.
Warehouse Quality
2003 Survey Results

25%+ 91.57%
Workforce Turnover

10% to 25% 93.57%

5% to 10% 95.44%

Less than 5% 96.08%

90%

91%

92%

93%

94%

95%

96%

97%
Warehouse Quality Index

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 35

 Workforce Challenges
Turnover 47%

Aging 45%

Multiple Languages 21%

Literacy 12%

Drugs/Alcohol 10%

0% 10% 20% 30% 40% 50%

% of Warehouses

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 36

 It pays to pay!
Pay Scales for Survey Warehouses
The average Warehouse Quality Index
for Above Average Pay = 98.3%.
F a r B e lo w A ve ra ge
1 .4 % The average Warehouse Quality Index
for Average Pay = 90.3%.
4 .1%
B e low A ve ra ge

4 7 .6 %
A ve ra ge

42 .2%
A b o ve A ve ra ge

4 .8%
F a r A b o ve A ve ra ge

0.0% 5 .0% 1 0 .0 % 1 5 .0 % 2 0 .0 % 2 5 .0 % 3 0 .0 % 3 5 .0 % 4 0 .0 % 4 5 .0 % 5 0 .0 %

2003 Survey Results

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 37
Warehouse Working Hours Profile
80%
% of Warehouse Working Hours

Part-Time
Staff -
70% Overtime
Part-Time
Staff - Regular Hours
60% Hours 4%
14%
50%
40%
Full-Time Staff
30% - Overtime
Hours Full-Time Staff
20% 18% - Regular
Hours
64%
10%
0%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
% of Warehouses

Full-Time Staff - Regular Hours Full-Time Staff - Overtime Hours

Part-Time Staff - Regular Hours Part-Time Staff - Overtime Hours

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 38

Operator to Supervisor Ratio
Average = 11.3

100.0%
96.3%
100.0%
Median = 10.2

94.1%
%
90.0%

85.4%
Productivity Best = 12
Cum%

81.7%
80.0%
Quality Best = 8

73.7%
67.9%
70.0%

58.4%
60.0%

51.8%
48.1%
50.0%

43.0%
38.7%
40.0%

33.5%
26.2%
30.0%

21.9%
17.5%
20.0%
15.3%
10.9%

10.9%
10.2%

9.5%

8.8%
8.0%
7.3%

7.3%

7.3%
10.0%

6.6%

5.8%
5.1%

5.1%
4.3%

4.4%

4.4%

4.4%

4.4%
3.6%

3.6%

3.6%

3.6%
2.9%

2.9%

2.9%
2.2%

2.2%

2.2%
1.5%
0.7%
0.7%

0.7%

0.7%

0.7%

0.7%
0.0%

0.0%

0.0%
30 29 28 26 25 24 23 22 21 20 19 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2
Operator to Supervisor Ratio

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 39

 % Active SKUs
25.0%
Average = 78.5%
20.0%
Median = 85.0% 19.4%
20.4%
18.3%
16.1%
15.0%

10.0% 8.6%

5.4%
5.0%
3.2% 3.2%
2.2% 2.2%
1.1%
0.0%
<10% 10%+ 20%+ 30%+ 40%+ 50%+ 60%+ 70%+ 80%+ 90%+ 100%
% Active SKUs

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 40

 Annual Order Lines per SKU

100.0%
92.3%
Daily

87.9%
100.0%

84.6%
80.2%
90.0% % of Warehouses

73.6%
Cumulative % of Warehouses
80.0%

63.7%
70.0% Weekly

54.9%
52.8%

52.8%
60.0% Monthly

49.5%
40.7%
50.0%

37.4%
33.0%
40.0%
26.4%
19.8%

30.0%
13.2%

9.9%
20.0%
8.8%

8.8%

7.7%
8.8%

6.6%

6.6%

6.6%

6.6%
4.4%

4.4%

4.4%

4.4%

4.4%

4.4%
3.3%

3.3%

3.3%
4.4%

2.2%
0.0%
10.0%
0.0%
+
+
+

+
+
+
+
+
+

+
+
1+
5+

0+
0+
0+
0+

0+
<1

10
20
30

40
50
60

70
80
90

00
00
10

20
30
40

50
10
20
Median = 75 Annual Lines Shipped per SKU

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 41

 Annual Lines per SKU vs.
Productivity Rank %
2003 Survey Results

47.8%
1-90s
Annual Lines per SKU

100s-400s 41.8%

500s-900s 41.2%

32.2%
1000+

30% 32% 34% 36% 38% 40% 42% 44% 46% 48%
High Productivity Rank % Low
Performance Performance

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 42

Warehousing Cost to Sales Ratio
8 .0 % 10.1%
7 .5 % 3.8%
7 .0 % 1.3%
Warehousing Cost to Sales Ratio

6 .5 % 3.8% Average cost to sales ratio = 3.4%

6 .0 % 3.8%
5 .5 % 1.3%
5 .0 % 5.1%
4 .5 % 3.8%
4 .0 % 6.3%
3 .5 % 6.3%
3 .0 % 6.3%
2 .5 % 2.5%
2 .0 % 11.4%
1 .5 % 10.1%
1 .0 % 10.1%
0 .5 % 13.9%
0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

11.0%

12.0%

13.0%

14.0%

15.0%
% o f W areh o u ses

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 43

 WMS Providers in
2005 Warehouse Benchmarking Report
• SAP (8) • Aquitec • MARC Global
• Manhattan Associates (7) • Asset Contols Inc. • Nfor
• Irista (4) • Baan ERP • Radio Beacon
• Adonix • CA Warehouse Boss • Renaissnce Software
• HK Systems
• Data Control Systems • Retek
• Oracle
• Dydacomp • Sigma Micro
• Provia
• ECOMETRY • Smith & Gardner
• Catalyst
• DSI • Exe • Ecometry

• EXE • HAL SYSTEMS • World Wide Chain Store

• Exeter • HighJump • Yantra
• Optum • INDUS
• Red Prairie (McHugh) • Intentia-MOVEX ERP
• Renaissance Software, Inc.
• Interlink
• ADPICS
• LDS Accuplus
2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 44
 State of WMS
WMS Integratated 76.3%
with TMS 23.8%

42.0%
WMS Part of ERP
58.0%

WMS Hosted 21.0% No

Internally 79.0% Yes

WMS Developed 20.3%

Externally 79.7%

29.5%
WMS In Place
70.4%

0% 20% 40% 60% 80% 100%

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 45

 WMS Plans
Maintain the Status
47%
Quo

Integrate WMS with

32%
TMS

Transition to an
29%
ERP-based WMS

Transition to a
14%
Standalone WMS

Transition to an
2%
ASP-based Model

0% 10% 20% 30% 40% 50%

% of Warehouses

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 46

 Warehouse
Communication Methods
Paper 88.6%
Bar Code Scanning 71.1%
Handheld RF Terminals 57.9%
Vehicle Mounted RF Terminals 43.0%
Pick-to-Light 7.9%
Radio Frequency Tags 7.0%
Optical Characters 7.0%
PDAs 4.4%
Handsfree RF Terminals 3.5%
Voice Headsets 1.8%

0.0% 20.0% 40.0% 60.0% 80.0% 100.0%

% of Warehouses

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 47

 Level of Information Handling Automation vs.
Warehouse Productivity Rank %

State III 28.8%

(Automated) 33.3%

Stage II (Semi- 5.6%

Automated) 40.4%

0.0%
Stage I (Manual)
42.8%

0% 10% 20% 30% 40% 50%

Productivity Rank % % Improvement vs. Baseline

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 48

 RFID Implementation Plans
No Plan to Implement 64%

Plan to Implement in 3+ Years 13%

Plan to Implement in 2 Years 8%

Plan to Implement in 1 Year 8%

Already Implemented 8%

0% 10% 20% 30% 40% 50% 60% 70%

% of Warehouses

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 49

 Pallet Storage Modes in
Survey Warehouses
Single Deep Rack 88.7%
Counterbalance Lift Truck 82.6%
Floor Storage 80.9%
Straddle Reach Truck 46.1%
Double Deep Rack 33.0%
Pallet Flow Rack 24.3%
Turret Truck 21.7%
Drive In/Through Rack 18.3%
Straddle Truck 12.2%
Push-Back Rack 9.6%
Sideloading Truck 8.7%
ASRS Machine 5.2%
AGVS 0.9%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 50

 Case Picking Devices
Pallet Jacks 67.6%

Man-aboard Order Pickers 58.1%

Counterbalance Lift Trucks 51.4%

Pick-to-Belt Conveyors 19.0%

Sortation Conveyors 13.3%

Tuggers 12.4%

Layer Pickers 6.7%

0% 20% 40% 60% 80%

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 51

 Broken Case Picking Equipment
Bin Shelving 83.0%

Flow Rack 45.5%

Storage Drawers 25.0%

Horizontal Carousels 9.1%

Automated Dispensing 3.4%

Vertical Carousels 2.3%

0% 20% 40% 60% 80% 100%

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 52

 Material Handling Automation vs.
Warehouse Productivity

Automated 13.1%

Mechanized 28.3%

Manual 30.3%

0% 5% 10% 15% 20% 25% 30% 35%

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 53

 Practices in Place in
2005 Survey Warehouses
Cross Training 78.1%
Putaway Location Verification 68.8%
Productivity/Time Standards 64.2%
Pick Location Verification 63.5%
ASNs 61.2%
ABC Cycle Counting 60.0%
Directed Putaway 54.7%
Popularity Slotting (Golden Zoning) 51.1%
Continuous Improvement Teams 51.0%
Item Cube Information 50.5%
Ergonomics Programs 49.0%
Cross Docking 44.8%
Activity Based Costing 35.4%
W eigh Checking 29.0%
Interleaving 12.2%
RFID Tags 7.4%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 54

 Practices in Place
18.0%
Median = 8 15.3%
16.0%

14.0% 12.6%
12.0%
9.9% 9.9%
10.0%
8.1%
8.0% 7.2% 7.2%7.2%

6.0% 5.4%
4.5%4.5%
3.6%
4.0%
1.8% 1.8%
2.0% 0.9%
0.0%
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Number of Practices in Place

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 55

 It pays to practice!
23.6%
World-Class (12 to 15) 41.9%
Stage (Number of Practices in Place)

27.3%

17.0%
Upper Class (9 to 11) 23.9%
35.8%

8.3%
Middle Class (6 to 8) 8.3%
43.2%

0.0%
Baseline (< 5) 0.0%
47.1%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Productivity Rank % % Improvement vs. Baseline Stage % Improvement vs. Previous Stage

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 56

 The “Perfect” Warehouse
A building 600 feet long, 300 feet wide, 30 feet clear with
180,000 square feet in a rapidly appreciating area inside a free
trade zone within 24 hour delivery of all U.S. zip codes, in close
proximity to a highly skilled and motivated workforce, and
within walking distance of a major U.S. port.
The building is 80% occupied during “normal” inventory levels
and 90% occupied during “peak” inventory levels.
The operation is a hybrid insource-outsource model with the
perfect outsource provider(s) chosen to perform those activities
inside the warehouse that SHOULD BE outsourced.
The operation is supported by a WMS provided by an ASP
enabling all world-class warehousing practices and integrating
with a wide variety of paperless communication devices chosen
perfectly to meet the unique needs of each activity within the
warehouse.

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 57

 The “Perfect” Warehouse
The workforce is cross-trained with an operator to supervisor
ratio of 8 where QUALITY is the key success driver and 12
where PRODUCTIVITY is the key success driver and where
operators are delighted with average to above-average pay.
The SKUs would be highly active, yielding 1000+ hits per year
on average.
An APPROPRIATE level of material handling technology is in
place, each device chosen to perfectly match the handling
requirements of the task.
A holistic set of financial, productivity, quality and cycle time
metrics work together to motivate and maintain world-class
warehouse performance.

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 58

 Contact Information
The Logistics Institute at Georgia Tech
„ www.tli.gatech.edu
Logistics Resources International
„ www.LRIConsulting.com
Edward H. Frazelle, Ph.D.
„ EdFrazelle@LRIConsulting.com

2005 TLI/WERC Warehouse Benchmarking Survey - © Edward H. Frazelle, Ph.D. 59