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enchmarking &
est Practices
Supply Chain Core Benchmarks
Understanding Key Metrics
Core Benchmarks Re
January 25, 2
www.supplychainconsortium.com
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Table of Contents
Executive Summary 3
Core Benchmark Worksheet 5
Financial Benchmarks 8
Supply Chain Planning 13
Sourcing 14
Transportation 15
Manufacturing 28
Conclusion 33
References 33
Distribution 23
Technology 31
AuthorTo learn more about Supply Chain Core
Benchmark trends and leading practicesor the resources available through theSupply Chain Consortium, contact:
Bruce Tompkins
Executive DirectorSupply Chain Consortium(919) 855-5527btompkins@tompkinsinc.com
Chris Ferrell
Associate DirectorSupply Chain Consortium(407) 362-0369
cferrell@tompkinsinc.com
Note: Throughout this report, importance is weighted on a scale of 1 to 5, with 1 being the loweand 5 being the highest unless otherwise noted.
Copyright 2011 Supply Chain Consortium. All rights reserved. Confidential and Propr
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PageSupply Chain Core Benchmarks Report
Copyright 2011 Supply Chain Consortium. All rights reserved. Confidential and Proprietary.
Core Benchmark Focus Areas
To provide insights into the core measures and indicators of supply chain performance, benchmarks are organized aroundthe major functional elements of the supply chain as well as financial and technology metrics. The areas highlighted inthis report are:
Financial Benchmarks Covers total supply chain, transportation and distribution center (DC) costs along withoutbound and inbound freight costs. Also included is data on days purchases outstanding, days receivablesoutstanding and financial inventory turns. The analysis has been done on an industry segment basis.
Supply Chain Planning Benchmarks Examines forecast accuracy metrics and scheduling and planning metrics.
Sourcing Benchmarks Provides foundation data on supplier partnership, outsourcing, and vendor performancemetrics, which are reviewed by industry (retail vs. manufacturing).
Transportation Benchmarks Provides data on truckload (TL), less than truckload (LTL), intermodal rail, air andparcel freight performance. In most cases, the data is presented by industry segment so that meaningful comparisonsto your transportation metrics are possible.
Distribution Benchmarks Highlights benchmarks in DC layout, inbound shipment flow and receiving, operationalperformance metrics, quality assurance, and labor management.
Manufacturing Benchmarks Covers several aspects of manufacturing operations. Included in the analysis is metricdata on quality systems, facility design, human resource management, maintenance, safety and energy, product
development, cost competitiveness, and production approaches. It also contains manufacturing philosophiesemployed by industry segments.
Technology Benchmarks Address capital investment in technology, internal and external cost associated withWMS, bar-code usage, and the use of a WMS.
The following sections are highly focused on data that are indicators of supply chain performance and provide a view tothe opportunities for improvement that may exist in your supply chain. As you review it, make comparisons and askyourself questions about how you rate against those included in the Consortiums database. To help with this comparison,pages 5-7 include a simple benchmark comparison worksheet. Use this worksheet; share it with others in yourorganization, and let it provide a framework for your supply chain improvement initiatives.
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Page 5 Supply Chain Core Benchmarks Rep
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Core Benchmark WorksheetInstructions: The Supply Chain Core Benchmarks Reportprovides extensive data on the most critical supply chain benchmarks. Thworksheet here is intended as a hands-on tool for you to collect relevant data points from figures throughout the report and compare theagainst your supply chain performance. To complete the worksheet, simply record the benchmark data from the report that provides thbest point of comparison with your supply chain and insert your companys results.
Benchmark Metrics Core Benchmark Report Data My Companys Benchmark DatFinancial
Supply chain cost as a percentage of revenue
Transportation cost as a percentage of revenue
Distribution cost as a percentage of revenue
Financial inventory turns
Days of purchases outstanding
Days of receiving outstanding
Supply Chain Planning
Forecast accuracy - MAPE and percentage error
Inventory turns
On-time delivery to customerOutbound order fulfillment lead time
Production plan adherence to a firm schedule
Sourcing
Vendor
Supplier on-time delivery
Fill rate on closed orders
In stock at stores
Lead time (days)
On-time availability at shipment origin
On-time delivery
Perfect order
Timely and accurate ASN
Timely and accurate P.O. acknowledgement
Timely and accurate ready to ship acknowledgement
Transportation
Truckload
On-time delivery
On-time pickup
Billing error rate
Claims incident rate
Claims response days
Electronic status update
LTL
On-time delivery
On-time pickup
Billing error rate
Claims incident rate
Claims response days
Electronic status updates
Continued on page
Proof of delivery
Capacity utilization for truckload containers
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Benchmark Metrics Core Benchmark Report Data My Companys Benchmark Dat
Transportation (continued)
Air
On-time pickup
On-time delivery
Proof of delivery
Claims incidence rate
Billing error rate
Electronic status updates
Claims response days
Ocean
On-time arrivals
Percentage of containers rolled
On-time sailing
Average container capacity utilizedElectronic status updates
Claims incidence rate
Billing error rate
Claims response days
Proof of delivery
Shipment integrity
Pro-active alerts on late shipments
Bookings declined
On-time availability at destination port
Parcel
On-time pickup
On-time delivery
Proof of delivery
Claims incidence rate
Billing error rate
Electronic status updates
Claims response days
Intermodal
On-time delivery
On-time pickup
Proof of delivery
Claims incidence rate
Billing error rateClaims response rate
Electronic status updates
Continued on page
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Benchmark Metrics Core Benchmark Report Data My Companys Benchmark Dat
Distribution Center
Storage utilization
Order accuracy
Order fill rate
On-time delivery
Perfect order completion
Order line accuracy
Part-time headcount as a percentage of FT headcount
Season part-time as a percentage of FT headcount
Headcount per million dollars of annual revenue
Headcount per million order lines shipped annually
Highest percentage order line picking method
Manufacturing
Customer rejection rate on shipped products (PPM)
Outgoing product quality (PPM)
Cost of quality as a percentage of COGS
Manufacturing cycle time
Percentage of total facility space used for storage andmaterial handling
Annual employee turnover
Annual absenteeism
Preventative maintenance compliance
Total annual research and development costs as apercentage of COGS
Change in manufacturing return on invested capital
Percentage of manufacturing cost change per unit
Percentage of change in manufacturing man-hoursper unit
Percentage of sales from make-to-plan
Percentage of sales from make-to-order
Technology
Percentage of inbound cartons that are bar-coded
Percentage of inbound container that are bar-coded
Percentage of inbound loose pieces that are bar-coded
Percentage of outbound cartons that are bar-coded
Percentage of outbound containers that are bar-coded
Percentage of outbound loose pieces that are bar-coded
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PageSupply Chain Core Benchmarks Report
Copyright 2011 Supply Chain Consortium. All rights reserved. Confidential and Proprietary.
Financial BenchmarksReviewing supply chain financial benchmarks provides an effective way of looking at overall supply chain performance.The data in this section has been divided by industry segment and into quartiles. Top quartile companies represent theleading 25% of all survey participants; the second quartile is the next 25% and so on.
Supply Chain CostSupply chain cost is steadily increasing over time despite concerted efforts to hold the line. As supply chain cost growsrelative to revenue, more pressure has been put on cost control efforts, and few companies can accept service levelerosion or inventory growth in exchange for reduced costs.
Figure 3 shows the average supply chain costs as a percentage of revenue divided by quartiles.
Each industry segment and company has varying views about how important the metric of supply chain cost as apercentage of revenue is to performance (Figure 4).
Supply
cost is s
increa
over
desp
conce
efforts t
the l
Figure 3. Average *Supply Chain Cost as a
Percentage of Revenue by SegmentTop Quartile 2nd Quartile 3rd Quartile 4th Quartile
Apparel, Fabric and Accessories 3.6% 5.2% 5.7% 9.8%
Automotive, Truck and Vehicles 3.0% 5.7% 5.9% 6.0%
Beauty, Health and Wellness 2.0% 4.5% 8.7% 9.2%
Department Store and Discount 2.3% 4.5% 6.6% 9.8%
Electronics and Electricals 3.0% 5.0% 6.9% 10.0%
Food and Beverage 5.0% 6.0% 7.8% 10.8%
Hobby, Toys, Arts, Crafts and Sporting Goods 3.6% 4.4% 5.6% 6.7%
Home Products/Furniture/Appliances 4.1% 5.0% 6.3% 7.2%
* Supply chain cost is defined as transportation, DC, LSP and overhead costs.
0 1 2 3 4 5
Average Importance
Apparel, Fabric and
AccessoriesAutomotive, Truck and
Vehicles
Beauty, Health and W ellness
Department Store and Discount
Electronics and Electricals
Food and Beverage
Hobby, Toys, Arts, Crafts and
Sporting GoodsHome
Products/Furniture/Appliances
Figure 4. Supply Chain Cost Importance by Segment
Apparel, Fabric and Accessories
Automotive, Truck and Vehicles
Beauty, Health and Wellness
Department Store and Discount
Electronics and Electricals
Food and Beverage
Hobby, Toys, Arts, Crafts and Sporting Goods
Home Products/Furniture/Appliances
Figure 4. Importance of Supply Chain Cost
Average Importance (Scale 1-5)
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0 1 2 3 4 5
Average Importance (Scale 1-5)
Apparel, Fabric and
AccessoriesAutomotive, Truck and
Vehicles
Beauty, Health and Wellness
Department Store and Discount
Electronics and Electricals
Food and Beverage
Hardware and Home
Improvement
Hobby, Toys, Arts and CraftsHome
Products/Furniture/AppliancesPharmaceutical and Drug
Specialty
Figure 6. Transportation Cost Importance by Segment
Respondentsare
xperiencing
significant
ncreases in
ansportation
cost as a
ercentage of
evenue over
time.
Transportation Cost
Transportation cost has been particularly hard hit with fuel pricing and capacity issues. In spite of tremendous efforreduce costs, respondents are experiencing significant increases in transportation cost as a percentage of revenue otime.
Figure 5 shows the breakdown by quartiles, and Figure 6 illustrates how respondents ranked the importanc
transportation cost.
Figure 5. Average Transportation Cost as a
Percentage of RevenueTop Quartile 2nd Quartile 3rd Quartile 4th Quar
Apparel, Fabric and Accessories 1.2% 2.0% 2.4% 4.0%
Automotive, Truck and Vehicles 1.5% 2.1% 4.3% 5.8%
Beauty, Health and Wellness 4.4% 5.0% 5.3% 5.6%
Department Store and Discount 1.4% 1.9% 2.7% 3.6%
Electronics and Electricals 1.8% 2.2% 2.8% 3.5%
Food and Beverage 1.1% 1.7% 5.9% 10.0%
Hardware and Home Improvement 2.4% 3.4% 3.5% 10.0%
Hobby, Toys, Arts and Crafts and Sporting Goods 2.6% 2.9% 3.3% 4.2%Home Products/Furniture/Appliances 3.1% 3.4% 4.5% 6.0%
Pharmaceutical and Drug 0.8% 1.3% 1.7% 2.1%
Specialty 0.9% 1.6% 2.2% 4.2%
Apparel, Fabric and Accessories
Automotive, Truck and Vehicles
Beauty, Health and Wellness
Department Store and Discount
Electronics and Electicals
Food and Beverage
Hardware and Home Improvement
Hobby, Toys, Arts and Sporting
Home Products and Appliances
Pharmaceutical and Drug
Specialty
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In generdata fo
cost a
percent
reven
trend
downw
compa
last ye
survey r
Distribution Center Cost
There is a higher degree of variability in DC cost as a percentage of revenue than with transportation cost. Somecompanies strategies increase the cost of distribution in order to significantly reduce transportation cost and improvecustomer service, while other companies are focused on a strategy of improved DC productivity.
In general, the data for DC cost as a percentage of revenue is trending downward compared to last years survey results,indicating that improvement activities directed at cost reduction in the supply chain have been effective (Figure 7).
Figure 8 shows that all industry segments believe DC costs to be of high importance.
Figure 7. Average DC Cost as a Percentage
of RevenueTop Quartile 2nd Quartile 3rd Quartile 4th Quartile
Apparel, Fabric and Accessories 1.1% 1.6% 3.7% 5.9%
Automotive, Truck and Vehicles 2.2% 3.0% 4.0% 6.5%
Beauty, Health and Wellness 2.7% 3.2% 7.0% 10.8%
Department Store and Discount 1.6% 1.8% 2.4% 4.0%
Electronics and Electricals 0.8% 1.1% 1.5% 4.6%
Food and Beverage 1.2% 1.5% 2.8% 10.0%
Hardware and Home Improvement 3.8% 5.4% 6.0% 7.6%
Hobby, Toys, Arts and Crafts 1.9% 2.5% 4.3% 4.7%
Home Products/Furniture/Appliances 1.9% 2.5% 4.3% 16.3%
Pharmaceutical and Drug 1.6% 1.8% 2.1% 2.3%
Specialty 2.0% 2.1% 2.4% 3.0%
0 1 2 3 4 5
Average Importance (Scale 1-5)
Apparel, Fabric and
AccessoriesAutomotive, Truck and
VehiclesBeauty, Health and Wellness
Department Store and Discount
Electronics and Electricals
Food and BeverageHardware and Home
ImprovementHobby, Toys , Arts, Crafts and
Sporting GoodsHome
Products/Furniture/AppliancesPharmaceutical and Drug
Specialty
Figure 8. Distribution Center Cost Importance By SegmentFigure 8. Importance of DC Cost
Apparel, Fabrics and Accessories
Automotive, Truck and Vehicles
Beauty, Health and Wellness
Department Store and Discount
Electronics and Electricals
Food and Beverage
Hardware and Home Improvement
Hobby, Toys, Arts and Crafts
Home Products/Furniture/Appliances
Pharmaceutical and Drug
Specialty
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mprovements
in financial
turns have
been made
over the last
everal years,
as companies
ave struggled
with the
ecession and
ound reduced
inventories
effective.
Financial Inventory Turns
Financial inventory turns are based on the inventory dollar value at a specific point in time compared to the costgoods sold (COGS) at that same time. Improvements in financial turns have been made over the last several years,companies have struggled with the recession and found reduced inventories effective.
From the survey, the three industry segments with the highest inventory turns are (1) electronics and electricals, (2) foand beverage, and (3) beauty, health and wellness, which is not surprising given the nature of those segments (Figure
Days Purchases Outstanding
Days purchases outstanding is an indicator of the amount of time a company takes to pay its trade creditors. In t
current financial environment, the days purchases number is growing as companies are conserving cash. Figure 10 nothat retail companies have a higher number of days purchases outstanding than manufacturing companies.
Figure 10. Days Purchases Outstanding
0
5
10
15
20
25
30
35
40
45
50
Retail Manufacturing
Numbero
fDay
Numbe
rofDays
Figure 10. Days Purchases Outstanding
Figure 9. Inventory Turns By Industry Segment
0 1 2 3 4 5 6 7 8 9
Apparel, Fabric and
AccessoriesAutomotive, Truck and
VehiclesBeauty, Health and Wellness
Department Store and Discount
Electronics and Electricals
Food and BeverageHardware and Home
ImprovementHobby, Toys , Arts, Crafts and
Sporting GoodsHome
Products/Furniture/AppliancesPharmaceutical and Drug
Specialty
Inventory Turns
Figure 9. Inventory Turns
Inventory Turns
Apparel, Fabrics and Accessories
Automotive, Truck and Vehicles
Beauty, Health and Wellness
Department Store and Discount
Electronics and Electricals
Food and Beverage
Hardware and Home Improvement
Hobby, Toys, Arts and CraftsHome Products/Furniture/Appliances
Pharmaceutical and Drug
Specialty
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Manufact
and re
companie
virtually
same ave
outbou
freigh
percent
Days Receivables Outstanding
Days receivables outstanding is a measure of the average number of days that a company takes to collect revenue after asale has been made. A low days receivable number means that it takes fewer days to collect accounts receivable. Thefinancial environment is also challenging the ability of many companies to collect receivables in a timely fashion.
Figure 11 (below) and Figure 10 (previous page) show that for retail companies and manufacturing companies, dayspurchases is greater than days receivables, which is the reverse trend from last years survey.
Freight Cost: Outbound and Inbound
The average outbound freight cost as a percentage of gross sales is slightly more than 2% (Figure 12). Manufacturing andretail companies have virtually the same average outbound freight cost percentage.
Inbound freight cost as a percentage of purchases averages 1.2% for all survey participants (Figure 13). As with outboundfreight, manufacturing and retail companies averages are very similar.
Figure 11. Days Receivables Outstanding
05
10
15
20
25
30
35
40
45
50
Retail Manufacturing
NumberofDay
NumberofDays
Figure 11. Days Receivables Outstanding
Figure 12. Outbound Freight Costs as a Percentage of Gross Sales
31%
34%
11%
24% Less than 1%
1% to 3%
3% to 5%
Greater than 5%
Figure 12. Outbound Freight Cost as a Percentage of Gross Sales
Figure 13. Inbound Freight Costs as a Percentage of Purchases
29%
48%
7%
16%Less than 1%
1% to 3%
3% to 5%
Greater than 5%
Figure 13. Inbound Freight Cost as a Percentage of Purchases
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Nearly
wo-thirds ofrespondents
ndicate that
their
production
plan
dherence to
a firm
schedule is
reater than
90%.
Supply Chain PlanningThis section discusses forecast accuracy metrics as well as scheduling and planning metrics.
Sales Forecast Accuracy Metrics
Although both methods are commonly used, more companies utilize the percentage error measure than mean absolpercentage error (MAPE) for forecast accuracy (Figure 14). Responses of survey participants for percentage erranged from 5% to 75% and for MAPE from 15% to 80%.
According to the survey, MAPE and percentageerror are viewed by respondents as the mostimportant forecasting methods, with the highestlevel of accuracy for their operations (Figure 15).
Scheduling and Inventory Management Metrics
The average performance of companies for on-time delivery of product to customer/consumers as required by tcustomer is 94.9%. Manufacturers average 93% delivery performance versus 97% for retailers. Total inventory tu
averages 7.0 but varies widely from industry to industry and company to company. Top quartiles companies haveaverage of more than 12.0 total turns.
The outbound order fulfillment lead-time is measured by the time from receipt of an order until an invoice is sent payment, and the average performance overall is 5.9 days (Figure 16). Top quartile companies have lead times of lthan three days.
Production Plan Adherence
Nearly two-thirds of respondents indicatethat their production plan adherence to afirm schedule is greater than 90%(Figure 17). Production plan adherencerequires products to be produced in thequantity and sequence specified by theschedule.
Figure 14. Accuracy Measurement Average Forecast Er
Percentage Error 22.6%
Mean Absolute Percentage Error (MAPE) 32.5%
Figure 16. Scheduling and Inventory Management MetricsAverage Importance
(Scale 1-5)
Average
Performance
On-time delivery to customers/consumers 4.6 94.9%
Total inventory turns 4.2 7.6 turns
Outbound order fulfillment lead time 4.1 5.0 days
Figure 15. Forecast Accuracy Metrics
00.5
11.5
22.5
33.5
44.5
5
Mean absolute
percentage
error (MAPE)
Percentage
error
Forecas t ratio Standard
deviation
Mean error Mean absolute
error
Mean squar
error
Importance(max=10
Importance(Scale1-10)
Figure 15. Importance of Forecast Accuracy Metrics
Figure 17. Production Plan Adherence to a Firm Schedule
3% 6%
28%
63%
Less than 70%
70% to 80%
80% to 90%
Greater than 90%
Figure 17. Production Plan Adherence to a Firm Schedule
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Compa
previ
years,
compa
hav
employ
perf
order
with ve
SourcingThe sourcing analysis provides foundation data onsupplier on-time delivery, product outsourcing, andnumerous vendor performance metrics.
Supplier Partnerships Metrics
The top-performing companies average supplier on-time delivery greater than 99% (defined as deliveryon-time based on the request of the company). Theaverage for all survey participants was 95% on-timedelivery (Figure 18).
Outsourcing Metrics
Supply chains have clearly changed over the past few years, with more and more manufacturing being done by contractmanufacturers and more raw materials and components being sourced from global suppliers (Figure 19). There are noindicators that this trend will lessen.
Vendor Performance Metrics
Vendor performance metrics cover operational measures related to fill rates, lead time, and status measures for theeffective communication of information and updates from vendors. Compared to previous years, more companies haveemployed the perfect order metric with vendors (Figure 20).
Figure 20. Vendor Performance Metrics Retail Manufacturing
Fill rate on closed orders 91.8% 93.8%
In stock at stores (retail only) 94.7% NA
Lead-time (days) 14 days 17 days
On-time availability at shipment origin 87.5% 91.3%
On-time delivery 88.0% 90.3%Perfect order 85.7% 92.7%
Timely and accurate advance shipment notifications 89.4% 90.7%
Timely and accurate PO acknowledgement 90.7% 96.5%
Timely and accurate ready to ship acknowledgement 78.4% 89.6%
Percentage of ProductsShipped to Global Markets
2%
15%
7%
76%
Les s Than 10% 10% to 30% 30% to 50% Greater than 50%
25%
25%
5%
45%
Figure 19. Outsourcing Metrics
35%
6%
6%
53%
Percentage of Products Produced byContract Manufactures
Percentage of ProductsShipped to Global Markets
Percentage of Raw Material and ComponentsSourced from Global Suppliers
Figure 18. Supplier On-time Delivery
0%10%
20%30%40%50%
Less than
90%
90-95% 95% to
99%
Greater
than 99%
Metric Percentage
Percentageo
Resp
ondents
Figure 18. Supplier On-time Delivery
Percentageof
Respon
dents
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est-in-class
companies
have TL on-
me delivery
reater than
99%.
TransportationThe transportation section includes data for each of the major transportation modes used extensively across NorAmerica and around the globe. In most cases throughout this section, the data has been organized by industry segmefor easier comparison.
Figure 21 shows the breakdown of transportation utilization by the different modes. Not surprisingly, truckload (TL)the most utilized by both retail and manufacturing companies.
Truckload Metrics: Pickup and Delivery
There is a surprising amount of variability in TL on-time pickup across industry segments. The overall average is 91for all survey participants. Best-in-class companies have TL on-time delivery greater than 99%. Across all surveparticipants, 15% have TL on-time delivery greater than 99%. Figure 22 shows the percentage of on-time pickup andelivery by segment.
Figure 21. Mode Utilization Profile
by Percentage of Total SpendTL LTL Air Parcel Intermodal Boxcar Ocean
Retail 36.1% 15.0% 3.9% 8.3% 11.0% 0.0% 25.8%
Manufacturing 51.5% 13.8% 10.1% 12.7% 4.8% 2.9% 4.2%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Apparel, Fabric and
AccessoriesAutomotive, Truck and
VehiclesBeauty, Health and Wellness
Department Store and Discount
Electronics and Electricals
Food and Beverage
Hardware and HomeImprovementHobby, Toys , Arts, Crafts and
Sporting GoodsHome
Products/Furniture/AppliancesPharmaceutical and Drug
Specialty
Figure 22. Percentage of On-time Pickup and Delivery by Segment
On-time Pickup Percentage On-time Delivery Percentage
Figure 22. Percentage of On-time Pickup and Delivery
Apparel, Fabric and Accessories
Automotive, Truck and Vehicles
Beauty, Health and Wellness
Department Store and Discount
Electronics and Electricals
Food and Beverage
Hardware and Home Improvement
Hobby, Toys, Arts and Sporting
Home Products and Appliances
Pharmaceutical and Drug
Specialty
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TL b
error ra
sur
partic
ranged
less tha
more
10
Proof of Delivery
Best-in-class companies have TL proof of delivery percentage greater than 99%. Across all survey participants, more thanhalf have TL proof of delivery greater than 99%. Figure 23 illustrates the proof of delivery percentage by segment.
Billing Error Rates
TL billing error rates for survey participants ranged from less than 1% to more than 10%, with an average of 3.3%. SeeFigure 24 for the breakdown by segment.
Figure 23. Truckload Proof of Delivery Percentage by Segment
90% 91% 92% 93% 94% 95% 96% 97% 98% 99% 100%
Apparel, Fabric and Acces soriesAutomotive, Truck and Vehicles
Beauty, Health and Wellness
Department Store and Discount
Electronics and Electricals
Food and Beverage
Hardware and Home Improvement
Hobby, Toys , Arts, Crafts and Sporting Goods
Home Products / Furniture / Appliances
Pharmaceutical and Drug
Specialty
Proof of Delivery Percentage
Figure 24. Truckload Billing Error Rate Percentage by Segment
0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10%
Apparel, Fabric and Accessories
Automotive, Truck and Vehicles
Beauty, Health and Wellness
Department Store and Discount
Electronics and Electricals
Food and Beverage
Harware and Home Improvement
Hobby, Toys , Arts, Crafts and Sporting Goods
Home Products / Furniture / Appliances
Pharmaceutical and Drug
Specialty
Billing Error Rate Percen tage
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anufacturing
companiesave slightly
igher results
han retailers
when asked
about the
ercentage of
ipments with
ccurate and
complete
atus updates.
Claims Incidents and Response Times
TL claims incidence rates vary greatly among industry segments and from company to company. There is a negligdifference between manufacturing and retail companies claims rates. Likewise, there is a wide variation in the TL claresponse days for survey participants, with an average of 56 days and a standard deviation of 34 days (Figure 25Figure 26).
Electronic Status Updates
Manufacturing companies have slightly higher results than retailers when asked about the percentage of shipments waccurate and complete electronic status updates. Few companies provided data on this metric, indicating that it is not uas often and it may be more open to judgment than other measures (Figure 27).
Figure 25. Truckload Claims Incidence Percentage by Segment
0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0
Apparel, Fabric and
Accessories
Automotive, Truck and
Vehicles
Beauty, Health and Wellness
Department Store and Discount
Electronics and Electricals
Food and Beverage
Hardware and Home
Improvement
Hobby, Toys , Arts, Crafts and
Sporting Goods
HomeProducts/Furniture/Appliances
Claims Incidence Percentage
Apparel, Fabric and Accessories
Automotive, Truck and Vehicles
Beauty, Health and Wellness
Department Store and Discount
Electronics and Electricals
Food and Beverage
Hardware and Home Improvement
Hobby/Toys/Arts/Crafts/Sporting Goods
Home Products/Furniture/Appliances
Claims Incidence Percentage
Figure 25. Truckload Claims Incidence (Percentage)
Figure 27. Truckload Accurate and Complete Electronic Status Updates Percentage
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 10
Apparel, Fabric and
AccessoriesBeauty, Health and Wellness
Department Store and Discount
Electronics and Electricals
Food and BeverageHardware and Home
ImprovementHobby, Toys, Arts, Crafts and
Sporting GoodsHome
Products/Furniture/Appliances
Electronic Status Updates Percentage
Apparel, Fabric and AccessoriesBeauty, Health and Wellness
Department Store and Discount
Electronics and Electricals
Food and Beverage
Hardware and Home Improvement
Hobby/Toys/Arts/Crafts/Sporting Goods
Home Products/Furniture/Appliances
Electronic Status Updates Percentage
Figure 27. TL Accurate and Complete Electronic Status Updates (Percentage)
Figure 26. TL Claims Response Time in days by Segment
0 10 20 30 40 50 60 70 80
Apparel, Fabric and
Accessories
Beauty, Health and Wellness
Department Store and Discount
Electronics and Electricals
Food and Beverage
Home
Products/Furniture/Appliances
Average Number of Days
Apparel, Fabric and Accessories
Beauty, Health and Wellness
Department Store and Discount
Electronics and Electricals
Food and Beverage
Home Products/Furniture/Appliances
Figure 26. TL Claims Response Time (Days)
Number of Days
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More
40%
compa
reache
go
perform
greate
95% on
pick
Capacity Utilization for Truckload Containers
The data for TL shipment capacity utilization follows a predictable pattern, with shipments from manufacturing plantshaving the best capacity utilization and inbound shipments from vendors to DCs having a lower percentage of capacityutilization. The more interesting observation is the range of responses, indicating some companies fill up trailers andsome do not (Figure 28).
Less than Truckload: Pickup and Delivery
By company, LTL on-time pickup percentages range from values nearing 80% to 100% and averaged 94.8%. More than40% of companies reached their goal performance of greater than 95% on-time pickup.
LTL on-time delivery does not vary much by segment (Figure 29). The standard deviation of the data for this metric isonly 3.8%. The average on-time delivery is 94.2% across all companies, with very little difference between manufacturers
and retailers.
Billing Errors
Retail companies have almost twice theamount of LTL billing errors asmanufacturing companies (Figure 30). This
variance is difficult to explain but may haveto do with the profile of the LTL shipments,which creates more complexity for retailers.Overall, the LTL billing error rate averages2.7%.
Figure 28. Truckload Capacity Utilization Range Average
Shipments inbound from suppliers to manufacturing plants 75% to 98% 86.9%
Shipments inbound from vendors to DCs or consolidation centers 65% to 96% 84.8%
Shipments outbound from manufacturing plants to DCs or customers 75% to 99% 91.5%
For shipments outbound from DCs to customers or stores 67% to 99% 85.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
BillingErrorRat
Percentage
Manufacturers Retail
Figure 30. LTL Billing Error Rate Percentage by Industry
BillingErrorRatePercentage
Figure 30. LTL Billing Error Rate Percentage
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Percentage On-time
Apparel, Fabric and
AccessoriesAutomotive, Truck and
VehiclesDepartment Store and Discount
Electronics and Electricals
Food and BeverageHardware and Home
ImprovementHobby, Toys, Arts, Crafts and
Sporting GoodsHome
Products/Furniture/Appliances
Figure 29. LTL On-time Pickup and Delivery by Segment
On-time Pickup Percentage On-time Delivery Percentage
Apparel, Fabric and Accessories
Automotive, Truck and Vehicles
Department Store and Discount
Electronics and Electricals
Food and Beverage
Hardware and Home Improvement
Hobby, Toys, Arts, Crafts and Sporting Goods
Home Products/Furniture/Appliances
Figure 29. LTL On-time Pickup and Delivery
On-time DeliveryOn-time Pickup
Percentage On-time
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Many
companies
see claims
response as
an area of
opportunity
and are
developing
goals for
significant
mprovement.
Claims Incidents and Response Rates
For respondents, LTL claims incidence rates range from far less than 1% to greater than 5%. Figure 31 illustrates claims incidence rate averages by segment. The Consortium data trends show claims rates declining over time. Taverage LTL claims response is 60 days, with an average goal of 45 days (Figure 32). So, many companies see this asarea of opportunity and are developing goals for significant improvement.
Electronic Status Updates
The responses to the question on LTL electronic status updates are based on a relatively small number of compancompared to the other metrics, leading to the conclusion that less companies track this measure for LTL carriers than TThe average percentage of shipments with accurate and complete electronic updates is 87.1%. Figure 33 has the accurand complete electronic status updates breakdown by segment.
Figure 33. LTL Accurate and Complete Electronic Status Updates
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 10
Apparel, Fabric and
Accessories
Beauty, Health and Wellness
Department Store and Discount
Electronics and Electricals
Food and BeverageHardware and Home
ImprovementHome
Products/Furniture/Appliances
Electonic Status Updates Percentage
Apparel, Fabric and Accessories
Beauty, Health and Wellness
Department Store and Discount
Electronics and Electricals
Food and Beverage
Home Products/Furniture/Appliances
Hardware and Home Improvement
Electronic Status Updates Percentage
Figure 33. LTL Accurate and Complete Electronic Status Updates
Figure 32. LTL Claims Response Time in Days by Segment
0 20 40 60 80 100 1
Apparel, Fabric and
Accessories
Beauty, Health and Wellness
Department Store and Discount
Electronics and Electricals
Food and Beverage
Home
Products/Furniture/Appliances
Apparel, Fabric and Accessories
Beauty, Health and Wellness
Department Store and Discount
Electronics and Electricals
Food and Beverage
Home Products/Furniture/Appliances
Claims Response (Days)
Figure 32. LTL Claims Response Time in Days
Figure 31. LTL Claims Incidence Rate by Segment
0% 1% 2% 3% 4% 5
Apparel, Fabric and
AccessoriesAutomotive, Truck and
Vehicles
Department Store and Discount
Electronics and Electricals
Food and BeverageHobby, Toys, Arts, Crafts and
Sporting GoodsHome
Products/Furniture/Appliances
Claims Incidence Percentage
Apparel, Fabric and Accessories
Automotive, Truck and Vehicles
Department Store and Discount
Electronics and Electricals
Food and Beverage
Hobby, Toys, Arts, Crafts and Sporting Goods
Home Products/Furniture/Appliances
Claims Incidence Percentage
Figure 31. LTL Claims Incidence Rate
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Rate ch
in air f
have be
the inc
over th
three y
Air Freight Metrics
All of the air freight metrics have an average importance level higher than 3.0 (Figure 34). Moreover, on-time deliverytops the list of important air freight metrics, which clearly points to the reason air is used for expediting goods andmaterials and reducing in-transit time. Leading companies have on-time rates nearing 100% as well as 100% proof ofdelivery.
Rate changes in air freight have been on the increase over the past three years, and these ncreases are being felt from bothtrans-Atlantic and trans-Pacific routes. Retail companies have seen increased air rates, particularly for trans-Pacific
routes, and are feeling the rate increases more than manufacturers (Figure 35 - Figure 37).
Figure 34. Air Freight Metrics Average Performance
Average Importance for Companies
Using Metric (Sca1e 1-5)On-time delivery 4.9 97.4%
On-time pickup 4.5 95.6%
Proof of delivery 4.3 97.7%
Electronic status updates 4.2 93.0%
Claims incidence rate 3.9 1.6%
Billing error rates 3.8 2.5%
Claims response time 3.7 51.3 days
Figure 37. Percentage Change in Air Rate Trends Over the Past Three Years
Trans-Atlantic 1-3% 4-6% >6%
All 68% 24% 8%
Trans-Pacific
All 56% 29% 15%
Figure 36. Respondents' Views of Trans-
PacificChange Over the Past
0%
10%
20%
30%
40%50%
60%
70%
80%
90%
100%
Increasing Decreas ing No Change
PercentageofRespondent
Percentage
ofRespondents
Figure 36. Retail Respondents Views
Rate of Change Over the Past Three
Increasing Decreasing No Change
Figure 35. Respondents' Views of Trans-
Atlantic Change Over the Past Three
0%
10%
20%
30%
40%50%
60%
70%
80%
90%
100%
Increas ing Decreas ing No Change
Percentageo
fRespondents
Figure 35. Manufacturing Respondents Views
Rate of Change Over the Past Three Years
Increasing Decreasing No Change
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Companies
at are taking
e initiative to
benchmark
nd research
ean provider
rates are
seeing a
decrease in
heir ocean
rates.
Ocean Metrics
The ocean transportation metrics are sorted by the percentage of survey participants using this metric. The results indithat some metrics such as on time availability at destination port can still be very important to those who use th(Figure 38 and 39).
The ocean rate trends over the last three years do not differ much between retail and manufacturing companies, but th
are clearly weighted toward increasing rates, as expected. The Consortium noticed that a much greater percentage of years survey respondents have indicated that their ocean rate trend is increasing compared to the previous year (Fig40). However, companies that are taking the initiative to benchmark and research ocean provider rates are seeindecrease in their ocean rates.
Figure 38. Ocean Metric Percentage of Respondents Using Metric Average Performanc
On-time arrivals 81% 91.0%Percentage of containers rolled 77% 2.1%
On-time sailings 70% 91.9%
Container capacity utilization 68% 88.0%
Electronic status updates 68% 87.7%
Claims incidence 63% 0.9%
Billing error rate 63% 8.8%
Claims response time in days 63% 61.7 days
Proof of delivery 61% 97.2%
Shipment integrity 58% 97.5%
Proactive alerts on late shipments 58% 83.9%
Bookings declined 44% 23.4%On-time availability at destination port 36% 90.1%
Decreasing No Change Increasing
1-3% 4-6% >6% 0% 1-3% 4-6% >6%
Retailers 2% 10% 17% 12% 17% 12% 29%
Manufacturing 7% 7% 17% 8% 17% 18% 27%
Figure 40. Ocean Rate Trends Over the Last Three Years
Figure 38. Average Importance for Companies Using Metric
0 1 2 3 4
On-time arrivals
Percent of containers rolled
On-time sailings
Average container capacity utilization
Electronic status updates
Claims incidence
Billing error rateClaims response time in days
Proof of delivery
Shipment integrity
Proactive alerts on late shipments
Bookings declined
On time availability at destination port
Average Importance (Scale 1-5)
On-time arrivals
Percentage of containers rolled
On-time sailings
Average container capacity utilization
Electronic status updates
Claims incidence
Billing error rate
Claims response time in days
Proof of delivery
Shipment integrity
Proactive alerts on late shipments
Bookings declined
On-time availability at destination port
Figure 39. Average Importance for Companies Using Metric
Average Importance (Scale 1-5)
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More
80% of
partici
see the
of inter
increa
over th
three y
Parcel Metrics
As noted in Figure 41, on-time pickup anddelivery and proof of delivery are the mostimportant air carrier metrics. Fortunately,parcel shipments are known for having veryhigh on-time percentages and proof ofdelivery, as well as low claims and billingerror rates.
The majority of survey participants indicatethat domestic parcel rates have increased overthe last three years. Additionally, there is asignificant difference in the percentage ofchange between manufacturing and retailcompanies. While retail companies haveexperienced a more considerable change (42%expect a 4-6% change), the majority ofmanufacturers indicate a 1-3% change.
International parcel rates have also beenincreasing over the last three years for both
manufacturing and retail companies. Retailersagain have had higher changes in their parcelrates than manufacturers (Figure 42 andFigure 43).
Intermodal Metrics
Respondents from manufacturing companiesaverage $20 million in annual intermodalspend, with several companies spendingnearly $100 million a year. The averageintermodal spend for retail survey participantsis $6 million, but several companies areapproaching $50 million a year. More than80% of survey participants see their use ofintermodal increasing over the next three
years. And once again, on-time delivery isleading the list of important intermodalmetrics (Figure 44 and Figure 45).
Figure 42. Parcel Metrics Average Performance
On-time pickup 98.0%
On time delivery 96.9%
Proof of delivery 98.3%
Claims incidence rate 1.4%
Billing error rates 1.8%
Claims response time 49.5 days
Electronic status updates 87.9%
Figure 43. Parcel Rate Trends Over the Last Three Years
Respondents View of Change
Domestic Increasing Decreasing No Change 1-3% 4-6% >6%
Manufacturing 84% 5% 11% 71% 24% 6%
Retail 79% 21% 0% 47% 42% 11%
International
Manufacturing 83% 6% 11% 88% 13% 0%
Retail 75% 13% 13% 36% 36% 39%
Percentage Change
Figure 45. Intermodal Metrics Average Performance
On-time pickup 96.5%
On-time delivery 93.1%
Proof of delivery 97.2%
Claims incidence rate 1.2%
Billing error rates 6.8%
Claims response time 64.7 days
Electronic status updates 87.1%
Figure 41. Importance for Companies Using Metric
0 1 2 3 4 5
On-time pickup
On time delivery
Proof of delivery
Claims incidence rate
Billing error rates
Claims respons e time
Electronic status updates
Average Importance (Scale 1-5)Average Importance (Scale 1-5)
Figure 41. Importance for Companies Using Metrics
On-time pickup
On-time delivery
Proof of delivery
Claims incidence rate
Billing error rates
Claims response time
Electronic status updates
Figure 44. Importance for Companies Using Metric
0 1 2 3 4 5
On-time pickup
On-time delivery
Proof of delivery
Claims incidence rate
Billing error rates
Claims response time
Electronic status updates
Average Importance (Scale 1-5)
On-time pickup
On-time delivery
Proof of delivery
Claims incidence rate
Billing error rates
Claims response time
Electronic status updates
Average Importance (Scale 1-5)
Figure 44. Importance for Companies Using Metrics
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The survey
hows that
the
majority
(60%) of
DC floor
space is
devoted to
storage.
DistributionThis section of the report covers all the key aspects of distribution operations. Analysis includes foundation data on layand inbound flow approaches. The metrics of distribution are presented in detail along with highlighted informationfunctions such as quality assurance (QA), returns, picking, packing and value-added services. The intent of this sectioto provide DC metrics that you can benchmark against to look for cost, quality and safety improvements.
DC Layout: Percentage of Floor Space by Function
According to respondents, the majority (60%) of DC floor space is devoted to storage (Figure 46).
Inbound Shipment Flow
Participants were asked what percentage of their inbound flow they would classify as crossdock, flow through or pifrom-stock. Clearly pick-from-stock is the predominant process in use, but 8% of manufacturers and 15% of retailers a crossdock process (Figure 47).
Figure 47. Percentage of Inbound Shipments by Activity
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Crossdock Flow through Pick-from-stock
P
ercentageofShipments
Manufacturing
Retail
PercentageofShipments
Figure 47. Percentage of Inbound Shipments by Activity
Figure 46. Percentage of Floor Space for Activities
Picking
3%
Packing and value
added services14%
Shipment staging
13%
Receiving
10%
Storage
60%
Figure 46. Percentage of Floor Space for Activities
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Over th
several
there
been
gradua
of incre
ord
accura
DC
Productivity
Average lines shipped per hour are based on a high number of variables, which makes direct comparisons betweenindustries or even within an industry difficult. Data from the survey indicates that the grocery, food and beveragesegment has some of the highest lines shipped rates, averaging more than 130 lines an hour, followed by apparel at 80-plus lines an hour.
Storage Utilization
DC storage utilization for the manufacturing surveyparticipants averages 79%; it is 75% for retailers (Figure48). In general, storage utilization greater than 90% iscause for concern.
Order Accuracy
Order accuracy is measured as orders filled error-free(correct quantity, product and value-added services) as apercentage of total orders placed with the DC. Thepercentage of accurate orders varies from 96% to greaterthan 99% by segment, but averages 98.4%. Over the lastseveral years, there has been a gradual trend ofincreasing order accuracy in DCs (Figure 49).
Fill Rate
Order fill rate is measured by the orders filled complete on the first shipment as a percentage of total orders placed at aDC. The rates for all industry segments are greater than 90%, with several survey participants nearing 100% (Figure 50).
Figure 49. Order Accuracy by Segment
80% 85% 90% 95% 100%
Apparel, Fabric and Accessories
Automotive, Truck and Vehicles
Beauty, Health and Wellness
Department Store and Discount
Electronics and Electricals
Food and Beverage
Hardware and Home Improvement
Apparel, Fabric and Accessories
Automotive, Truck and Vehicles
Beauty, Health and Wellness
Department Store and Discount
Electronics and Electricals
Food and Beverage
Hardware and Home Improvement
Percentage of Total Orders (Scale 80-100%)
Figure 49. Order Accuracy (Percentage of Total Orders)
Figure 48. DC Inventory Storage Utilization
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%100%
Manufacturing Retail
PercentageofStorgaeUtilizatio
PercentageofStorageUtilization
Figure 48. DC Inventory Storage Utilization
Figure 50 . Order Fill Rate Percentage by Segment
80% 85% 90% 95% 100%
Apparel, Fabric and Acces sories
Automotive, Truck and VehiclesBeauty, Health and Wellness
Department Store and Discount
Electronics and Electricals
Food and Beverage
Hardware and Home Improvement
Hobby, Toys , Arts, Crafts and Sporting Goods
Apparel, Fabric and Accessories
Automotive, Truck and VehiclesBeauty, Health and Wellness
Department Store and Discount
Electronics and Electricals
Food and Beverage
Hardware and Home Improvement
Hobby, Toys, Arts, Crafts and Sporting
Percentage of Total Orders (Scale 80-100%)
Figure 50. Order Fill Rate (Percentage of Total Orders)
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The most
common
audit
erformed for
outbound
quality
ssurance is
a count
check.
On-time Delivery
On-time delivery is measured as orders delivered on time to customers or stores as a percentage of total orders. On-tidelivery percentages also are an indication of the effectiveness of methods for transporting product to the customerretail store. This measurement can be subject to company policies and shipment window requirements, particularlyretail companies (Figure 51).
Perfect Order Completion
Perfect order completion is measured as the orders shipped completely error free the first time and delivered on time percentage of the total orders placed with the DC. Roughly 10% of survey participants utilize perfect order completiona DC shipping metric. From this small percentage of companies, the performance ranges from the nearly 80% to mthan 99%, with an average of 89%.
Order Line Accuracy
Order line accuracy is measured by order lines filled complete on the first shipment as a percentage of total orders plaat a DC. However, order line accuracy is also not a commonly used metric for DC operations. Performance ranges fr97% to 100%, with an average of 98.7%.
Outbound Quality Assurance: Audit Selection Methodology and Audit TypesSurvey participants were asked to identify all methods used to audit outbound orders from their DCs. As clearly showFigure 52, random audits, which are based on sampling, are used by a majority of companies, followed by companperforming 100% audits of all orders. Only 2% of companies indicate that they do not perform outbound audits.
The most common audit performed is a count check, with 78% of the respondents who complete outbound checks docount checks. Checking labels for accuracy is the next most frequently performed audit, at 69% (Figure 53).
Figure 52. Audit Selection Methodologies
0% 20% 40% 60% 80% 100%
Value audit
No Audit
Random Audit
100% audit of all orders
Customer-specific audits
Percentage of CompaniesPercentage of Companies
Figure 52. Audit Methodologies for Outbound Orders
Customer-specific audits
100% audit of all orders
Random audit
No audit
Value audit
Figure 53. Audit Types
0%10%
20%30%
40%
50%60%
70%80%
90%
100%
Count
Check
Weight
Check
Size
Check
Label
Check
PercentageofCompanie
Figure 53. Audit Types
PercentageofC
ompanies
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Percentage of Orders
Apparel, Fabric and Accessories
Automotive, Truck and Vehicles
Department Store and Discount
Electronics and Electricals
Food and Beverage
Hardware and Home Improvement
Hobby, Toys , Arts, Crafts and Sporting Goods
Figure 51. On-time Delivery Percentage by Segment
Apparel, Fabric and Accessories
Automotive, Truck and Vehicles
Department Store and Discount
Electronics and Electricals
Food and Beverage
Hardware and Home Improvement
Hobby, Toys, Arts, Crafts and Sporting Goods
Percentage of Total Orders
Figure 51. On-time Delivery (Percentage of Total Orders)
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The low
headcou
million
lines, th
efficie
opera
from a
proce
perspe
DC Labor Management
Figure 54 shows the differences among segments for part-time and seasonal headcounts as a percentage of full-timeheadcounts. Figure 55 and Figure 56note the difference among segments for DC headcount per million dollar of annualrevenue and per million order lines shipped annually. Strategies for headcount vary considerably by industry, companyand by geography with respect to the rise of part-time and seasonal workers.
The larger the headcount per dollar of revenue, the more revenue dollars are being shipped per employee. The lower theheadcount per million order lines, the more efficient the operation, from a lines processed perspective.
Figure 56. Headcount per Million Order Lines Shipped Annually
0 10 20 30 40 50 60 70 80 90 100
Apparel, Fabric and
AccessoriesAutomotive, Truck and
VehiclesBeauty, Health and Wellness
Department Store and Discount
Electronics and Electricals
Food and BeverageHardware and Home
ImprovementHobby, Toys, Arts, Crafts and
Sporting GoodsHome
Products/Furniture/Appliances
Headcount
Apparel, Fabric and Accessories
Automotive, Truck and Vehicles
Beauty, Health and Wellness
Department Store and Discount
Electronics and Electricals
Food and Beverage
Hardware and Home Improvement
Hobby, Toys, Arts, Crafts and Sporting Goods
Home Products/Furniture/Appliances
Figure 56. Headcount per Millions Order Lines Shipped Annually
Headcount per Million Order Lines Shipped
Figure 55. Headcount per Million of Annual Revenue
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1
Apparel, Fabric and
AccessoriesAutomotive, Truck and
VehiclesBeauty, Health and Wellness
Department Store and Discount
Electronics and ElectricalsFood and Beverage
Hardware and Home
ImprovementHobby, Toys, Arts, Crafts and
Sporting GoodsHome
Products/Furniture/Appliances
Headcount
Apparel, Fabric and Accessories
Automotive, Truck and Vehicles
Beauty, Health and Wellness
Department Store and Discount
Electronics and ElectricalsFood and Beverage
Hardware and Home Improvement
Hobby, Toys, Arts, Crafts and Sporting Goods
Home Products/Furniture/Appliances
Headcount per Million Dollars of Revenue
Figure 55. Headcount per Million of Annual Revenue
Figure 54. Part-time and Seasonal Headcount as a Percentage of Total Headcount
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
Apparel, Fabric and
AccessoriesAutomotive, Truck and
VehiclesBeauty, Health and Wellness
Department Store and Discount
Electronics and Electricals
Food and BeverageHardware and Home
ImprovementHobby, Toys, Arts, Crafts and
Sporting GoodsHomeProducts/Furniture/Appliances
Percentage of Total Headcount
Part-time Headcount
Seasonal Headcount
Apparel, Fabric and Accessories
Automotive, Truck and Vehicles
Beauty, Health and Wellness
Department Store and Discount
Electronics and Electricals
Food and Beverage
Hardware and Home Improvement
Hobby, Toys, Arts, Crafts and Sporting Goods
Home Products/Furniture/Appliances
Percentage of Total Headcount
Figure 54. Part-time and Seasonal Headcount as a Percentage of Total Headcount
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Pick and Pack Processes
Figure 57 lists the definitions of pickingflows. Discrete order picking is the simplestand most often used method of pickingamong survey participants (Figure 58). Thebest picking method for an operation depends
on a combination of factors, including layout,equipment and product type. Generally, themore advanced the systems and equipment,the more likely those variations of zone, batchand wave picking will be the most productive.
Figure 59 identifies the primary (mostoften selected) picking flow selected foreach industry segment by surveyparticipants. Some industries have movedinto picking methods other than discrete.
Value-added Services
Value-added services (VAS) in DCs areclearly on the rise, not only in volume butalso in the kinds of services that are beingoffered (Figure 56).
There are some logical differences in the VAS that are being performed in retail DCs versus the VAS that are beperformed in manufacturing DCs, but both are experiencing a major increase in this activity. The percentage of ordthat require VAS averages 10% but can be as high as 20-30%, and almost all companies that do VAS believe the upwtrend will continue.
Figure 57. Definitions of
Picking Flows
Number of
PickersNumber of
OrdersNumber
Time Per
Discrete One One One
Zone Multiple One One
Batch One Multiple One
Wave One Multiple MultipZone-Batch Multiple Multiple One
Zone-Wave Multiple One Multip
Zone-Batch-Wave Multiple Multiple Multip
Value-added
rvices (VAS)
n DCs are
early on the
se, not only
volume but
also in the
kinds of
ervices that
are being
offered.
Apparel, Fabric and Accessories Zone-batch-wave
Automotive, Truck and Vehicles Batch and zone-batch-w
Beauty, Health and Wellness Zone-wave and other
Department Store and Discount Batch
Electronics and Electricals Discrete (order)
Food and Beverage Discrete (order)
Hardware and Home Improvement Discrete (order)
Hobby, Toys, Arts, Crafts and Sporting Goods Discrete (order) and wa
Home Products / Furniture / Appliances Discrete (order)
Figure 59. Primary Picking Flow for each Segment
Figure 60. Percentage of Orders Required for each Value-Added Activity
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
Ticketing
Price labeling
Folding, hanging, bagging, etc.
Pre-packs
Store-ready displays
Special value packs
Customer specific repackaging
Kitting/product repacking
Attaching RFID tags
Pre-routed pallets or carton labels
Percentage of Orders
Retail
Manufacturing
Ticketing
Price labeling
Folding, hanging, bagging, etc.
Pre-packs
Store-ready displays
Special value packs
Customer specific repackaging
Kitting/product repacking
Attaching RFID tags
Pre-routed pallets or carton labels
Percentage of Orders
Figure 60. Percentage of Orders Required for each Value-Added Activity
Figure 58. Percentage of Order Lines Picked
0%10%
20%
30%
40%
50%
Discrete
(order)
Zone Batch Wave Zone-batch Zone-wave Zone-
batch-wave
OtherPercenta
geofOrderLine
Picked
Perce
ntageofOrder
L
inesPicked
Figure 58. Percentage of Order Lines Picked by Picking Method
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Comp
that ach
turnov
less tha
are cons
to be
perfor
ManufacturingThis section covers several aspects of manufacturing operations, with analysis of metric data on quality systems, facilitydesign, human resource management, maintenance, safety and energy, product development, cost competitiveness, andproduction approaches. Also included are the manufacturing philosophies employed by industry segments.
Quality Systems and Performance Metrics
Quality system metrics include customer rejection rate, which averages more than 6,000 parts per million (PPM) with arange from 200 PPM to 11,000 PPM. Outgoing product quality is used more frequently by manufacturing companies, butaverages nearly 16,000 PPM. Both of these measures for Consortium companies are very good relative to othercompanies in general. The cost of quality as a percentage of COGS is not as common as other quality systems andperformance metrics, but values less than 1% are considered very good (Figure 61).
Facility Design and Layout Metrics
The manufacturing cycle time is measured as the time a product order is released for production until that product hasbeen shipped. The variability and complexity of the manufacturing processes has a great deal to do with this measure.Also impacting manufacturing processes is space utilization. While it is necessary to use space for storage and materialhandling in a manufacturing facility, the amount of space required should be minimized. Percentages of 20-40% are notuncommon (Figure 62 and Figure 63).
Human Resource Management MetricsEmployee turnover is a measure of workforce churn and is the product of many factors, including morale, pay,management and work environment. Companies that achieve a turnover of less than 10% are considered to be goodperformers. Similarly, absenteeism is defined as absent or late arriving employees, which the Consortium finds is notmeasured by most companies, but it averages almost 4% (Figure 64).
Figure 61. Quality Systems and PerformancePercentage of
Companies UsingLevel of Importance
(Scale 1-5)Average
Performance
Customer rejection rate on shipped products (PPM) 74.7% 4.9 6,031 PPM
Outgoing product quality (PPM) 45.5% 4.7 15,808 PPM
Cost of quality as a percentage of COGS 18.2% 4.0 1.3%
Figure 62. Facility Design and LayoutPercentage of
Companies UsingLevel of Importance
(Scale 1-5)Average
Performance
Manufacturing cycle time 80.0% 4.8 170 hrs.
Percentage of total facility space (sq. ft.) used forstorage and material handling
54.5% 4.3 32.7%
Figure 64. Human Resource ManagementPercentage of
Companies UsingLevel of Importance
(Scale 1-5)Average
Performance
Annual employee turnover 90.9% 4.1 12.2%
Annual absenteeism 36.4% 3.7 3.9%
Figure 63. Percentage of Material Handling Labor to Total Direct Labor
38%
49%
13%Less Than 1%
1% to 5%
5% to 10%
Less than 1%
1% to 5%
5% to 10%
Figure 63. Percentage of Material Handling Labor to Total Direct Labor
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Preventative Maintenance Compliance
Preventative maintenance compliance is the percentage of maintenance tasks done on a scheduled basis. Consorticompanies have an unusually high value of 89.6% (Figure 65).
Operations Average OEE (Overall Equipment Efficiency)
Nearly 90% of respondents note that they have an OEE greater than 60%, which indicates a high level of operatperformance versus schedule, a high output compared to standard equipment outputs, and good quality performance.
Product Development Metrics
Total annual research and development (R&D) cost as a percentage of COGS is highly industry specific. High technoland consumer products companies spend 5-10% on annual R&D, and lower technology industries spend fewer dollarR&D (Figure 66).
Product development cycle time has emerged as a critical business metric for companies in industries that demproduct differentiation (Figure 67).
Cost and Competitive Metrics
Manufacturing cost metrics indicate the efficiency of capital investment in manufacturing, the change in unit costs products produced, and the change in labor content in manufacturing products. Over the last three years, surrespondents have seen return on investment capital (ROIC) improve to 6.1%. Either through wise investment or usepartners assets, manufacturing unit costs have declined more than 8%, with some companies exceeding 1Additionally, manufacturing labor per unit is down by an average of nearly 9% (Figure 68).
ver the last
hree years,
survey
espondents
have seen
return on
nvestment
pital (ROIC)
mprove to
6.1%.
Figure 65. Maintenance, Safety and EnergyPercentage of
Companies UsingLevel of Importance
(Scale 1-5)Average
Performan
Preventive maintenance compliance 92.0% 4.7 89.6%
Figure 66. Product DevelopmentPercentage of
Companies Using
Level of Importance
(Scale 1-5)
Average
PerformanTotal annual R&D cost as a percentage of COGS 45.4% 2.4 2.2%
Figure 68. Cost and CompetitivenessPercentage of
Companies UsingLevel of Importance
(Scale 1-5)Average
Performanc
Change in manufacturing ROIC over the last threeyears
89.0% 4.4 6.1%
Percentage of manufacturing cost change per unit forproduct shipped over the last three years
88.0% 4.9 7.6%
Percentage of change in manufacturing man-hours perunit of output over the last three years
63.0% 4.2 8.7%
Figure 67. Percentage Improvement in Product Development Cycle Time Over the Last Three
Years
78%
22%
Less Than 20%
20% to 40%
Less than 20%
20% to 40%
Figure 67. Percentage Improvement in Product Development Cycle Time Over the Last Three Years
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PageSupply Chain Core Benchmarks Report
Copyright 2011 Supply Chain Consortium. All rights reserved. Confidential and Proprietary.
Respon
indicat
redu
manufa
cycle ti
critic
meetin
rapi
chan
deman
produ
Push (Make-to-Plan) and Pull (Make-to-Order)
A majority of manufacturers utilize a push approach for production in some segments such as personal care and drugs which essentially produce all products to a plan.
Make-to-order remains a much smaller percentage of most industries sales than those using a push process (Figure 69).In some cases, the make-to-order process is not a practical alternative with the manufacturing processes in use and the
customer requirements. Survey participants were asked about initiatives they were pursuing. They indicate that reducingmanufacturing cycle times is critical to meeting the rapidly changing demand for products.
Figure 70. Precentage of Sales for Make-to-Order versus Make-to-Plan
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Apparel, Fabric and
AccessoriesAutomotive, Truck and
Vehicles
Beauty, Health and Wellness
Department Store and Discount
Electronics and Electricals
Food and Beverage
Hardware and Home
ImprovementHobby, Toys, Arts , Crafts and
Sporting GoodsHome
Products/Furniture/Appliances
Percentage of Sales
Push (Make-to-Plan)
Pull (Make to Order)
Apparel, Fabric and Accessories
Automotive, Truck and Vehicles
Beauty, Health and Wellness
Department Store and Discount
Electronics and Electricals
Food and Beverage
Hardware and Home Improvement
Hobby, Toys, Arts, Crafts and Sporting Goods
Home Products/Furniture/Appliances
Percentage of Sales
Figure 69. Percentage of Sales for Make-to-Order versus Make-to-Plan
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Supply Chain TechnologyThis section covers capital expenditures for supply chain technology by segment, the use of bar-code technology, and use of warehouse management systems (WMSs).
Budget for Supply Chain Technology
Forty percent of the surveyed companies allocate less than 3% of their total capital budget to supply chain technol(Figure 70). The total technology expenditures over the last 12 months for manufacturing companies is $3 million andretail companies, $6 million.
Bar-Coded Inbound and Outbound Containers
Obviously, bar-code technology has been in place for many years, and it is engrained in most companies inbound outbound processes. On the outbound side, most products are bar-coded today and there is some movement toward use of RFID technology (Figure 71).
early half ofsurveyed
companies
llocate less
than 3% of
their total
capital
budget to
upply chain
echnology.
Figure 71. Average Percentage of Shipments
that Are Bar-CodedInbound Shipments Outbound Shipments
Manufacturing Cartons Containers Pieces Cartons Containers Piec
Apparel, Fabric and Accessories 99% 75% 99% 100% 80% 99%
Automotive, Truck and Vehicle 84% 50% NA 100% NA 100%
Beauty, Health and Wellness 76% NA 50% 100% 100% 100%
Electronics and Electricals 84% 75% 75% 96% 91% 85%
Food and Beverage 98% NA 98% 75% NA 100%
Hobby, Toys, Arts, Crafts and Sporting Goods 94% 80% 80% 98% NA 95%
Home Products/Furniture/Appliances 65% 100% NA 100% 100% 100%
Retail Cartons Containers Pieces Cartons Containers Piec
Apparel, Fabric and Accessories 74% 46% 74% 100% 0% 50%
Automotive, Truck and Vehicle 78% 75% 100% 80% 100% NA
Department Store and Discount 85% 97% 99% 99% 100% 100%
Beauty, Health and Wellness 75% 53% 95% 100% 100% 100%Electronics and Electricals 61% 54% 63% 98% 98% 98%
Food and Beverage 87% 85% 98% 94% 97% 96%
Hardware and Home Improvement 83% 83% 95% 99% 100% 99%
Hobby, Toys, Arts, Crafts and Sporting Goods NA NA 90% 100% 100% 100%
Home Products/Furniture/Appliances 73% 95% 95% 100% 100% NA
Specialty 72% 72% NA 100% NA NA
Figure 71. Percentage of Total Capital Budget Allocated to Supply Chain Technology
40%
33%
27%Less than 3%
3% to 6%
Greater than 6%
Figure 70. Percentage of Total Capital Budget Allocated to Supply Chain Technology
Less than 3%
3% to 6%
Greater than 6%
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ConclusionThis Supply Chain Core Benchmarks Reportuses data available at the time the report was written and only when a vnumber of data points exist. The objective is to provide further insights in future editions as more benchmark datcollected and more comparisons and trending are possible. The foundation and metrics presented in the report cover:
Financial Benchmarks
Supply Chain Planning Benchmarks
Sourcing Benchmarks Transportation Benchmarks
Distribution Benchmarks
Manufacturing Benchmarks
Technology Benchmarks
The goal of benchmarking is to use data to help identify specific, actionable tactics for improvements which align wyour companys goals. Thus, this report is intended to provide meaningful data in sufficient detail to allow yocompare your relative performance to the survey population as a whole, as well as by industry and/or segment. The fois on presenting data and not on commentary or reaching specific conclusions on what is good or bad, right or wrPlease make use of the benchmark comparison worksheet located on pages 5-7 to record benchmark values fromfigures presented in this report and directly compare them to your data.
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Join the Supply Chain Consortium Group on LinkedIn:
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http://www.xing.com/group-50193.4ed4eb
The Supply Chain Consortium is the premier source for supply chain
benchmarking and best practices knowledge. The consortium sponsors a
comprehensive repository of more than 17,000 benchmarks complemented by
search capabilities, online analysis tools, topic forums, and peer networking for
executives and practitioners. All these elements are designed to drive world-class
performance in your organization.
Benchmarking &
Best Practices
The Supply Chain Consortium is led by the needs of its membership and an
Advisory Board that includes:
www.supplychainconsortium.com
Bruce Tompkins, Executive Director
(919) 855-5527
btompkins@tompkinsinc.com
Chris Ferrell, Associate Director
(407) 362-0369
cferrell@tompkinsinc.com
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