How to Measure Warehouse Performance

Warehouse Performance, Cost, and Value Measures

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Figure 13. RightChain™ Warehousing Scoreboard On-Time Performance Screen

3.4 Cycle Times The RightChain™ Warehousing Scoreboard includes two cycle time indicators: dock to stock time (DTST) and warehouse order cycle time (WOCT). Dock-to-Stock Time (DTS) is the elapsed time from when a receipt arrives on the warehouse premises until it is ready for picking or shipping. Warehouse Order Cycle Time (WOCT) is the elapsed time from when an order is released to the warehouse floor until it is picked, packed, and ready for shipping. A few years ago we were asked to assist a large apparel retailer with their supply chain strategy. We toured their main distribution center during one of the initial visits. I noticed their receiving dock looked especially full. I asked them what their dock-to-stock time was. They shared proudly that it was 96 hours. I shared that our benchmarking showed that 24 hours was a norm; 8 hours was above average, and a few hours was world class. They were somewhat defensive and said they had looked into systems required to reduce dock-to-stock time, but they could never produce an acceptable return on investment. I asked them how much inventory was sitting on the dock. It was $8,000,000 worth of inventory. I asked them what range of investment proposals they received for the material handling systems required to help them reduce their DTST to 24 hours. Quotes were in the range of $2,000,000. I did some quick math and calculated that by reducing their dock-to-stock time by 75% they could reduce their inventory by $6,000,000. I asked them, “Wouldn’t it make

World Class Warehousing™