Manufacturing Systems: Maybe It IS Rocket Science

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Warehouse Operations Performance Assessment and
Benchmarking
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Agenda

• What you need to use iDEAs
• What iDEAs can do for you
• What weve learned so far

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Warehouse Operations

• Consume resources
• Space
• Equipment (and software)
• Labor
• Inventory
• Produce services
• Customer orders filled
• Replenishment orders received
• Value adding services
• Returns processed

Unload
Receiving Function
Inspect
Put Away
Storage Function
Order Pick
Shipping Function
Pack
Load
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Over 300 qualified users
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What do you need to use iDEAs?

• Internet connection
• Standard Browser
• Warehouse data
• Less than an hour online

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Over the Internet
Your data is private and secure
Html documents
Database
Solver
At your site
Georgia Tech Server
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Process

• Create a user account
• Create a data record
• Input/output data
• Warehouse data
• Run the analysis
• Score percentile
• Partial efficiency analysis
• Benchmark warehouse comparison

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How do you assess performance?
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The Basic iDEAs
Activities
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SYSTEM EFFICIENCY CONCEPT
B
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Your Warehouse SAT
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Now you know how you compare

• To the best possible
• Ranking in the peer group

• What drives your performance?

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Partial Efficiency
Lines picked
Partial productivity is the ratio of one output
to one input
Total labor hours
Lines picked
Your
Partial efficiency is the ratio of your partial
productivity to the best partial productivity in
your peer group.
Total labor hours
Lines picked
Best
Total labor hours
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Performance Gap Analysis Illustration
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Partial Efficiency (PE) Analysis

• PE can be decomposed into 7 multiplicative
  factors including DEA.
• Partial Efficiency
• Technical Efficiency
• ?Technical Change
• ?Scale Efficiency
• ?Input Slack Factor
• ?Input Substitution Factor
• ?Output Slack Factor
• ?Output Substitution Factor

?waste
?can be fixed, long term
?not a warehouse issue
?excessive resources
?wrong mix of resources
?overproduce some services
?wrong mix of services
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Efficiency Gap Analysis
Broken case lines
Full case lines
Investment dollar
Investment dollar
3
21
49
1
49
18
18
17
12
21
40
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Current status against the best practice
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System-based inefficiency (based on DEA score)
operational
Slack of this individual output
tactical
improvement
opportunity
Scale difference
Input mix difference
strategic
Output mix difference
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The Basic iDEAs

• One system efficiency score
• Relative to the best possible based on a
  specified peer group
• Partial efficiency analysis

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Results to Date
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Industry
auto (21, 11.8)
Not classified
(49, 27.5)
electronics
(20, 11.2)
Others (10, 5.6)
furniture ( 7, 3.9)
publishing ( 6, 3.4)
food product
photographic ( 8, 4.5)
(25, 14.0)
Pharmaceutical (12, 6.7)
Healthcare( 7, 3.9)
Office( 7, 3.9)
machine ( 6, 3.4)
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Operation Types
3PL ( 9, 5.1)
distribution
(22, 12.4)
Others
(35, 19.7)
manufacturing
wholesale
(62, 34.8)
(29, 16.3)
retail (21, 11.8)
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Picking Mode
Broken Case
(66, 37.1)
Full Case
(27, 15.2)
Pallet
( 8, 4.5)
Mixed (77, 43.3)
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General Conclusions

• We can quickly compute a resource efficiency
  score for any warehouse
• Percentile ranking against peers
• No matter how we define peer group
• Some are resource efficient
• 25 are below 50 resource efficiency
• The average resource efficiency is 75
• Now what?

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Benchmarking and Best Practices
Illustration Purposes Only!
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Inventory Turnover Effect
Efficiency
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Labor Turnover Effect
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Seasonality Effect
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Where do we go from here?

• Benchmarking
• Industry and company-specific versions of iDEAs

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THANK YOU!