What is the value of warehouse benchmarking?

Often I have the question, do you benchmark your warehouse production and how do you compare to others? There is no easy answer. It is very difficult to benchmark a warehouse. Often you put in many working hours in a benchmark but the result is more or less of no value. You will see when you start to dig in all the KPI’s and process flow charts you find more differences than similarities that make it difficult to compare the KPI´s. However, if you have the right intention from the beginning and do the benchmark for the right reason you can learn something.

It is often a benchmark request come from the senior management. They are uncertain of the KPI numbers you present. They don´t know how to value your numbers, if they are god or bad. They want something to compare with and in a case like this, it is not a good idea to start a benchmarking and just give them some KPI’s from a random warehouse to compare with. You need to do a proper presentation with explanations why the KPI’s differ, both numbers that are in your favor and negative. If you don´t I can ensure you that you will have problems with senior management’s expectations. If the senior management have a benchmarking request and you believe senior management want the benchmark because of uncertainty there is in my opinion better ways to build trust with senior management than a benchmarking activity. For example invite the senior management to the warehouse and explain the details behind the KPI’s and what you could do with help from them to perform even better than today.

As I wrote before a warehouse production is a complex environment. So many factors have impact in your warehouse efficiency and quality. For example purchase department, how do they buy? Small quantities or big quantities? How do the suppliers pack the goods? How many suppliers do you have? How long can the consignments be standing before you need to handle it? When it comes to sales department, how many order types do you handle? How many orderliness per order? How long can they send each order type? Is there any regulations how many orderliness can they send close to truck departure? As you can see, there is lot of things to consider when you benchmark and this is just a fraction of what you need to look at.

In my opinion, you need to ask why you are doing a benchmark and what will you do and how should you value the results. I have done benchmarks but mostly for my own inspiration to develop my own warehouse production. To find solutions and ideas that I can adapt in my warehouse. I value the KPI’s and analyze what is the reason the other warehouse pick so much orderlines per hour. Do they have any automation? Maybe some consolidation features in WMS or maybe a collaboration with sales department to mainstream order types and stricter order politics. Same with goods in, have the other warehouse a good collaboration with purchase department? Maybe the warehouse have influence in the suppliers packing methods to increase efficiency in goods in department and so on.

I think there is a value to benchmark but not to compare if you are good or not. Do it for inspiration to be better and develop the business. Involve purchase department and sales department even IT department. Your warehouse efficiency depends on so many factors you can´t control but maybe you can have influence on with your knowledge and competence. Try to gather cross-functional teams with purchase departments, sales departments and IT departments.

The important thing is not to sit back because your numbers look good compared to another warehouse, if you start to analyze the operations you probably have better prerequisites.

Remember, if you don’t evolve you are soon overtaken by competitors. You make a benchmark to find inspiration and knowledge to evolve not to find a reason to sit back.

Roberth Karlsson

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