Warehouse Leaders Seen Slashing Costs Year to Year

Best-in-class companies have cut costs and cycle times significantly over the past 24 months, while laggards have seen costs rise, Aberdeen finds

Boston — December 8, 2006 — Warehouse management is moving to the forefront as top supply chain performers recognize the importance of warehousing innovation, and a combination of automation, best practices sharing, a robust visibility initiative and consistent WMS upgrades is key to top warehouse performance, according to new Aberdeen research.

"Warehousing is no longer the siloed operation where product is moved inefficiently from one point to another," said Jeff O'Neill, Aberdeen supply chain analyst and author of "The Warehouse Productivity Benchmark Report: A Guide to Improved Warehouse and Distribution Center Performance."

"Top performers are recognizing the importance of warehouse automation and are finding ways to diminish costs and ramp up customer service," O'Neill added.

The report finds that best-in-class companies have been able to reduce their warehousing costs while average companies have seen costs stay flat or rise by as much as 20 percent since 2004. Best-in-class companies also have reduced cycle times, Aberdeen found.

Other study findings:

  • Best-in-class companies are twice as likely to have decreased warehousing costs by 11 percent to greater than 20 percent since 2004 versus their peers; and,
  • Best-in-class companies are more than twice as likely to have a radio frequency identification (RFID) tagging support system versus their peers.
"Embracing automation is proving to be a key component in increasing warehouse productivity," O'Neill said. "Further, operating a legacy WMS (more than four years old) is hindering operations not taking advantage of top platform functionality."

The report is available (free with registration) at http://www.aberdeen.com/summary/report/benchmark/BM_Warehouse_Productivity_3589.asp

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