DC Costs Trending Down: Supply Chain Consortium Report

Sept. 22, 2009
A recent survey of retail and manufacturing companies shows supply chains are finding greater savings today from distribution improvement efforts.

Distribution center (DC) costs as a percentage of revenue are trending downward compared to last year, according to the Core Benchmarks Report from the Supply Chain Consortium, a group of companies that share resources and best practices. Tompkins Associates collects data, conducts surveys and writes reports for the Consortium.

“Companies have put a lot of effort into cost savings,” says Bruce Tompkins, executive director of the Consortium and author of the report. “And, with supply chain costs and transportation costs increasing, distribution is an area where companies are able to alleviate some of the financial strain.”

The report also shows a higher degree of variability in DC costs as a percentage of revenue than transportation costs, which indicates some companies are increasing the costs of distribution to reduce transportation costs and improve customer service. However, in general, DC costs are decreasing, and many companies are focused on strategies to improve DC productivity.

With more than 300 participating retail, manufacturing and wholesale/distribution companies, the Supply Chain Consortium sponsors a repository of 17,000-plus benchmarks along with online analysis and networking for supply chain executives and practitioners. The Consortium is led by an advisory board that includes executives from Campbell Soup Co., Hallmark Cards, Hewlett Packard, Ingram Micro, Kraft Foods, Miller-Coors, Coca-Cola Co., Target and True Value Hardware.

The full Core Benchmarks Report is available to Consortium members and contributing members.