Changing Trends in Distribution Centers

A recent Supply Chain Consortium (Raleigh, N.C.) benchmarking and best practices survey of 100 top retail and related companies reveals some interesting facts about DC operations and configuration as well as best practices.

Early manufacturers and retailers would barely recognize today's complex, fluid distribution centers. Although they have the same basic functions of receiving and storing products and picking and shipping customer orders, DCs have evolved along with customer demands. The most successful ones continue to adapt to change and improve processes by focusing on best practices.

"Every DC should have a best practices program," says Brian Hudock, Tompkins Associates (Raleigh, N.C.) partner and author of the survey report. "It is the path to reducing errors, labor, and cycle time while increasing accuracy and service. A best practices program, if done right, never ends."

A few key findings from the DC benchmarking and best practices survey include:

  • 63% of all product storage is still done with floor bulk and single-deep pallet rack;
  • 43% of retail operations have moved to highly automated operations, while only 14% remain highly manual;
  • There has been a 28% increase in imports over the last 3 years;
  • 46% of cross dock labeling is done by suppliers;
  • A warehouse management system makes the put-away storage location selection for 60% of all operations;
  • 55% of inbound orders are planned against advanced shipping notices;
  • Value-added services now account for 17% of total facility space utilization;
  • 60% of all operations have a sorter to support either picking or shipping.

Overall, the consortium survey found that customer demand, technology leaps, product mix, transportation costs and even management styles drive changes in distribution centers.

With more than 100 participating retail and retail supplier companies, the Supply Chain Consortium sponsors a comprehensive repository of 9,000-plus benchmarks complemented by search capabilities, online analysis tools, topic forums and peer networking for supply chain executives and practitioners.

The consortium is led by the needs of its membership and an advisory board that includes supply chain executives from Best Buy, Campbell Soup, Hallmark, J.C. Penney, Molson Coors, Polo Ralph Lauren, Rite Aid, Target, The Coca-Cola Co., and Whirlpool.

Source: Tompkins Associates Inc.

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