If Mark Twain was alive today and speaking at warehousing conferences (that's a pretty big leap of imagination, but play along with me here), I have every reason to believe that he'd start off his presentation saying something like this: "There are three kinds of lies in a distribution center: lies, damned lies and metrics." And then, still speaking about warehousing metrics, he'd add, "It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so."
Every day we're presented with fresh evidence that companies are not only measuring the wrong things, but they're using that mishmash of data to justify decisions that ultimately don't produce the desired results. Managers are supposed to use metrics to better understand their operations, notes Elijah Sleigh, regional operations manager with Legacy Supply Chain Services, a third-party logistics provider, but too often these leaders fail to make the metrics relevant enough that they can be used to drive performance.
"Do the members of your team truly understand what you're measuring?" Sleigh asks. "And have they truly bought in to what you're trying to do?"
In a presentation at the Warehousing Education and Research Council (WERC 2015) annual conference, held earlier this month in Orlando, Fla., Sleigh offered the example of a company that seemed to be very proactive when it came to developing a safety culture, to the point that it prominently displayed "Propane Forklift Safety" posters around its facilities, with comprehensive procedural best practices outlining exactly how to change an LPG cylinder. This company was diligent in its mission to improve its safety metrics, and made sure that every employee knew what was expected of them. You can imagine the self-satisfied smiles on the faces of the corporate leaders who fully expected to see their safety scores rapidly improve.
There were plenty of smiles to go around, to be sure, but the smiles were all on the faces of the employees in one of the company's warehouses. You see, every single forklift in that facility was electric; there wasn't a propane cylinder anywhere in the building. So despite all the helpful signs and instructions, the warehouse employees were no closer to reaching the corporate safety goal than they were before. All the metrics were predicated on better maintenance of a specific type of vehicle that the warehouse didn't even use.
With metrics, Sleigh explains, you have to make sure the data you're collecting applies to the situation. That often requires a culture shift, and not always at the employee level.
As the propane safety story illustrates, sometimes it requires the leadership taking the time to understand the work that their employees perform. Instead of trotting out the tired cliché that "you can't manage what you don't measure," some leaders would be better off following the dictum that "you can't measure what you don't manage."
In another WERC 2015 presentation, Barry Brandman, president of Danbee Investigations, offered another perspective on how companies fall into the trap of thinking they've covered every contingency and are appropriately measuring the right things. As a business security expert, Brandman is often contacted by companies when their inventory reports or cycle counts are off and the discrepancy can't be explained. If employee theft is suspected, Danbee will assign an investigator to work undercover at a facility, often in the guise of a new warehouse worker.
At one distribution center, for instance, a dishonest warehouse manager would frequently enter the facility after hours and load large quantities of stolen goods onto a rented truck—but only he knew that these items were stolen because the company's inventory system said otherwise. How was that possible? The manager entered false information into the system that indicated certain inbound shipments had been short. He also inflated the amount of damaged goods that were supposedly discarded (but that ultimately ended up in his possession). It took an investigator trained to see beyond what the naked eye saw to uncover this warehouse manager's nefarious scheme.
Brandman cites other instances of canny warehouse employees double-scanning products as they unloaded an LTL truck and then left some products behind on the truck, splitting the take later with the truck driver. One employee exploited a glitch in a WMS that allowed him to print up extra labels, which were put on inventory and then loaded onto a truck, whose driver was also in cahoots with the warehouse thief.
"The stereotype of a thief sneaking out of your facility with a stolen box isn't typical," Brandman says. "Most thefts look exactly like normal business operations—even despite the presence of security guards and surveillance cameras. It often takes diligence and patience to identify criminal activity."
The morale of the story is: When it comes to metrics, if you can't trust your eyes, then maybe you shouldn't trust the numbers either.