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March 28, 2012

A new way to look at DC performance

Focusing strictly on what got done in a DC without consideration of **ital{how} it got done can potentially damage supply chains in a number of ways.

By Peter Bradley

Shortly after we launched DC Velocity in January 2003, we initiated our first important research effort, one that looked at the performance metrics used in the nation's distribution centers. Our goal was twofold: to compile data that would offer readers benchmarks for evaluating their own operations' performance and to begin to build a database that would show how performance improved (we assumed) over time.

Since that beginning, the research has evolved and expanded. In addition to our original partner, Karl Manrodt of Georgia Southern University, who first proposed the idea, our partners now include the Warehousing Education and Research Council (WERC) and the consulting firm Supply Chain Visions.

The annual metrics report has become one of the highlights of WERC's annual conference, and we expect it will be so again when the group meets in Atlanta in early May. But over time, we've begun to understand that something was missing from those measures, something that underlies how success in improving performance actually occurs. And that's what we might call the "soft side" of logistics.

Now, don't misunderstand. This isn't some throwback to 1960s encounter groups. It is an argument to look beyond such "hard" measures as on-time shipments or order picking accuracy to factors that are perhaps tougher to quantify but equally important. As the authors of our upcoming survey report write, "Simply put, the interpersonal skills that promote and nurture strong relationships—the ability to communicate well, interact effectively with others, make mutually beneficial decisions, solve problems jointly, and collaborate—can have as direct an impact on warehouse and DC performance as do the operational aspects of a business."

As it happens, our April issue Thought Leader, Tracy Maylett, CEO of the consulting firm DecisionWise, is one of the leading proponents of managing the "soft side" of logistics performance. He and Kate Vitasek, founder of Supply Chain Visions and a faculty member at the University of Tennessee Center for Executive Education, recently penned a more extensive look at the importance of this soft side for our sister publication, CSCMP's Supply Chain Quarterly.

In an interview with DC Velocity, Maylett discusses why focusing strictly on what got done in a DC without consideration of how it got done can potentially damage supply chains in a number of ways. He explains that the soft metrics include such things as customer retention, employee retention, and employee engagement—the sorts of things that are crucial to long-term success. Looking at and managing the soft side of logistics, it seems to me, are as crucial to developing sustainable supply chains as energy conservation and waste reduction.

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