In 1610, Galileo Galilei said, "We must measure what can be measured, and make measurable what cannot be measured." Over the years, this statement has evolved to the more direct, often-quoted axiom, "You can't manage what you can't measure." But today, some 400 years later, distribution center managers still struggle with the premise.
Some DC operators have developed meaningful performance and productivity standards and metrics, but a surprising number have not. There is no valid reason for not having a well-thought-out and meaningful measurement program in any DC. Although literally hundreds of rules and suggestions for establishing metrics exist, the following four basic axioms apply across all industries for either proprietary or contract operations:
1. The first axiom is the tried and true, "You can't manage what you can't measure." It is particularly applicable to warehousing. If managers don't know how the DC is performing against standards and benchmarks,they will be forced to make decisions in a vacuum. In the case of service failures or cost overruns, there will be absolutely no way to identify, analyze or solve the problems.
2. Not mentioned nearly as often is the second part of Galileo's admonition, "Make measurable what cannot be measured." In other words, the job is to identify activities within the warehouse in discrete segments against which you can establish measurable and achievable standards. A common mistake is to establish standards that are so vague they are meaningless.
3. Measure only what is important and actionable. One problem with measurement programs is that they often lead to "report abuse." Some managers become so fascinated by the reports themselves that they will insist on measuring the most meaningless activities. If it does not have an impact on the operation, its cost or customer service, forget it. Better still, examine whether the activity is necessary at all.
4. Finally,"Performance measurement must be balanced." Too many measurements can bury a warehouse operation in details and actually lead to diminished performance. Too few, or too general, measurements make performance difficult to evaluate and manage. Timing should be balanced, as well.
Do not measure everything every day.
There are a number of areas in any DC that lend themselves to accurate and meaningful measurement. Here's a look at some of the more common measures:
Whatever techniques are employed, good warehouse management requires good warehouse measurement.