Certification pays unexpected dividends

Though not yet two years old, the Warehousing Education and Research Council's (WERC) facility certification program has already built a track record of providing benefits to the companies that take part. Participants say those benefits can come in at least two forms: improvement in operations in preparation for certification, and validation of existing capabilities and efficiencies by the certification itself.

The program was launched in late 2010 to fill what WERC's leadership saw as a void in the industry. Kate Vitasek, co-founder of the consultancy Supply Chain Visions and one of architects of the program, says the idea was to create a standard against which warehouse managers could measure their facilities' performance. "We've been doing benchmarking for several years, and I've been in over 300 warehouses," she says. "It is always sad to see companies that think they are much better than they are." She adds that she has literally seen warehouses that use sticky notes for labeling racks and write numbers on boxes for cycle counts.

The program, which is open to third-party logistics service providers (3PLs) as well as "first-party" private warehouses, also provides a means of independent verification of a facility's capabilities. Vitasek sees that as a major benefit for shippers who use contract warehouse services. Certification will assure those customers that a 3PL meets minimum standards, she explains, adding that she hopes that someday, third parties will be required to be certified before they're even allowed to submit an RFP.

Getting certified
To earn certification in the voluntary program, a facility must undergo an inspection and assessment of its processes by an independent auditor. The auditor grades the operation against the standards outlined in WERC's Warehousing Fulfillment Process Benchmark and Best Practices Guide. The assessment covers eight standard warehousing processes: receiving and inspection, material handling, slotting, storage and inventory control, warehouse management systems, shipping documentation, picking and packing, and consolidation and shipping. The auditor assigns scores to each activity based on a five-point scale—poor practice, inadequate practice, common practice, good practice, and best practice.

Steve Murray of Supply Chain Visions designed the program under the guidance of Vitasek and Michael Mikitka, WERC's chief executive officer. Murray now conducts the audits for WERC and has completed more than 20, including assessments of facilities run by major companies like Colgate and Starbucks. (To avoid the appearance of conflict, Supply Chain Visions is contractually barred from providing consulting services to a company it has audited for the program unless the two had a pre-existing business relationship.)

For companies considering going through the process, which does carry a fee, WERC provides an audit preparation guide. That guide, Murray says, includes a step-by-step explanation of what the auditor will look for.

The process itself involves a questionnaire, an initial telephone conversation with Murray about the procedure, and a full-day site visit. "We go through a kick-off meeting, then go out and walk the facility," he says. "We follow the flow of product from receiving to shipping, then we talk about the WMS and other tools used to run the warehouse." The evaluation covers 114 individual process elements categorized within the eight process areas.

After the audit, Murray prepares a spreadsheet tool and a report that normally runs 20 to 30 pages, which WERC sends to the facility. Finally, Murray and facility management hold a conference call to review the document. "I go through it to the level of detail they want," he says.

Earning the certification requires achieving a minimum score on each of the 114 elements. "You fail one, and you are not certified," Murray says.

Big benefits
As for what prompts companies to go through the certification process, Murray says it's a couple of things. "We believe it's in everyone's best interest to meet a minimum level of best practices," he says. While companies could perform self audits using the WERC guide, both third parties and first-party warehouse operators see value in the certification, he asserts.

"If you're a 3PL, theoretically you're in a better position to market your services if you can declare you are certified," Murray says. In a few cases, he adds, third parties have gone through the process at the insistence of their customers.

For first-party warehouses, it's usually about the process, Murray says. "Often we find that internally they know have problems and want someone to help them understand where the problems are and where they could improve. Or the managers of supply chain or distribution feel they're not getting enough respect from senior management. I've seen cases where a facility may be lobbying for capital, technology, or manpower. Going through the process will show weaknesses and support the request. Another potential motivation: If a facility manager can prove through the certification process that a facility has adopted best practices, it could dissuade management from considering outsourcing."

A fan of the program
Those who've been through the program can attest to the benefits. One such company is Hunter Fan, a Memphis, Tenn.-based manufacturer of ceiling fans. As Michael Ritter, the company's senior vice president of operations, explains, the manufacturer decided to seek certification last year in order to demonstrate to senior management and investors that its Byhalia, Miss., DC was among the best in the business.

Ritter credits David Phillips, general manager of warehousing and distribution, for leading the 936,000-square-foot DC through the certification process, a distinction it earned in November. Ritter says that when Phillips took over management of the DC last year, he began to roll out lean management tools to the facility's 85 employees, including the management group, supervisors, and the shop floor, with the aim of developing best-in-class processes as outlined in the WERC program. Other members of the DC's leadership team included Leone DeGaetano, director of transportation; Mike Bradford, operations manager; and Jim Bond, rework/returns and receiving manager.

Earning the certification, Ritter says, validated for him and other senior managers that the DC was operating as well as if not better than others. "It told me the facility is managed better than average and that we had a professional environment focusing on the right things and performing very well." For employees, he adds, it provided reinforcement that the work asked of them has been worthwhile.

Quest for validation
For OHL, a major third-party service provider, the decision to go through the certification process was part of a broader effort to standardize operations across its facilities as well as ensure it was staying abreast of industry trends. As Randall Coleman, OHL's senior vice president for the South region, explains, "We had embarked on a program about a year ago trying to drive consistency across all our operations, so what the customer is seeing is the same in each DC. At the same time, we wanted to challenge ourselves to show we were moving in the right direction in regard to best practices."

Coleman says OHL used the WERC best practices guide as a roadmap to improve service levels. To date, the Brenéwood, Tenn.-based company has completed certification of three facilities.

Looking at best practices, he says, helps alert companies to how those practices evolve. "There's always a tendency to allow yourself to be constrained by what's going on within the four walls," he says. "You don't look outside. But what was acceptable performance two to five years ago is now run of the mill or subpar. So participating in the certification program was a good way to benchmark against the best in class."

Editor's note: For more information on the WERC certification program, visit www.werc.org/facility_cert