Our 11th annual study of distribution center metrics shows that where performance gains are concerned, the lowest achievers outshone their "best-in-class" peers this year.
While the economy continues to hobble along, distribution professionals are taking advantage of the lull to work out any kinks in their DC operations. That much was clear from the results of our 11th annual metrics survey, which showed continuous year-over-year improvements in performance across a majority of measures. What was interesting this year was that it wasn't necessarily the top-performing organizations that were making the gains. In many cases, it was the lowest-performing operations that recorded the greatest strides.
The annual research, launched via an online survey in early January, was conducted among DC Velocity readers and members of the Warehousing Education and Research Council (WERC). Respondents were asked what metrics they use and how well their organizations performed against 47 key DC and warehousing metrics in 2013. (For purposes of analysis, the measures have been grouped into five categories: customer, operational, financial, capacity/quality, and employee/safety.) More than 400 respondents participated in the study, which is jointly sponsored by DC Velocity and WERC with support from Kronos and Kenco Group.
The survey aims not only to determine which metrics are important to DC and warehousing professionals, but also to understand the underlying trends and changes in performance from year to year. In addition, the study provides valuable benchmarks against which managers can more accurately gauge their performance within the company and against their competitors. (The full survey results will be incorporated into a report by Tillman, Manrodt, and Williams and will be available at www.werc.org after the annual WERC conference in Chicago April 27-30.)
WHICH METRICS MATTER MOST?
When it comes to the performance metrics used by DC professionals, the survey once again showed that the top choices don't vary much from year to year. In fact, this year's list of the Top 12 metrics pretty much mirrors last year's list, with minor changes in the rankings. (See Exhibit 1.)
However, there's a longer-term trend taking shape here that's a little worrisome. Research has shown that companies that use a balanced set of measures—financial as well as customer-, employee-, and process-centric metrics—outperform those that use a more limited set of measures. Unfortunately, our research indicates that where the 12 most popular metrics are concerned, the mix has become less balanced over the years—a trend first noted in 2011. This year's study showed that nothing had changed on that front—in both the 2013 and 2014 surveys, nine of the Top 12 metrics were either customer or operational measures.
In fact, since 2011, there's been a marked shift toward the use of operations-focused metrics. (Operational metrics measure internal performance, such as order fill rates and lines received and put away per hour.) While those are undeniably important to DCs, companies should be aware that focusing too much of their attention on operations could lead to adverse effects in other areas, such as costs. For instance, an operation that's intent on achieving a 99-percent order fill rate might be tempted to expedite shipments. While that would go a long way toward keeping customers happy, such a move could send the cost per unit shipped through the roof.
HOLDING THEIR OWN—MOSTLY
As for how facilities are performing against those metrics, the news is generally good. The results from our 11th annual survey show continuous improvements in operational performance across a majority of measures when compared with the 2013 study.
However, there were also some disappointing findings. With three of the Top 12 metrics focused on supplier performance, we expected to see big gains here. But that didn't happen. Performance against supplier-related metrics has either slipped or remained flat. As for why that would be, we have some thoughts. Having spent the past seven years researching supplier and buyer relationships, we believe the root cause of the stagnant performance is "status quo" practices in supplier management. In particular, we think the problems can be traced to a lack of the kind of collaboration necessary to tackle the problems and issues that DCs and their suppliers face.
On a brighter note, "best-in-class" (top 20 percent) and "median" (middle 20 percent) performers showed improvement against more than 70 percent of the metrics. However, even that wasn't enough to earn them a place in the sun. It's the "major opportunity" performers that deserve a standing ovation this year. "Major opportunity" performers—those whose facilities' performance ranked in the bottom 20 percent of survey respondents, and therefore have the most to gain—improved and/or maintained performance against 86 percent of the metrics in this year's study. The biggest gains for that group came in financial and productivity-related measures.
The net result of these strides was to narrow the performance gap between themselves and the best-in-class performers. Exhibit 2 identifies the metrics against which "major opportunity" respondents showed the greatest gains over the 2013 study. As it turned out, when it came to the same four metrics, the best-in-class respondents showed only incremental improvements or actually saw performance slip, further eroding their lead.
FOR EVERY TO, THERE IS A FRO
Although we've come to expect overall performance improvements from year to year, it's important to note that those gains sometimes come at a cost. As companies focus in on a new area, it's all too easy to let performance in another area slide. If managers don't intervene, performance tends to erode ever so slowly over time. And in some cases, the slippage can be significant.
For that reason, the study also looked at areas where performance has slipped the most—the so-called "points of pain." As mentioned earlier, supplier-related metrics took a big hit this year, with performance against the majority of these measures either remaining largely unchanged or dropping. In fact, of all the metrics studied, performance against the "supplier orders received per hour" metric deteriorated the most, with performance by best-in-class respondents dropping over 60 percent from 2013 levels.
Other "points of pain" identified this year were annual workforce turnover, inventory shrinkage as a percentage of sales, and days of finished-goods inventory on hand. (See Exhibit 3.)
IT'S A TOSS-UP
Overall, it appears that while warehouses and DCs at all levels are making performance gains, the race to the top is getting tighter. The "major opportunity" respondents continue to make great strides in closing the performance gap. However, best-in-class respondents are still able to do a better job of managing drops in their performance compared with other respondents. Whether the momentum can be sustained or not, only time will tell.
Warehouse automation orders declined by 3% in 2024, according to a February report from market research firm Interact Analysis. The company said the decline was due to economic, political, and market-specific challenges, including persistently high interest rates in many regions and the residual effects of an oversupply of warehouses built during the Covid-19 pandemic.
The research also found that increasing competition from Chinese vendors is expected to drive down prices and slow revenue growth over the report’s forecast period to 2030.
Global macro-economic factors such as high interest rates, political uncertainty around elections, and the Chinese real estate crisis have “significantly impacted sales cycles, slowing the pace of orders,” according to the report.
Despite the decline, analysts said growth is expected to pick up from 2025, which they said they anticipate will mark a year of slow recovery for the sector. Pre-pandemic growth levels are expected to return in 2026, with long-term expansion projected at a compound annual growth rate (CAGR) of 8% between 2024 and 2030.
The analysis also found two market segments that are bucking the trend: durable manufacturing and food & beverage industries continued to spend on automation during the downturn. Warehouse automation revenues in food & beverage, in particular, were bolstered by cold-chain automation, as well as by large-scale projects from consumer-packaged goods (CPG) manufacturers. The sectors registered the highest growth in warehouse automation revenues between 2022 and 2024, with increases of 11% (durable manufacturing) and 10% (food & beverage), according to the research.
The Swedish supply chain software company Kodiak Hub is expanding into the U.S. market, backed by a $6 million venture capital boost for its supplier relationship management (SRM) platform.
The Stockholm-based company says its move could help U.S. companies build resilient, sustainable supply chains amid growing pressure from regulatory changes, emerging tariffs, and increasing demands for supply chain transparency.
According to the company, its platform gives procurement teams a 360-degree view of supplier risk, resiliency, and performance, helping them to make smarter decisions faster. Kodiak Hub says its artificial intelligence (AI) based tech has helped users to reduce supplier onboarding times by 80%, improve supplier engagement by 90%, achieve 7-10% cost savings on total spend, and save approximately 10 hours per week by automating certain SRM tasks.
The Swedish venture capital firm Oxx had a similar message when it announced in November that it would back Kodiak Hub with new funding. Oxx says that Kodiak Hub is a better tool for chief procurement officers (CPOs) and strategic sourcing managers than existing software platforms like Excel sheets, enterprise resource planning (ERP) systems, or Procure-to-Pay suites.
“As demand for transparency and fair-trade practices grows, organizations must strengthen their supply chains to protect their reputation, profitability, and long-term trust,” Malin Schmidt, founder & CEO of Kodiak Hub, said in a release. “By embedding AI-driven insights directly into procurement workflows, our platform helps procurement teams anticipate these risks and unlock major opportunities for growth.”
Here's our monthly roundup of some of the charitable works and donations by companies in the material handling and logistics space.
For the sixth consecutive year, dedicated contract carriage and freight management services provider Transervice Logistics Inc. collected books, CDs, DVDs, and magazines for Book Fairies, a nonprofit book donation organization in the New York Tri-State area. Transervice employees broke their own in-house record last year by donating 13 boxes of print and video assets to children in under-resourced communities on Long Island and the five boroughs of New York City.
Logistics real estate investment and development firm Dermody Properties has recognized eight community organizations in markets where it operates with its 2024 Annual Thanksgiving Capstone awards. The organizations, which included food banks and disaster relief agencies, received a combined $85,000 in awards ranging from $5,000 to $25,000.
Prime Inc. truck driver Dee Sova has donated $5,000 to Harmony House, an organization that provides shelter and support services to domestic violence survivors in Springfield, Missouri. The donation follows Sova's selection as the 2024 recipient of the Trucking Cares Foundation's John Lex Premier Achievement Award, which was accompanied by a $5,000 check to be given in her name to a charity of her choice.
Employees of dedicated contract carrier Lily Transportation donated dog food and supplies to a local animal shelter at a holiday event held at the company's Fort Worth, Texas, location. The event, which benefited City of Saginaw (Texas) Animal Services, was coordinated by "Lily Paws," a dedicated committee within Lily Transportation that focuses on improving the lives of shelter dogs nationwide.
Freight transportation conglomerate Averitt has continued its support of military service members by participating in the "10,000 for the Troops" card collection program organized by radio station New Country 96.3 KSCS in Dallas/Fort Worth. In 2024, Averitt associates collected and shipped more than 18,000 holiday cards to troops overseas. Contributions included cards from 17 different Averitt facilities, primarily in Texas, along with 4,000 cards from the company's corporate office in Cookeville, Tennessee.
Electric vehicle (EV) sales have seen slow and steady growth, as the vehicles continue to gain converts among consumers and delivery fleet operators alike. But a consistent frustration for drivers has been pulling up to a charging station only to find that the charger has been intentionally broken or disabled.
To address that threat, the EV charging solution provider ChargePoint has launched two products to combat charger vandalism.
The first is a cut-resistant charging cable that's designed to deter theft. The cable, which incorporates what the manufacturer calls "novel cut-resistant materials," is substantially more difficult for would-be vandals to cut but is still flexible enough for drivers to maneuver comfortably, the California firm said. ChargePoint intends to make its cut-resistant cables available for all of its commercial and fleet charging stations, and, starting in the middle of the year, will license the cable design to other charging station manufacturers as part of an industrywide effort to combat cable theft and vandalism.
The second product, ChargePoint Protect, is an alarm system that detects charging cable tampering in real time and literally sounds the alarm using the charger's existing speakers, screens, and lighting system. It also sends SMS or email messages to ChargePoint customers notifying them that the system's alarm has been triggered.
ChargePoint says it expects these two new solutions, when combined, will benefit charging station owners by reducing station repair costs associated with vandalism and EV drivers by ensuring they can trust charging stations to work when and where they need them.
New Jersey is home to the most congested freight bottleneck in the country for the seventh straight year, according to research from the American Transportation Research Institute (ATRI), released today.
ATRI’s annual list of the Top 100 Truck Bottlenecks aims to highlight the nation’s most congested highways and help local, state, and federal governments target funding to areas most in need of relief. The data show ways to reduce chokepoints, lower emissions, and drive economic growth, according to the researchers.
The 2025 Top Truck Bottleneck List measures the level of truck-involved congestion at more than 325 locations on the national highway system. The analysis is based on an extensive database of freight truck GPS data and uses several customized software applications and analysis methods, along with terabytes of data from trucking operations, to produce a congestion impact ranking for each location. The bottleneck locations detailed in the latest ATRI list represent the top 100 congested locations, although ATRI continuously monitors more than 325 freight-critical locations, the group said.
For the seventh straight year, the intersection of I-95 and State Route 4 near the George Washington Bridge in Fort Lee, New Jersey, is the top freight bottleneck in the country. The remaining top 10 bottlenecks include: Chicago, I-294 at I-290/I-88; Houston, I-45 at I-69/US 59; Atlanta, I-285 at I-85 (North); Nashville: I-24/I-40 at I-440 (East); Atlanta: I-75 at I-285 (North); Los Angeles, SR 60 at SR 57; Cincinnati, I-71 at I-75; Houston, I-10 at I-45; and Atlanta, I-20 at I-285 (West).
ATRI’s analysis, which utilized data from 2024, found that traffic conditions continue to deteriorate from recent years, partly due to work zones resulting from increased infrastructure investment. Average rush hour truck speeds were 34.2 miles per hour (MPH), down 3% from the previous year. Among the top 10 locations, average rush hour truck speeds were 29.7 MPH.
In addition to squandering time and money, these delays also waste fuel—with trucks burning an estimated 6.4 billion gallons of diesel fuel and producing more than 65 million metric tons of additional carbon emissions while stuck in traffic jams, according to ATRI.
On a positive note, ATRI said its analysis helps quantify the value of infrastructure investment, pointing to improvements at Chicago’s Jane Byrne Interchange as an example. Once the number one truck bottleneck in the country for three years in a row, the recently constructed interchange saw rush hour truck speeds improve by nearly 25% after construction was completed, according to the report.
“Delays inflicted on truckers by congestion are the equivalent of 436,000 drivers sitting idle for an entire year,” ATRI President and COO Rebecca Brewster said in a statement announcing the findings. “These metrics are getting worse, but the good news is that states do not need to accept the status quo. Illinois was once home to the top bottleneck in the country, but following a sustained effort to expand capacity, the Jane Byrne Interchange in Chicago no longer ranks in the top 10. This data gives policymakers a road map to reduce chokepoints, lower emissions, and drive economic growth.”