WERC’s Annual DC Measures Survey is a great tool for benchmarking your distribution center and warehouse operations, but it’s also a valuable resource for identifying trends across the industry. This year’s survey showed the growing importance of labor-related metrics in assessing DC performance. It also highlighted two key warehouse technology adoption trends, including a 20 percent increase in the use of voice picking and far higher adoption of software solutions over warehouse automation to improve warehouse operations.
The labor and warehouse technology trends are related. As pointed out in a separate study commissioned last year by Lucas Systems (the DC Employment Outlook Survey published in late 2017), labor challenges are driving a new emphasis on supply chain and warehouse technology investments to improve the efficiency of order picking and other processes, especially investments in worker productivity and warehouse management software.
Trend One: Labor Metrics Dominate
Every year the WERC report lists the top 12 metrics used by DC and warehouse managers and tracks how those rankings change from year to year. The metrics cover inventory, warehouse operations, financial, and labor-related measures. In 2016 none of the top twelve measures related to labor, but this year 5 out of the top 12 were related to warehouse workers:
- Contract employees to total work force
- Overtime hours to total hours worked
- Part-time workforce to total work force
- Percentage of employees cross-trained
- Annual workforce turnover
The growing importance of labor metrics in warehousing is no surprise given that 60% of companies say they are having trouble finding hourly workers (according to the 2017 DC Employment Outlook Survey). As noted by the WERC study authors, “logistics is still very much a people-oriented business. Additionally, our findings suggest that companies that focus on people perform better on almost every metric across the DC Measures study!”
Trend Two: Software Investment Strength
For the first time in a decade the 2018 WERC survey included questions about warehouse technology usage and future adoption plans. Those questions covered a range of technologies, from traditional warehouse automation (conveyors, sortation, etc.), to warehouse management systems, to slotting software and voice picking systems. It did not include robotics.
The warehouse technology with the fastest growth was voice directed picking, which saw a 20 percent increase in usage, rising to 26% today from 6% in 2008. According to the report, each of the key software technologies included in the survey showed increases of greater than 5%. Conversely, the percentage of warehouses using automation was basically unchanged since 2008. Auto ID technologies (barcode scanners and RFID) also showed modest gains in usage.
The study authors contend that overall adoption of warehouse technology has lagged. Its hard to disagree. Despite a 15% increase in warehouse management software usage since 2008 (making WMS the top warehouse technology by usage), 35% of respondents are not using a warehouse management system (the study authors include custom-built inventory systems among their definition of WMS systems). I suspect the majority of the facilities that do not have a WMS solution are smaller, simpler warehouse or DC operations (shipping full pallets, for example), rather than high volume fulfillment centers with complex order picking processes and inventory management needs. The study also points out that a majority of distribution centers use no other technology beyond warehouse management and mobile devices with RF/Barcode scanners.
Future adoption plans paint a somewhat brighter future for warehouse technology.
Trend Three: The Digital Future Takes Shape
The emphasis on software investments between 2008-2018 is also reflected in the WERC survey respondents’ plans for implementing digital supply chain technologies over the next five years. Survey respondents ranked “mobile technology” and “real-time big data and analytics” as the technologies expected to have the biggest impact on warehouse and distribution operations and efficiency.
In terms of adoption plans, more than 90 percent of warehouse managers expect to be using mobile technologies within five years (increasing from just over 50 percent today). More impressively, 86 percent expect to be using big data and real-time analytics within five years, a 60 percent increase over the percentage of people using the technology today.
Those trends align well with Lucas current solutions and product roadmap. Mobile applications (Lucas Move featuring Jennifer voice) and real-time analytics (Lucas Engage) are core to the Lucas Mobile Work Execution solutions used in warehousing and distribution today. In addition to thousands of warehouse workers using Lucas Move on smartphones, tablets and other mobile computers, we have been working with smartglasses since 2013. And we are also developing machine learning solutions to provide predictive analytics on top of our existing analytics capabilities.
For More Information
As noted above, the results of the 2018 WERC Survey amplify some of the findings of the 2017 DC Employment Outlook Survey published by the editors of CSCMP’s Supply Chain Quarterly and sponsored by Lucas Systems. According to that survey, DCs are finding it harder than ever to hire enough workers. In response, they are relying more on overtime, temps, and part-time workers, which explains why labor-related metrics are rising to the top in the WERC survey. Likewise, the 2017 Employment Survey indicated that DCs are far more focused on software and IT solutions to improve labor productivity, efficiency, and warehouse operations, rather than automation.