So why aren’t merchants more aggressive in dealing with inventory? In particular, marketers need to do more to liquidate aging inventory, and look closer at how to achieve the optimal balance point between high order fill rate and increased inventory.

Most multichannel companies have plenty of room for improvement in how they manage inventory. These first 3 steps will allow you to deal with inventory more aggressively and make more profit.

Look for future blog posts within this series on Managing Your Inventory.

1. Get A Handle On Inventory Status And Condition

Most direct companies use their order management system for inventory control. But top management does not use these systems: What they use to monitor inventory status may be a summarized or Excel-based report. Companies need to have a “single version of the truth” for all data: sales, inventory, purchases, stock on hand, etc., including plans and actuals.

What’s more, there can be dozens of system codes describing inventory status and condition. The inventory application needs to have status codes used in reporting that can accurately and helpfully describe inventory status to management — such as active product, inactive product, assigned to liquidation, discontinued, return to vendor, and so on.

Sound basic? Sadly, it’s not in practice at many companies. In fact, it’s the root of a lot of inventory management issues and attempts to gain useful reports.

2. Get Senior Management, The Chief Financial Officer And Inventory Manager On The Same Page

Inventory management is not a clerical activity, but a strategic function. Come to agreement about which key inventory metrics you can do something about, and how to measure them. Then review this on a frequent, scheduled basis.

There are lots of things you can measure, but many are meaningless. Just by focusing on these inventory metrics, you will see improvement if you can put in place the tactics to improve performance.

3. Analyze The Age Of Inventory

Many companies either cannot report age of inventory, or they are less than proactive in dealing with it. What is old inventory to you? For some companies, the answer may be 12 to 15 weeks on average; for others, 25 weeks. There are two key points here:

1. Are you as active as you need to be to liquidate slow sellers? One of our clients said its goal was to turn the inventory at least four times a year, up from the current 3.15 turns. But when we talked about how long the company carried inventory before it deemed the stock as old, the response was 20 weeks. This is a classic example of where most small- to mid-size companies are from an inventory management perspective, and in using key performance indicators. By choosing to focus on inventory as it hits 20 weeks and older, they may end up doing only 2.6 turns annually. For this client to get four turns annually, the company needs to be concerned with inventory as it hits 11 to 13 weeks on average. Develop a strategy to liquidate inventory when it’s obvious it’s a slow seller rather than waiting. You need to develop long-term strategies and follow up with the actions or tactics needed to achieve them. You must also understand the goals, agree to how they will be measured, and report on them regularly.

2. Are you assigning inventory carrying costs? As with the managers who didn’t think there were such costs because they “owned” the inventory, you must realize that there are costs you incur, including occupancy cost (space and utilities), cost of money or lost opportunity, taxes and insurance, and labor to maintain the inventory.

If you need to talk with one of our inventory consultants about improving the management of your inventory or would like to discuss your overall inventory strategy, don’t hesitate to contact us at any time. Jeff Barry, our marketing manager, can be reached via email or call directly 804-264-8040.

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3 of 12.  Failure to develop detail business requirements

Develop requirements document into Request For Proposal (RFP) document or design document.  Interview each functional area that are stakeholders in new system.  Don’t recreate existing systems in the requirements. Address the functionality, not necessarily how it should be accomplished.  Document interfaces necessary, including the data points and frequency data is passed.  Select group should review requirements to make sure they fall in line with company’s strategic direction. 

Tell vendors enough to understand your business:  Background about company;  company goals and objectives for project;  timeframes to complete each step of project including deadlines for vendor responses to RFP;  transactional volumes and user counts;  directions on how to respond to RFP.

4 of 12.  Limited search, limited vendors

Keep your options open – don’t settle on one vendor too prematurely.  Initially, you want to consider all the vendors that sell or license applications you are looking for and then in a methodolical way develop a short list of 3 or 4 vendors in order to review range of functionality, services and negotiate price.  No one vendor is perfect fit for all companies.  Look for where you can get at least 80% of the critical functions. 

Are you currently involved in an order management system or warehouse management system project? Do you feel overwhelmed and need to talk to a consultant about getting some help? Contact us at any time in the project to release the pressure of the order management system or warehouse management system project; as well as your daily tasks.

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1. Labor
2. Facilities
3. Workflow and procedures
4. Systems

Labor is incontestably the most expensive area on your profit and loss statement relating to fulfillment, so it’s important to get the most for your payroll dollar. Labor, in turn, consists of four areas, the first two of which can be easily quantified; the others are more difficult to quantify but should not be ignored.

Productivity. Simply a measure of the number of work units processed in a given amount of time, either by employee or by department. Work units can be orders, shipments, lines, etc. as appropriate for each fulfillment function.

Cost of labor. Can be divided into “Direct” labor—the part of your labor force directly involved in physically moving merchandise, accounting for a full 50 percent of overall fulfillment costs—and Indirect labor—clerical workers, managers, supervisors, administrative staff, security, etc.—-accounting for about 17 percent of overall fulfillment costs. Both have to be evaluated in the assessment process. The relationship of labor cost and labor productivity is critical to understanding where to place your emphasis.

Turnover and training: The effect of your turnover rate is difficult to quantify, but rest assured, it is real. The turnover rate itself can be derived from a simple calculation, and should not be overlooked. If your work force changes frequently, productivity is likely to suffer, as group after group of new employees work through the learning curve to reach full competence. In addition, the cost of hiring—screening, drug testing, training, etc.—is escalating. By contrast, a stable work force that knows the system and processes can continually work toward new efficiencies. Ask yourself what you can do to reduce the turnover rate. How efficient is your training process? Are training procedures documented? Are there enough training materials and manuals on hand? All these factors will make a difference in the effectiveness of your training efforts. 

Local labor market: Your local labor pool will also affect productivity and costs in a way that is likewise hard to measure but nevertheless real. A low unemployment rate may mean that in order to hire the quality of worker who can achieve the productivity levels you desire, you will have to pay higher wages (thereby increasing labor costs, already a hefty chunk of the cost column). A higher unemployment rate may have the opposite effect. The local economy is largely beyond your control, yet it can have a profound influence on your operations—all the more reason to get a handle on those factors that you control. 

Facilities should be examined to determine whether you have enough space and whether you are using the space you have efficiently and cost effectively. Components include: 

The cube: Focus cube utilization on Storage, Picking and Packing, areas which together typically account for 70 to 80 percent of warehouse space. Are you using the whole “cube” (square footage and height) effectively? An assessment gives you the ability to maximize the use of existing facilities before spending money and effort to add resources, so that any future justifications for expenditures will be valid and generate an accurate Return on Investment. 

Costs: Typically, occupancy costs (lease or depreciation costs of building and equipment, utilities, maintenance, taxes and insurance) amount to 18 to 22 percent of the total fulfillment dollar. Beyond that, there are many ways, such as calculating the occupancy cost per order or call, to map your facility’s costs and compare the results to other companies. 

Seasonality: Your warehouse will operate differently in peak and off-peak seasons; take both into consideration. In fact, the frenetic activity of peak season is a good time for assessment; you’ll see whether your space is sufficient and whether your systems hold up. Whenever you perform your assessment, keep peak-season needs in mind. 

Housekeeping/Maintenance: Cost of occupancy goes up as housekeeping standards go down. Congestion, inadequate lighting, floors in poor condition and lack of proper maintenance will slow work and put your work force at risk of costly accidents that drain profits. Dirty conditions can affect products, resulting in costly returns, and also adversely affect the operation of bar coding equipment, automated conveyances, and mechanical sorting devices. Besides, the attitude, productivity, morale and retention of your work force will be higher in a tidy workplace. 

Workflow and Procedures are often the easiest areas in which to make improvements. Your goal is to minimize the number of times a product is handled, and the number of steps your crew has to take to move the product through the facility. Providing the potential to match future needs is critical. 

Flow charts: Develop one detailing how product moves from receiving and returns through replenishment, and a second detailing how orders move from pick ticket generation to shipment. As you trace the movement of goods through the facility, take note of how its layout helps, or hinders, workflow. Consider if departmental workflows contradict each other; whether you are using conveyors where you should, employing the right material handling equipment, and have the best storage methods for your product. Work paths should minimize travel time and merchandise movement. Departments should be situated logically in relation to one another to minimize travel between them. 

Slotting systems: Your slotting program will determine how efficiently your staff can pick. The goal should be to ensure product is available when the picker reaches the pick slot while managing the number of replenishments needed. Proper slotting is a key to effective replenishment. The ideal slotting system gives you flexibility. You should re-profile your primary pick slots as part of a dynamic, ongoing process. 

Packaging materials: Failure to keep enough materials on hand, right at the work station, for the warehouse crew to do their jobs (e.g., shipping cartons, dunnage, gift wrap, taping, picking tote boxes, etc.) will mean productivity suffers while workers lose valuable time gathering materials or waiting for them to be delivered. 

Quality control: Identifying errors early saves money; cost of an undetected error is typically $25 to $50. Don’t rely just on returns from customers to gauge your accuracy or quality performance. Make sure you are measuring and reporting internal quality checks and taking action as needed. The assessment should review both incoming and outgoing quality. Vendor compliance manuals should be reviewed as well. 

Systems should provide the functionality and flexibility you need, supporting efforts to maximize space and labor efficiency. In most warehouse operations, the three key areas of concern are slotting, replenishment, and location control. Basic warehouse management system (WMS) functionality should include: 

Inventory management is the most important WMS function. It should track product by SKU, quantity, location and transactions against the location, and ensure inventory accuracy. 

Bar coding will not only significantly improve the accuracy of inventory transactions; but also will help you track productivity in four-walls inventory tracking (receiving, stock put away, pick, pack and ship) and productivity by individual, activity and/or department. It can dramatically reduce paperwork. 

Replenishment: Your WMS should control bulk-to-forward movement of goods, through minimum and maximum inventory triggers. It should also monitor demand quantity in waves of pick tickets, to make sure sufficient quantities are in the forward pick location. Look for opportunities to cross-dock back orders. 

Pick ticket selection: The WMS should enable you to print and sort pick tickets in a variety of ways, depending on order priorities and resource availability. 

Pack verification: You should be able to scan items to check accuracy before shipping. 

Tracking: Your WMS should track orders throughout the fulfillment process and integrate order status to your customer service department. 

Returns: Your WMS should minimize steps for processing returns to keep costs low. 

It is critical that all systems communicate with each other as needed and use common data as much as possible to maximize operations efficiency and productivity.

These four areas and the details within are where all warehouse assessments should begin and focus on. When evaluating these areas take note and talk with your employees that are affected and work daily in these areas to get a true sense of the issues and potential solutions. Listen to your employees and ask for their recommendations, you just might be surprised with the solutions that they come up with to improve the issue.

If you get to a point where you need assistance, don’t hesitate to contact us at any time to discuss your findings and what you need help with. Contact Jeff Barry via email or call him directly at 804-264-8040.

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2 of 12.  Counting on IT to do everything

Success in order management system selection is driven by assembling a strong project team of all the departments that will use the system.  Order management system selection is not just IT’s project.  Large scale systems like order management software change everything about the way your company will do business.  The users want good order management systems, but one group or another either pushes responsibility off on the other or they don’t have input and buy into the process. Also, be sure to have executive sponsorship that supports the project from start to finish.  Be sure you have a project manager capable of coordinating and supporting project.  Don’t rely on the order management system vendor’s project manager to manage the entire project.  For large order management software projects this is a full time job, if you don’t have the resources seek assistance from experienced external resources to assist you.

Are you currently involved in an order management system project? Do you feel overwhelmed and need to talk to a consultant about getting some help? Contact us at any time in the project to release the pressure of the order management system project as well as your daily tasks.

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We have developed a series of 12 blog posts that highlight mistakes that our clients have had to painfully learn prior to us getting hired or after we have completed our contracted phase of the order management system project.

1 of 12.  Having the Wrong Expectations

Many order management software projects get off to the wrong start.  In my four decades of order management system project experience, here are five things management always wants to know upfront in the project before the selection project proceeds:

• To understand type/tier of order management system that best suits your needs
• Perform preliminary gap analysis of your business compared to commercial systems available
• Develop preliminary total cost of ownership for entire project
• Understand the schedule to complete process
• To know what resources – both internal and external – are required to implement and support project

How many times have you told your boss, “ABC will cost this amount” or “We can complete the project on this timeline” – only to find out after you do the in depth research or do the project, reality is dramatically different.  The point here is that management doesn’t want to go through months of detail study to find out that they can’t see their way to a huge investment.  They want the answers to these questions first and then give you approval to do the detail work.  This is a catch 22.  Unless you have current prior experience with the order management system being investigated, how will you answer these questions?

It may be an option to engage a consultant to gain insight.  You have to answer these questions in a manner that doesn’t create unreasonable expectations for the project. If you are facing the above order management system expectations from your executives, contact us to discuss your system project.

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Multichannel Retailer USI Inc. Chooses Manage Metrix – Co-Developed By Taurus Software and F. Curtis Barry & Company – For Proactive Business Performance Management

Redwood City, CA. and Richmond, VA; June 24, 2010 –  Taurus Software and F. Curtis Barry & Company, announced back on February 22, 2010 that USI Inc., a leading supplier of lamination equipment and office accessories, has selected to implement the Manage Metrix solution. As an Ecometry client, USI is excited about the combination of Taurus’ leadership in data warehousing, analytics and business intelligence and F. Curtis Barry & Company’s knowledge of the multichannel industry, benchmarking and best business practices coming together in a unique business intelligence and performance management solution. USI and the Manage Metrix co-developers will be working on streamlining business efficiencies in the Inventory department, where USI’s goals are to balance inventory, reduce backorders, and maximize customer satisfaction.

USI chose Manage Metrix because of several factors, including the dynamic Taurus/FCBCO partnership, the solution’s valuable functionality, and the long-standing relationship that USI and Taurus have enjoyed throughout the years of Taurus developing specialized solutions for Ecometry customers.

“Over the years, we have been working with multiple Taurus Software solutions,” states Peter Frega, Director of Operations at USI.  “We have been completely satisfied with their valuable products, ease of use, and superb functionality.  Even still, we are more excited about implementing Manage Metrix since we have never seen anything quite like this.”

USI will be monitoring their inventory pulse using the Manage Metrix Inventory Analytics through the corporate dashboard, which yield insight on how to free up dollars in unproductive inventory, minimize backorder occurrences, processing costs and lost customers, balance rate of sales and purchases for active inventory, and automatically identifying the most productive and valuable tasks.  In addition, the consultants at F. Curtis Barry & Company will be working closely with USI to establish best business practices and interpret the key performance indicators (KPIs). The KPIs illustrate what areas in inventory are excelling and proactively alert executives and managers to possible areas of concern.

“Managing inventory is so important because it’s one of the largest assets we have,” says Peter Frega. “Inventory impacts our other departments as well as our customers, and managing inventory is a challenge since inventory levels change hourly. We used to spend 80% of our time generating reports, and 20% of our time strategizing. With Manage Metrix, we expect to spend 20% of our time generating reports, and 80% of our time strategizing.”

Manage Metrix also has two additional modules, Merchandising and Marketing; which are ready for beta testing.

If you are interested in learning more about how you could use Manage Metrix in your business, or would like a detailed demo to see how Manage Metrix works – please contact Jeff Barry at jbarry@fcbco.com or call 804-264-8040.

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ICOFR is the percentage of orders that are shipped complete—all items that were on the customer order—within your company’s shipping standard. For in-stock product the shipping standard of most well-run operations is 24 hours from receipt of an order.

Many consider ICOFR to be just an inventory measure, but its usefulness goes far beyond that. To understand this metric’s value better, let’s look at some results from three clients that had not previously measured ICOFR.

The first example is a $25 million apparel Website that has 3.0 lines per order. Seventy-five percent of the product is reorderable. This company has always used the backorder rate to gauge its in-stock position and customer service; the backorder rate is 10%, day in and day out, so the client inferred a 90% service rate. The company’s first ICOFR report showed a rate of 76.5% for an entire season—hardly the world-class customer service it is striving to achieve! But the ICOFR is generally 10-15 full percentage points below the item fill rate or the backorder rate.

The second example comes from a $30 million food merchant that averages 2.25 lines per order. This business is characterized by high repeat-customer purchases and a low percentage of new product. It has a 1.5% backorder rate daily—wow! But its first ICOFR report showed a 88.5% rate—another big surprise for the owners.

The third example (see figure 1) is a $90 million apparel business with catalog and Internet channels. Fifty percent of the styles are reorderable. The attached graphic shows the pattern for ICOFR when charted weekly for a year. The numbers are highly variable, with the ICOFR as low as 52% one week and up to 80% another, depending on when item receipts are heaviest.

During the past 20 years of working with multichannel companies, we have observed the results in figure 2, which shows several major categories of businesses and their initial customer orders, cancellations, inventory turnover, and customer returns. These are results for companies that are performing well and have capitalization for inventory purchases. It’s difficult for companies in the fashion apparel industry to perform above 70%, because 50%-75% of product is new in each major edition of their catalogs. A higher reorderability rate of product, an accurate history of item selling, shorter item lead time to restock, and higher inventory levels all potentially improve the ICOFR.

So let’s look at a few customer service nuances of this calculation. I like it as a measure of customer service because I believe it truly reflects what the customer expects. If he gives you an order for 3.0 items, he expects 3.0 items shipped. It’s a measure of inventory availability when the customer orders.

Also, if there are three lines on an order and you ship two, the calculation credits your ICOFR with 0% complete, which is why the ICOFR falls so dramatically. New products that really sell well with no history from which to accurately project demand strip the inventory and create the low customer service rate. This is shown in the figure 2 statistics comparing fashion apparel and reorderable/weekend apparel.

But we all know that there is a balance point between ICOFR and turnover. No business can service 100% of all orders daily and have an acceptable turnover or take the risk of overstocks. So the challenge is to find the optimal inventory point and determine how much risk you want to take.

The merchant also needs to take into account the cost of backordered merchandise. Our studies with hundreds of multichannel companies show that it costs $7 -$12 for each backordered unit of merchandise. This includes the shipping cost of the backordered unit, shipping material, additional labor, and the “Where is my order?” calls to the contact center. It does not include loss of shipping and handling revenue, potential loss of a customer from poor service, the merchandise buyer’s labor for expediting backorders, or the cost of air freight to expedite.

Measuring ICOFR does not mean you should stop measuring backorder rates or item rates. You should report all three. But the ICOFR is the only one that looks at customer service and inventory availability by order—as the individual customer experiences service.

If your management team doesn’t measure initial customer order fill rate, make it a priority to measure and report it by class and category as well as the total business weekly rate. Add it to your key performance indicator (KPI) dashboards and maybe your management objectives. Hopefully you will gain a new perspective on how well you’re serving your customer and in turn will manage the inventory optimally.

If you are needing some assistance in what and how to measure certain metrics in your inventory department or would like to discuss how we can help your inventory department be more efficient through an inventory assessment, don’t hesitate to contact us at any time. Call Jeff Barry at 804-264-8040 or email him at jbarry@fcbco.com.

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We recently had the opportunity to have a presentation by Deposco of their ShipForce warehouse management system on demand software solution. Deposco was established in 2004 and has financial backing by The Albermarle Group and UPS Strategic Enterprise Fund. In addition to ShipForce, Deposco also offers an Inventory Management System (StockForce), a Supply Chain Management system (Mobile WorkForce) as well as Business Intelligence (BI) to support on-demand user support of key warehouse metrics.

ShipForce offers all of the standard warehouse management system functionality including: receiving by advance shipping notice (ASN), purchase order or blind, quality verification, put away (directed or user enabled), replenishment, pick selection options, pack verification, inventory adjustments, etc. These functions are performed in conjunction with radio frequency (RF) to guide the user to perform the given task.

What you gain with a SaaS model is reduced need for additional Information Technology staff to maintain another application, the cost of additional equipment to support both a test and a production environment and the cost of license and maintenance fees associated with purchasing the application.

ShipForce has integration points from the client’s ERP application for sales orders, purchase orders, return merchandise authorization (RMA), item master, locations, and additional master type data.  And standard integrations from ShipForce up to the client’s ERP system for shipment details, inventory synchronization, and in process fulfillment status as needed. These data integrations can be sent and received in a number of different ways including: web services, FTP, flat files, HTTP, direct database connections or direct upload into a user integration point.

What you can look forward to gain with a warehouse management system like ShipForce is a reduction in labor force through more efficient automated processes; elimination of manual data entry through the use of RF technology. Reduced shipping errors with the use of pack verification and an integrated manifesting system. Ability to reduce inventory write offs as all inventory locations and their contents are controlled systemically and all inventory movement is guided via the RF.  And finally because of better control and management of what inventory is in the warehouse and where should lead to reduction in overall inventory and increased inventory turns.

Deposco’s ShipForce is SAS 70 type II certified and its audit controls of activities, processes and safeguards were developed by members of the American Institute of Certified Public Accounts (AICPA).  Deposco’s application complies with Sarbanes-Oxley for public companies need for compliance to these standards and it is also PCI DSS certified.

With any SaaS software model you need to be sure that the software you will be utilizing is housed in a secure environment that has redundancy for fail over for everything from a generator for power to multiple sources into the building for supporting WAN. Redundancy is key here to be sure that you have sufficient and timely rollover to protect your company in the event of a failure at the vendor’s location. In addition to this failover protection you will also need to be sure you get validated transaction through put and at what connection speed to the SaaS vendor’s location.  The larger the transaction volume the larger the communication connection will need to be.

So as you embark on your next warehouse management system selection remember that there are many options out there and a SaaS model is certainly one to consider!

If you are planning or currently in the middle of a warehouse management system, ERP, or order management system project and are feeling overwhelmed – don’t hesitate to contact a consulting firm that has successfully completed dozens of systems projects a year. F. Curtis Barry & Company is always available to discuss your project and how we would approach your unique situation. Call Jeff Barry at 804-264-8040 or email him at jbarry@fcbco.com.

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Although the industry has evolved over the years and employs many levels of automation and technology, a common theme is the need to address these timeless objectives. In working with companies who are addressing these issues, there is another common thread. That is a return to the basic processes in the warehouse.

As with issues staying the same, most warehouse functions and processes have remained relatively the same over the years. The application of technology or automation may have changed the way the function or process is achieved, but the objective and overall functional process itself remain the same.

With the ongoing commonality of warehouse functions among companies, we have found that almost every warehouse can enjoy benefits by addressing the basic operating infrastructure and processes in place today. One of the best ways to evaluate your basic warehouse needs is to have an independent warehouse assessment conducted.

The warehouse  assessment process enables you to identify areas where you can improve operational performance. The five basic components of the warehouse assessment are:

1. Walkthrough and observations of the operation

2. Data gathering of necessary information and metrics

3. Interviews with key staff members

4. Report analysis to determine current productivity and service levels

5. External benchmarking to look for areas of potential improvement

Walkthrough. One of the first steps in the assessment is to take time to walk through the facility and observe general operating conditions and effectiveness of the processes being used. This is not a detailed analysis, but developing overall impressions can guide the more detailed steps of the assessment to be completed later. Many times, the initial walkthrough and observations help focus and direct the assessment process. After you have seen enough facilities, it is possible to form initial opinions as to the current level of productivity and service very quickly. The general cleanliness of the facility, employee attitude and morale, overall work pace, information posting for employees, congestion, appropriate use of automation, bar code applications, space and cube utilization, etc. are all issues that can be observed during the walkthrough that can provide clues as to the appropriate focus for the assessment. Using all of the tools available can provide valuable information for the direction of the detailed assessment.

Data gathering. The assessment will involve some new research, but chances are you’ve already been collecting a lot of the data for other purposes. Designing an assessment is a matter of putting it all together. Most assessments are a combination of research analysis, report review and on-site fact-finding. The first step is to gather all the research you already have and collect any that you are missing. It is always necessary to establish expectations or standards as the baseline for any comparisons. Measurement against these standards identifies areas where expectations are not being met and action is required.

Staff interviews. Another important step is to talk to those staff members directly involved in the activity being assessed. Interview key management staff to gauge their perspective on the operation and any future plans for growth, product changes, or planned process changes. Then talk to the workers on the floor doing the work in the warehouse. If anyone knows where the problems and opportunities lie, it is the people who live with the issues day in and day out. Don’t miss this important resource; they are many times the best source for information.

Report analysis. Among the types of reports you should consider are basic internal operations performance reports, including service levels such as order shipping accuracy, order turnaround time, etc.; receiving; quality assurance; stock putaway; returns; inventory control; replenishment; and picking, packing and shipping. Examining these reports can help reveal which departments are reaching desired levels and which ones need some attention. The reports usually will include information relating to budgets or expectations compared to actual results in key areas of the business, covering productivity as well as service metrics.

Benchmarking is important. Your assessment should compare your desired standards of service and productivity with your actual performance. Comparing your own figures—both actual and goals—to that of other catalog and multi-channel marketing companies can help you evaluate your performance, too. Just be careful to compare “apples to apples” and pick companies that are as much like yours as possible. External comparisons can lead you to certain areas or processes within your operation that are candidates for further study. But remember that you cannot take someone else’s standards or performance expectations and make them your own; there are always too many differences in operations to do this. Our opinion is that it is always better to compare your results against yourself and against a set of standards or expectations over an established time period. This permits the identification of trends as well as snapshot evaluations. It is really desirable to combine both internal and external benchmarks to evaluate where you stand.

It is also very important to make sure you measure activities and costs that are relevant and actionable. Reviewing true productivity metrics in terms of work units and man-hours is better than looking at a percent to sales measure. The percent measure is dramatically affected by price points and labor market conditions, which usually are out of the operation’s control. Emphasis should be placed on comparable benchmarks, which can lead to some action steps by the operations group.

Look for our blog next month about what the four critical areas to concentrate on during the warehouse assessment…

If you are looking for some assistance in conducting a warehouse assessment then you need a consulting firm with the experience and knowledge base that can make quick but thorough work and actionable detailed recommendations to immediately begin implementing. F. Curtis Barry & Company has conducted warehouse assessments for dozens of clients a year and would be more than happy to discuss with you how we would approach assessing your warehouse. Call Jeff Barry at 804-264-8040 or email him at jbarry@fcbco.com to talk today.

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Jeff elaborated on how despite the economic challenges of last year that Junction had its most profitable year since its inception this past year with several notable new deals and implementation go-lives.  Jeff also stated that Microsoft Dynamics AX got a lot of recognition in 2009, and was recognized as the leader in the middle-market ERP space by The Gartner Group in its May 2009 Magic Quadrant report.  See chart below:

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