It’s Not Really Magic - Warehouse Benchmarking
What may seem like a rabbit out of the hat is usually the result of experience, and that applies to good advice in operations consulting as well as to magic. For instance, in a current interview Ken McKinney, director of distribution for Urban Outfitters, mentions F. Curtis Barry & Company in connection with his “welcome to operations” moment:
The one that stands out happened as we were starting up our direct-to-consumer operation. We contracted the services of F. Curtis Barry & Co. to advise us on fulfillment matters, and I asked one of their folks what a reasonable expectation for orders processed per man-hour would be, taking into account our eclectic product mix. He answered with a number in the single digits. Given that we were performing in the triple digits in units per man-hour with our retail operation, I was amused by his answer and thought that attaining the number he presented would be a slam-dunk. After seven years, we have yet to consistently hit his number. (Multichannel Merchant, Jan. 1, 2007)
It turns out that the person who gave McKinney that advice was F. Curtis Barry & Company vice president Bob Betke. Here’s Bob’s recollection of the background to that particular piece of advice:
We gave Ken an example of what the industry benchmark was for his type of business—I can’t remember what the exact number was. But based on our Benchmarking ShareGroups that we facilitate, we had gathered a lot of data that said a company similar to his should be doing “X” units per hour as a production number. He thought that was very low, but it gets back to the issue of comparability. We were talking about direct-to-consumer companies; he was coming out of a retail environment. He was trying to compare retail numbers to direct numbers. His statement in the interview essentially says that there is a big difference, and they have not been able to meet those retail industry numbers in the direct side of the business year after year.
It does lend credence to the fact that our numbers have validity, number one; and number two; there is a difference between retail and direct production. You always want to get behind a number to find out what the genesis of the number is and what the business model is. You can’t take a retail number and apply it to direct, or you can’t take a hard goods company number and apply it to a hanging apparel company.
Learn more about F. Curtis Barry & Company’s Warehouse Benchmarking ShareGroup hosted this year by Victoria’s Secret Direct in Columbus, OH on March 12-13, 2007 or contact Jeff Barry at jbarry@fcbco.com or at 804-740-8743.