Benchmarking Survey Reveals Distribution Trends
Less packaging, more value-added services and more crossdocking are among the trends noted in a recent Supply Chain Consortium report.
By Corinne Kator, Associate Editor — Modern Materials Handling, 3/28/2008
Distribution centers are reducing their use of packaging material, devoting additional space to value-added services and relying more on crossdocking than ever before. Those are three of the trends Bruce Tompkins, executive director of the Supply Chain Consortium, notes in his â€œ2008 Core Benchmarks Report.â€
The report is based on survey responses from members of the Supply Chain Consortium, a group of retailers and manufacturers who work together to rate their supply chain operations.
Trend 1: Reducing packaging
The report shows paper material and plastic airbags are the most common forms of protective packaging used in Supply Chain Consortium member DCs. It also notes a significant decrease in spending on packaging material in the last year.
â€œWe could definitely see a trend in 2007 compared to previous yearsâ€™ surveys of people using less and less materialâ€”and using less expensive material when they are using packaging,â€ says Tompkins.
For environmental and for economic reasons, he says, â€œcompanies are using more creative means for protecting their products instead of just throwing money at packaging.â€
Trend 2: More value-added services
While DCs are doing less of their own packaging, theyâ€™re doing more of their customersâ€™ kitting, price labeling and display building. These and other value-added services (VAS) are clearly on the rise, says Tompkins.
From making products store-ready to adding RFID tags, he says, â€œpeople are doing things now in their DCs that they never dreamed theyâ€™d be doing in their DCs.â€ And while this work eats up valuable resources, he says, â€œtheyâ€™ve got to do it because thatâ€™s what the customer wants.â€
Most VAS require a lot of space, he adds, â€œand almost nobody has cash around to build a new facility, so the question theyâ€™re asking is â€˜how do we get more done in the facility we already have?â€™â€
Some of his answers:
- Increase inventory efficiency to free up storage space for VAS
- Add mezzanines to take advantage of vertical space
- Keep DC layouts flexible so itâ€™s easier to take on new VAS when customers ask for them
Trend 3: Less picking, more crossdocking
Another DC activity on the rise among Supply Chain Consortium members is crossdocking. â€œClearly, pick-from-stock is the predominant process in use,â€ says the report, but 6% of manufacturersâ€™ inbound shipments and 24% retailersâ€™ inbound shipments are being handled by less labor intensive crossdocking or flow-through processes, and Tompkins believes these numbers will continue
â€œMore and more people are understanding the value of setting up a facility for crossdocking,â€ he says, â€œand more and more people have the technology to do it.â€
Successful crossdocking, he says, requires a DC with the proper layout and lots of doors, good data about inbound and outbound shipments, and software that can process and match up that data.
Source: Modern Materials Handling