UK warehouse benchmarking report reveals low use of cross-docking

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Although much is written about cross-docking, 80% of UK warehouses cross-dock only 10% or less of their throughput, according to new research conducted by Cranfield School of Management. 

This is one of the findings outlined in the 2008 UK Warehouse Benchmarking Report which gives companies a means to compare themselves against their fellow operators and offers a snapshot of how the UK warehouse industry is performing.

The results show that there have been many new builds of large warehouses in recent years, probably driven by such factors as globalisation, which has increased supply lead times and led to a higher level of safety stock necessary to maintain customer service levels.  Most warehouses are now acting as decoupling points in these long supply chains, separating lean manufacturing flows from the rapid responses needed to satisfy volatile markets, by means of holding buffer inventories.

While cross-docking might not be used by the majority of UK warehouses, it is well suited to some supply chain situations and the survey found that 9% of warehouses cross-dock over 45% of their throughput.  These included warehouses handling products such as seafood, juice, food and books.

The research also highlighted that while most warehouses provide value added services (e.g. price tagging, kitting and final assembly), most activities are fairly minor in nature and undertaken as part of the pick and pack process rather than being allocated specific floor area.  On average, only 8% of floor area is taken up by value added services.   

The report examined the use and plans for warehouse data input and communication methods.  Interestingly, more warehouses are planning to use voice (15%) rather than RFID technology (10%). 

Dr Peter Baker, Senior Lecturer in Logistics and Supply Chain Management at Cranfield School of Management, said:  Our figures would suggest that the predicted widespread use of RFID may still be some way into the future.  It may be because the payback of voice is more straightforward to calculate whereas the payback of RFID is much more complex and the technology is still being fully developed.

Although third party logistics (3PL) providers are used extensively in modern supply chains, many warehouses are still operated by manufacturers, wholesalers or retailers themselves.  This is possibly because of the long term asset nature of the facilities and because they may be viewed as necessary core competencies.  In the survey, 64% of warehouses were classified as own operated (by the manufacturer, wholesaler or retailer), with a further 11% being operated by a 3PL on a dedicated basis for one client.  About a quarter of warehouses were operated by 3PL companies on a shared user basis or as an operational warehouse.

The survey also found that over 94% of warehouses use a Warehouse Management System (WMS), with 56% using a specialist WMS package, while 24% use a module of an Enterprise Resource Planning (ERP) software and 16% use internally developed software.  Larger warehouses tend to be more likely to use a specialist WMS package or an internal development possibly due to the greater functionality and greater level of specialist business processes involved.

Copies of the report can be purchased by contacting Denise Paul at Cranfield School of Management on 01234 751122.

 

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