Warehouse Practices: How Do Yours Measure Up?

Publishing executives and warehouse managers in companies large and small, with highly diverse and targeted products and marketing channels, can benefit for the first time from a new Warehouse Benchmarking System. The program was tested last year by the Book Industry Study Group (BISG) and is now being rolled out to the industry. Participants can measure their productivity and improve the effectiveness of their warehousing practices. It is an easy-to-use, and highly powerful program that relies on comparative peer-group data.

“Participants use their [Web] browser to enter the appropriate data in a convenient, tabular format,” says Professor Leon McGinnis at the School of Industrial and Systems Engineering, who worked with BISG on developing the book industry model. “Nobody can see the data of a participant, except the research team that is part of a quality check on values entered.”

Interested publishers can apply on the BISG Web site until April 1 to participate in the current (2006–2007) research cycle. The greater the number of publishers who enroll, the more useful the peer-group comparisons will be.

When BISG first partnered with Georgia Tech in 2004 to develop the project, James Benjamin of Baker and Taylor, then chair of BISG’s Distribution Executives Interest Group (DEIG), said, “Our goal was to answer the age-old question, ‘Are we using the right amounts of the right resources to achieve the right service levels at minimum cost?’”

This year’s DEIG Chair, Craig Bauer, vice president for global sourcing at Houghton-Mifflin, says that the corollary questions every manager would want such a tool to answer are, “Are we competitive? Are we best-in-class?”

Knowing how you stack up on lines per labor-hour moved out the door [number of title lines picked off of orders] will tell you right off the bat where you stand from a productivity standpoint. But it is only the tip of the iceberg. How much inventory are you holding to make this happen? What is your equipment and plant investment? What automated and manual picking and consolidating procedures and technologies are used? What would be the effect of reconfiguring some aspect of your operation or a change in SKU or channel mix? How much of your resources are devoted to customer service and added-value operations? The program includes a “what-if” tool to provide answers to these questions.

Another plus: the program is useful for publishers of all sizes, according to Mike Harry, chief supply chain officer of Lifeway Christian Resources in Nashville, Tenn., and John Lancaster, general manager of the distribution center for medical publisher, FA Davis in Philadelphia.

Harry directs a 550,000-square-foot warehouse, shipping some 150,000 SKUs, and stocking at least 45,000 at any one time, moving largely to trade and consumer channels. Lancaster manages a 45,000-square-foot facility, shipping 550 active SKUs primarily to the professional and educational markets.

Lancaster found it especially useful in providing additional inputs for the warehouse system conversion his company is undergoing. Harry gave examples of useful benchmarks for picks/hour, and the impact of case vs. individual picks and dynamic pick routing.

On the upper end of the scale, Floyd Westervelt, director of strategic planning and inventory at Harcourt, directs four warehouses ranging from 375,000 to 600,000 square feet in size, moving approximately 100 million books annually primarily for the school, trade, academic, reference and religion markets. He, too, is enthusiastic about the value of the program for all publishers.

“[It will] provide a different perspective and better insight into their operations,” Westervelt says. “Large and small publishers can learn from each other. They can see what’s actually happening ‘out there’ and help produce change.”

There are certain parameters pretty much common to publishers of any size, he adds, such as: “pick rates, management span of control, issues with software, advantages of picking to light or picking with voice, handling equipment, etc.”

The deciding difference in the market is “the ability to deliver. The distribution center is an extension of the sales team,” notes Westervelt.

With distribution being the toughest operating link in the publishing supply chain, the Warehouse Benchmarking System can be a useful tool to the industry as a whole, as well as to every participant. BB

Eugene G. Schwartz is a publishing industry analyst, writer and editor-at-large for ForeWord Magazine. A former PMA board member, he is president of Consortium House, a management and business consultancy to publishers. He was previously a manufacturing, production and operations executive.