A STUDY FLAGS WAREHOUSE WOES

CHRIS O'LEARY

MEMPHIS, Tenn. -- Wholesalers, while making some advances in productivity, are still stumbling with inefficient operations, a new survey concludes.

The study, commissioned by the National-American Wholesale Grocers' Association, Washington, said the average wholesaler is not fully exploiting technology in warehouse operations.

"Technology, specifically information systems-based, has not been widely pursued," wrote the survey's author, Richard Kochersperger, a food marketing researcher at St. Joseph's University, Philadelphia.

NAWGA sent surveys to about 150 association members, and 77 wholesaler division branches responded. A majority of the respondents were from divisions of either Supervalu, Eden Prairie, Minn., or Fleming Cos., Oklahoma City.

In technology, computerized systems for inventory putaway are being used by 60% of the respondents. A smaller group of respondents reported using more advanced programs: 32% are sending electronic purchase orders and 20% are receiving advanced shipping notices from vendors via electronic data interchange.

Sixty percent of the wholesalers polled require nonwarehouse laborers, or "lumpers," to change inbound pallet size or product layers to conform to local wholesaler requirements. And 61% of the wholesalers said more than 40% of the products they receive must be reconfigured, or "fingerprinted."

"Every time someone fingerprints the case, costs in the system go up," Kochersperger wrote. "It takes longer to receive the product and it ties up valuable dock space."

A majority, 74%, of wholesalers have satellite warehouses for excess inventory, a practice long criticized for adding time and costs to the product delivery system.

And while 81% of the wholesalers are using work flow standards to encourage productivity, only 41% said they fully enforce the standards.

It is in controlling labor costs, either direct warehouse staff or supervisory positions, where much productivity can be gained, the study reported, adding that labor represents 70% of a wholesaler's total operation costs.

"From this data it should be clear to all managers that the key to improving distribution center cost and productivity focuses on the people," Kochersperger wrote.

The study also called for more information to be standardized to streamline statistical analysis and make identifying problems somewhat easier.

"There is a strong need for consistency in measuring and reporting information about distribution center operations," he wrote. "Even companies within the same corporation don't utilize the same benchmarks and accounts."

The study did show some promise for Efficient Consumer Response initiatives, however, with 74% of those polled saying they are involved in some degree of cross-docking products from supplier to retailer.

The most popular categories for cross-docking included general merchandise, specialty items, deli, bakery and promotional goods.

About 22% of the wholesalers surveyed saying they were involved in continuous replenishment programs.