Aberdeen Group Benchmark Report
Technology Strategies for the Multi-Site Warehouse and Order Management
Executive Summary
As supply chains become increasingly more global in nature the ability to effectively manage a network of distribution centers is becoming a required core competency. Unfortunately, a surprisingly high number of companies that currently practice multi-site distribution are experiencing real challenges in this area impacting profitability. In a recent survey of 146 multi-site distributors, almost two thirds of companies report that their operations are moving in the WRONG direction—costs have risen, and customer service levels have declined.
Best-in-Class Performance
However, a small group of companies have mastered the art of managing a network of warehouses. These companies follow strategies which allow them to provide superior levels of customer service while at the same time containing costs. On average, Best-in-Class companies have:
• 99% or more on-time and complete orders
• Fewer than 1% of orders contain a line that is back ordered
• Lower inventory carrying costs over two years
• Reduced inventory write-offs for spoilage or obsolescence over two years
Competitive Maturity Assessment
The firms enjoying Best-in-Class performance shared several common characteristics with respect to their multi-site order fulfillment capabilities, such as:
• Companies that have reduced their order fulfillment costs year-over-year are 82% more likely to have sales order splitting capabilities.
• Companies have reduced their inventory carrying costs year-over-year are almost TWICE as likely to practice order distribution by inventory level.
• Companies that have 99% or more complete shipments are 54% more likely practice Vendor Order Splitting.
Required Actions
To achieve Best-in-Class performance, multi-site distributors must:
• Leverage the entire network to fill orders, and move away from dedicated use facilities, resulting in greater agility and improve levels of customer service
• Rather than “rip and replace” disparate WMS systems, use a Multi-Site Inventory Visibility platform to manage globally
• Utilize warehouse and order management applications to enable Sales Order Splitting
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