2013 Warehouse/DC Survey—Managing a “barely budging budget”

Every November we step inside the warehouse and distribution center (DC) facilities of Logistics Management readers to get a better look at how the activities and processes inside the four walls are affecting their overall logistics and supply chain operations.

Starting on page 48, Contributing Editor Maida Napolitano, a warehouse and distribution professional herself, takes a deep dive into the findings of Peerless Research Group’s (PRG) annual Warehouse and DC Operations Survey, the clearest view available of how U.S. facilities are being run. This year the survey received 530 qualified responses from operations managers, to upper-level managers, all the way to CEOs—all personally involved in decisions at the warehouse and facility level.

As Napolitano reports, we were somewhat surprised to find that, despite the positive vibes that U.S. business started feeling about a year ago, respondents are still stuck in the era of “barely budging budgets” that we saw solidified in the results gleaned during the recession.

“As the economy has been slow to recover, it’s become clear that reducing operating and transportation costs continues to be top priority,” says Napolitano. “However, managers are now under more pressure than ever to improve service levels with little to no capital to spend for improvements. This is a conflict of ideals that we saw develop five years ago, and one we assumed would begin to slightly erode this year.”

But that wasn’t the case. However, one could argue that this recently developed fiscal discipline is a good thing.

In fact, our findings reveal that the market will continue to witness the evolution of the logistics professional, one who has become more of a strategist, willing to carry out initiatives that don’t demand major systems changes and require little capital investment. They’re squeezing the best out of what they have, improving warehouse and DC processes, looking to step up inventory control, and sitting down with carriers—and even competitors—to maximize existing DC networks.

“It’s refreshing to see a significant number of respondents taking multiple actions to keep costs in check without major investment,” says Don Derewecki, senior business consultant at TranSystems, LM’s partner for this survey over the past eight years. “They’re taking time to ask customers to order less frequently, but in larger quantities, or using 3PL warehouses to get closer to customers.”

“There is no magic bullet,” says Norm Saenz, senior vice president and principal of TranSystems. “Whether opening new DCs, turning to a 3PL, or renegotiating with freight carriers, results show that there’s no one prominent answer.”

If you have specific questions or would like to go even deeper into the results to see how your peers are managing the “barely budging budget,” join me, Derewecki, and Saenz in our annual Warehouse and DC Operations Survey Webcast that will go live on Thursday, November 21 at 2:00 p.m. ET. Register now at logisticsmgmt.com/wdc_2013survey.