Distribution Center

Distribution Industry Falling Behind in Improvement Practices

July 17, 2017
Distribution centers and warehouses haven't implemented easy–to-use strategies that already improve customer service and profitability in many other industries.


No way.

Holy Moly.

Those are the top three polite reactions to the results of the just-released 2017 MPI Distribution & Logistics study.

The non-polite reactions can't be included here. Suffice to say that they involve saltier terms for numbskullery and dogged inattention. As in: how can companies across an entire sector be leaking so many profits, and not know it?

The new data suggests that manufacturers, distributors, and retailers are losing millions of dollars annually — simply because their distribution centers and warehouses haven't implemented easy–to-use strategies that already improve customer service and profitability in many other industries.

Even worse, some key warehouse metrics – such as perfect order fulfillment — are worse now than they were 10 years ago.

How is this possible? Maybe because:

Distribution centers and warehouses DON’T generally apply common practices that could improve their operations. For example, only 53% of facilities have a continuous-improvement program in place — and this is the most widely used practice.

  • ONLY 41% of distribution centers/warehouses have adopted lean thinking — a much lower implementation rate vs. manufacturing plants.
  • A majority of facilities train each employee 20 hours or LESS annually — even though 40 hours is a benchmark for world-class performance across industries.
  • A majority of facilities have adopted at least some IoT technologies, but much more remains to be done — especially given that 39% have NO application of the IoT.

Yikes. No Way. Holy Moly.

Still, this is a Good News/Bad News story, depending on where you sit.

It’s Bad News — and nearly incredible — that an entire sector could be falling behind other industries in basic management and improvement strategies. Customers are unlikely to put up with low industry standards for much longer.

The Good News is that individual companies can leapfrog competitors by adopting best practices and technologies common in other industries. Sector leaders who exploit this window of opportunity can put their firms on the path to long-term competitive advantage.

What are you waiting for?

About the Study

The 2017 MPI Distribution and Logistics Study was conducted by The MPI Group, and promoted by MPI and APICS. From January through March 2017, 224 distribution center and warehouse executives participated in the study. A free sample of the executive summary, Next-Generation Performance for Distribution and Logistics, is available at:  

John R. Brandt, CEO and founder of The MPI Group, has devoted more than two decades to studying leadership in effective, purpose-driven organizations. An expert on how companies can adapt themselves to the realities of new markets, new corporate structures, and new customer expectations, Brandt is an experienced journalist, former editor-in-chief of IndustryWeek magazine and publisher and editorial director of Chief Executive magazine, and an accomplished management innovator and an internationally recognized expert on manufacturing and technology.He writes one of a series of blogs provided to IndustryWeek by The MPI Group.

Sponsored Recommendations

Voice your opinion!

To join the conversation, and become an exclusive member of IndustryWeek, create an account today!