Logistics Benchmarks

Description

Value

The cost to process a purchase order (generally)

$100 to $160

The cost to process a manual purchase order

$100 to $110

The cost to process a automated purchase order

$50 to $55

The cost to process a automated purchase order with EDI

$20 to $25

The cost to process a automated purchase order with EDI and bar code

$15 to =$18

The cost to process a purchase order for MRO

$95 to $105

The cost for carriers to prepare freight bills

$24 to $40

The reduction of the price of materials using Internet procurement vs. traditional procurement

5% to 10%

The reduction of cycle times using Internet procurement vs. traditional procurement

5 days

The cost savings per requisition using Internet procurement vs. traditional procurement

$70

The reduction in inventory using Internet procurement vs. traditional procurement

25% to 45%

Savings available using technology for the settlement of freight bills

$10 per document

Consumer banking transaction cost reduction using electronic systems

Over $1.00 per transaction

Cost to process a time and expense report

$5 to $10

Cost to process a vendor payment

$4 to $13

Number of invoices an average large company issues per year

800,000

Savings available per invoice for electronic delivery vs. traditional delivery

$6 to $8

Percentage of customers needed to use an electronic payment system in order to recoup system investment in one years time

2% to 3%

Savings percentage of total supply chain cost that "Best-In-Class" companies experience over competitors

4% to 6%

Supply chain cost advantage for "Best-In-Class" companies vs. average competitors

42% to 48%

Order cycle time advantage between "Best-In-Class" companies vs. average competitors

45% to 55%

Inventory days of supply advantage between "Best-In-Class" companies vs. average competitors

45% to 55%

Percentage of time "Best-In-Class" companies meet delivery dates vs. average competitors

15% to 18%

Percentage of the number of fewer days of inventory "Best-In-Class" companies have vs. the competition

58% to 62%

Percent of time "Best-In-Class" companies meet customers requests

98%+

Percent of operating costs inefficiencies in the supply chain waste

22% to 26%

Advantage that "Best-In-Class" companies experience over the competition in cash-to-cash cycle time

45% to 55%

Cost advantage of optimizing the distribution network

20% to 30%

Cost advantage for transportation though optimizing the distribution network

15% to 25%

Cost advantage for inventory carrying cost though optimizing the distribution network

10% to 15%

Increase in on-time deliveries by companies that effectively manage their supply chain

Over 40%

Increase in revenue generated by companies that effectively manage their supply chain

Over 15%

Inventory reduction generated by companies that effectively manage their supply chain

Over 40%

Percentage of customers recommending a product if they have a bad experience with a supplier

Under 20%

Percent of time trucks travel empty

10% and 15%

Annual cost of empty trucks on the road

$28 to $32 Billion

Percentage of customers reporting a problem with a supplier over the past 6 months

Over 50%

Percentage of customers who will repurchase a product if they are satisfied with the method that a complaint is handled

Over 50%

Percent of customers who stop buying because they are dissatisfied with the product

13% to 16%

Percent of customers who stop buying because of attitude towards the customer

65% to 70%

Workplace injury annual cost according to OSHA

$50 Billion

Percent of a companies products that make real profit annually

20%

Percent of a companies products that break even annually

35%

Percent of a companies products that create a profit but not enough to cover actual costs annually

25%

Percent of a companies products that lose money annually

25%

Standards annual inventory carrying cost as a percent of sales

20% to 30%

Inventory carrying cost for the year 2000

Over $370 Billion

Inventory carrying cost as a percent of Gross National Product (GNP)

Over 3%

Inventory investment as a percent of total assets for a standard manufacturing company

25% to 28%

Percent of sales for total logistics cost

8% to 10%

Total distribution cost in dollars per CWT

$60

World class companies error rates on orders shipped

Less than 1 per 1,000

World class companies logistics costs as a percent of sales

Under 5%

World class companies inventory turnover rate

over 20

World class companies total order cycle time

4 to 6 days

Percent of sales increase if stock outs were eliminated

10% to 14%

Cost savings for companies adopting strategic sourcing

15% to 25%

Percentage of expenditures related to the supply chain

65% to 70%

Cost savings from implementing a Transportation Management System

10% to 40%

Percent of total transportation capacity used in the US

45% to 55%

Percent of warehouse operating costs related to order picking

60% to 65%

Picking rate of a pick to part picker

50 lines per hour

Picking rate of a part to pick picker

100 lines per hour

Picking rate of a pick to belt picker

250 to 400 pieces per hour

Percent of time in a typical warehouse that pickers are traveling

Over 55%

"Best-In-Class" percentage of on-time delivery

99%

"Best-In-Class" percentage of order completeness

98%

"Best-In-Class" order cycle-time

48 Hours

Inventory turns in the grocery - frozen industry

12- to 14

Inventory turns in the grocery - perishable industry

365

Inventory turns in the grocery - dry industry

18 to 25

more information below...

Logistics

Odd Facts
If a company operates on a 3% to 5% profit margin, a 3% to 5% reduction in supply chain costs can double profitability.
eProcurement can reduce processing time for purchase orders by more than 5 days.
Inventory levels for top companies are often higher than those of their competition, they just move it more rapidly through the system.
"Best-In-Class" companies enjoy higher employee productivity levels which lowers overall costs.
"Best-In-Class" companies meet or exceed customer service expectations over 95% of the time.
The most effective technique for increasing shareholder value is developing sound operations improvements.
Cross docking can reduce conventional warehousing costs by 25%.
Leading supply chain companies outperform the competition by reducing costs, compressing order-cycle times, and increasing asset productivity.
Annual inventory costs average 35% of product costs.
"Best-In-Class" companies total supply chain cost is between 3% and 6% of sales.
Top performing companies operate with less than 45 days of inventory throughout the entire supply chain.
A "Best-In-Class" company with $50 Million in sales enjoys a $3 Million cost advantage over the competition.
"Best-In-Class" companies have 75% to 95% more asset utilization than their competitors.
Customer disloyalty can hurt company performance by 25% to 50%.
The cost of attracting new customers is six times the cost of retaining current customers.
Satisfied customers will tell 2 to 6 people about a positive experience vs. unsatisfied customers telling 10 to 20 people.
The number 1 ranked customer requirement is on time delivery.
A dissatisfied customer decreases revenue at a rate 2 times the revenue contributed by a satisfied customer.
Profitable companies turn inventory 28% faster than unprofitable companies.
Profitable companies have about 10 days less inventory on hand compared to unprofitable companies.
Inventory expands to the space available to it.
Dell's inventory buffers at its factories are 2 to 4 hours, not days, weeks, or months.
Never be out of the 20% of items that account for 80% of your sales.
Inventory investment is the single largest asset for manufacturing companies.
An efficient data entry clerk will make 1 error for every 300 entries while a bar code system will make 1 error every million entries.
People spend 20% to 30% of their time looking for misfiled information at a cost of over $60 per incident.
Transportation costs are the single largest element in all distribution oriented operations.
Financial reward is the largest motivating factor for warehouse employees while personal recognition and increased responsibility are not far behind.
80% of a warehouse cost is in the floor slab and the roof.
In traditional rack storage systems, 60% of the available space is consumed by aisles.
In narrow aisle rack storage systems, 50% of the available space is consumed by aisles.
In very narrow aisle rack storage systems, 40% of the available space is consumed by aisles.
Highway mileage is 1.25 times the "As the Crow Flies" distance between 2 places on a map.
Transportation costs are the leading expense for all distribution oriented operations.
Charges for auditing freight bills is usually 50% of the amount recovered.
Improving Warehouse Productivity: Sequence picking locations to minimize travel time for pickers.
Improving Warehouse Productivity: Store items that are usually picked together as close as possible.
Improving Warehouse Productivity: Balance picking activities around the entire warehouse.
Improving Warehouse Productivity: Sequence SKU's to minimize travel time.
Improving Warehouse Productivity: Constantly look for ways to reduce travel time.
The best metric for service levels in a distribution center is complete lines shipped.
For best productivity and efficiency, distribution centers should operate at 80% of capacity.
The top 50% of SKU's account for over 98% of all movement within a distribution center.
When using flow racks, keep carton weight under 30 pounds.
Every aisle in a distribution center should be racked on both sides.
A lift truck should show 5-1/2 hours of use on an 8 hour shift.
Improving Warehouse Productivity: Never overlook housekeeping.
There should be one dock door for every 10,000 square feet of space in a distribution center.
Honeycombing can chew up 20-25% of bulk storage capacity.
When purchasing extra inventory because of discounts, the discount must be greater than the inventory carrying costs involved over the time period of carrying the extra inventory.
Update purchasing lead times at least every 3 months to enusure proper calculations.
Base customer service on what the customer wants, not what your company wants.
You cannot afford to give 100% customer service.
Inventory Valuation Methods: FIFO - First In First Out.
Inventory Valuation Methods: LIFO - Last In First Out.
Inventory Valuation Methods: WAC - Weighted Average Cost.
Inventory Valuation Methods: FISH - First In Still Here.
Asking for forgiveness is usually easier than getting permission.
Logistics

Reduce document management overhead. An internal study has estimated that it costs $90 to $130 per year to maintain a single controlled document. According to IBM a typical filing cabinet costs at a minimum $60,000 a year to maintain.