Innacurate order picking costs companies $390K each year: study
U.S. based workflow company Intermec, Inc., surveyed 250 supply chain and distribution managers and found the average mis-pick costs $22
EVERETT, Wash.—Distribution centers could be losing an average of nearly $390,000 per year due to mis-picks, according to a recent study.
Conducted by Intermec, Inc., a workflow performance and management firm, the survey of 250 supply chain and distribution managers across the U.S., U.K., France and Germany found the average mis-pick costs about $22, with more than half (52 per cent) of companies reporting a pick rate of less than 97 per cent.
With a new year bringing renewed pressure to boost efficiencies and drive costs down, improving productivity and accuracy is fundamental to improving profit margins, which is why 59 per cent of managers use “The Perfect Order” metric to identify areas for improvement.
A further 19 percent do not even measure the costs of mis-picks in any form, suggesting that the accumulated losses in the supply chain may be even higher.
Some 47 per cent of companies that have recently conducted a workflow process review said picking was a key area where cost savings could be achieved. For those using ‘The Perfect Order’ metric, opportunities for increased savings were clear, with 43 per cent identifying complete shipments as the most profitable.
Highlights from the distribution centre study include:
- 74 per cent of responding managers believe increasing automation within the distribution center would have the greatest impact in increasing profitability.
- 51 per cent believe the adoption of new technology by workers is a challenge, signifying intuitive and simple technology offers a faster path to savings.
- 49 per cent cite difficulty in pinpointing areas in the distribution center where investment would yield the greatest result
- 68 per cent believe worker mobility and flexibility is key to improving profitability—a sentiment felt strongest in the US (76 per cent) and UK (84 per cent)
- 23 per cent of companies are still using paper to conduct distribution center processes
- Despite continued use of paper, 72 per cent said up-to-date technology and multi-functional devices are needed to improve distribution center performance
- 52 per cent admit to using RFID within the distribution center.
- 24 per cent of all managers currently use voice-directed work