distribution networkAccording to a recent New York Times article the index of manufacturing activity fell to 49.6 in August 2012 – a three year low. This is never a good sign for manufacturing or distribution.  In the world of distribution, this indicator happens when it is almost too late to react.

Are there better indicators to monitor the health of your distribution network?

Like vital signs on a hospital patient, your distribution network should have several key performance metrics in place that are reviewed on a regular basis.  These metrics vary depending on the business model, but they can include:

  • Number of line items processed (picked, packed, and shipped)
  • Items received (acknowledged, checked, and stocked)
  • Overall throughput for the warehouse
  • Shipments in/out and associated costs per shipment
  • Average time to process an order or receive a shipment

All of these measurements can help you to keep a closer eye on the health of your distribution network.  But there are also other signs that should be checked before small problems become much bigger ones.

The following are three key telltale signs that your distribution network could be in jeopardy:

  1. Can’t measure or track – your existing warehouse management system (WMS) is not capable of generating performance measurement reports that will help your business.  These reports should be tuned to your particular business and based around industry benchmarks and best practices.  If you cannot track key metrics, your distribution ship could be sinking without your knowledge.
  2. Not accurate – the numbers that are provided are only partially collected data or the information is not accurate.  A good check is to pick one day of activity, or one customer order, and perform a quick audit to make sure your system is properly reflecting the information in your reports.  If the data is missing or inaccurate, there is a problem.
  3. Location no longer valid – distribution networks are built to last over a very long time period – typically decades.  A foundation to the distribution system is identifying locations based on customer shipping and receiving points.  For example, an automotive parts supplier may locate their distribution center close to an assembly plant.  What if the plant has closed?  Have your customer geographies changed over time? Forbes sites that product companies are ordering in smaller lot sizes, and computerization of processes is leading to more distributed supply chains.

In most of these cases, data is your key.  Having the right distribution network analysis capabilities can mean life or death for your supply chain.  TMG has the experience and the capabilities to help you to perform initial assessment of your current network and identify opportunities to tune and improve performance.  For more information contact TMG to get real solutions for your distribution systems.

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