Benchmarking Warehousing and Distribution Operations: An Input-Output Approach

We develop an input-output model of a warehouse system to assess operational efficiency. Our model simultaneously accounts for all of the critical resources (labor, space, storage and handling equipment) and the different workload requirements (broken case, full case and pallet picking, storage and order accumulation) of a warehouse. We collected extensive data on 57 warehouse and distribution facilities from a variety of industries, including auto parts, dental and office supplies, electronics, fine papers, hardware, health care, industrial packaging, mail order apparel, office machines, photographic supplies, and wholesale drugs, and used the model to assess and compare their efficiencies. We offer 3 conclusions based on a statistical analysis of the operating efficiencies obtained from several models: • Smaller warehouses tend to be more efficient than larger warehouses. • Warehouses using lower levels of automation tend to be more efficient. This association is more pronounced in small firms. • Unionization is not negatively associated with efficiency and in fact may actually contribute to higher efficiency.