Warehouse Efficiency Benchmarking: is ‘Fine’ your ceiling… or just where you are right now?
Your Warehouse Is doing Fine (and that's the problem)
The operational hell that doesn't trigger anything
There’s a particular kind of operational hell that doesn’t get talked about nearly enough. It’s not the kind with flashing red KPIs, sirens, and an unwanted visit from the MD. It’s not the kind that ends up in a case study with a dramatic before-and-after. It’s rather more subtle than that, and considerably harder to fix.
It’s the warehouse that’s doing fine.
Not great. Not terrible. Fine. Ticking over. Hitting most of its targets, most of the time. It’ll generate the occasional raised eyebrow from finance but nothing that couldn’t be smoothed over with a reasonable explanation and a non-committal shrug, when talking about Q3.
You probably know this warehouse. You might even work in it.
The problem with fine is that fine doesn’t trigger anything. Crisis triggers things. Crisis gets budget approved and consultants called. It means processes are reviewed, and it generates all sorts of useful, if rather painful, activity. Crisis has a certain clarifying quality to it. Fine, on the other hand, just carries on. Doing nothing dramatic. Indefinitely. For ever.
And in the background, while everything is fine, the costs just keep piling up.
The problem with warehouse efficiency benchmarking against yourself
Here’s a question that sounds simple but can often be quite awkward when you actually try to answer it: how do you know that your operation is performing well, rather than just performing better than it was last year?
Most warehouses benchmark against themselves. Last month vs this month. This year’s peak vs last year’s peak. Year-on-year improvement measured against their own historical baseline. Which is fine as a way of tracking direction of travel, but it tells you absolutely nothing about where you actually are. And that’s the core problem with warehouse efficiency benchmarking that only looks inward: it measures progress without measuring position.
Possibly more importantly, it tells you nothing about where you are relative to your competitors.
It’s sort of like congratulating yourself on running a mile faster than you did last January, without ever wondering if the mile you ran was actually in the direction you wanted to travel.
The industry has plenty of information on what good looks like. Order picking shouldn’t account for 55% of your operating costs. Half of your picker time shouldn’t be spent walking rather than picking. Those throughput benchmarks exist. Warehouse labour efficiency benchmarks exist. But if you’ve never held your operation up against any of them, there’s a realistic possibility that fine is costing you quite a lot of money.
Nobody gets a medal for preventing a problem
Part of what makes fine so much of a problem is that the people who work in it are, quite reasonably, proud of it. They built it. They fought for it. They’ve kept it running through years of supply chain chaos and a woeful labour market. That’s not nothing, and it deserves genuine respect.
But it can also create a culture where suggesting that things could be materially better feels, at least to the people who’ve been holding things together, rather like an accusation.
It isn’t. Or at least, it shouldn’t be.
The fact that a system has room for improvement isn’t a reflection on the people running it — it’s a reflection on the fact that technology and best practice have a habit of moving continuously forward, whether you’re actively watching them or not.
The warehouse that was configured optimally in 2021 is not optimally configured now, because 2021 is not now. Orders look different. SKU profiles look different. Carrier requirements look different. The system doesn’t know any of this, because nobody told it, because nobody’s had time, because everything was fine.
The compounding cost of good enough
A pick path that’s suboptimal by 15% is not, in isolation, a catastrophe. A wave plan built around last year’s order profile might add a bit of friction, but not enough to trigger alarm bells. A workflow rule that predates a major product range change might make for an occasional workaround, but experienced staff know what to do and new staff can learn quickly enough. Each of these things, individually, is manageable.
Together, they’re a problem.
Because what they add up to is an operation that is silently absorbing significantly more warehouse labour than it needs to. And that labour shows up in your P&L as a cost of doing business, rather than as the warehouse labour efficiency gap it actually is. And because it’s always been there, at roughly the same level, it becomes part of the baseline. And it’s part of what fine looks like.
And then peak season arrives, and you scale a fundamentally inefficient operation by a factor of three, and suddenly those invoices land on your desk with a Post-it note that says ‘Care to comment?’ in red ink.
The off ramp from 'fine'
The off ramp from fine doesn’t need to be a crisis. But it does need a decision, and a perhaps slightly uncomfortable look at whether your current operation reflects how your business actually works today, or whether it’s still working the way it did when someone last had time to look.
In most cases, the data to answer that question is already inside your WMS. The pick path data, the walking time data, the wave efficiency data — it’s all there. It’s just not doing anything, because nobody’s looking at it, because everything is fine. That’s what warehouse efficiency benchmarking against your own data — rather than just your own history — can actually tell you.
The question isn’t whether your warehouse is broken. It probably isn’t. The question is whether fine is your preferred ceiling, or just where you happen to be standing right now.
Because those are very different things. And the gap between them is costing you.
If you’d like to find out how much, we’re always happy to have a chat
