A typical question I often hear asked at conferences, trade shows or meetings is: “what metrics are being used in our industry and where should we be?”
Let’s start with the foodservice industry. Not every foodservice company is created equal and therefore, not every foodservice company tracks and measures the same things.
Most companies measure productivity by 5 major labor functions. These labor functions are measured in cases per payroll hour.
- Productivity expressed in payroll hours (includes all paid time: work, breaks, team meetings, vacation, sick days, etc.)
- Fork lift labor refers to putaway and replenishment functions
- Indirect labor includes supervision, maintenance, inventory control, inbound and outbound checking, clerical and housekeeping
1. Putting productivity benchmarking in perspective
When comparing your operation’s performance to a benchmark, it is important to keep in mind the factors that determine productivity outcomes. Some are in management’s control. Some are not.
2. Operating costs as it relates to productivity
It is also important to understand where labor fits in operating expenses. Will gaining in labor productivity hinder the overall supply chain costs?
I’ve seen foodservice companies focus solely on selection productivity, which increased the throughput tremendously, however, the drivers on the other hand had to spend a lot of additional time and effort during deliveries, which not only had a negative impact on overall efficiencies, it also had an impact on customer service levels. On average, warehousing and transportation distribution expenses are about 50% each.
There are also other warehousing expenses such as occupancy costs and indirect labor.
Now, let’s remember that every one of you have different constraints and client profiles. We have to make sure that we don’t jump to conclusions too quickly when comparing our own figures to averages, however, if we do not measure ourselves, we will never know how we are doing!
Stay tuned for the next series of blogs on metrics that will focus on Wholesalers, Retailers, eCommerce and Beverage distribution.