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Distribution Centre Pick Accuracy Research

Distribution Centre Pick Accuracy Research

Soon to be published research from ECR reveals that over 60% of inventory records across the 7 retailers studied, in just under 100 stores and over 1,000,0000 inventory records, were wrong. When retailer inventory records are wrong, organisations either have more or less than they had imagined, leading to excess inventory and shelf out of stocks in the store, that in turn lead to lost sales. Indeed, To discover, investigate and fix the excess inventory and these gaps on the shelf, stores are asked to spend millions on store labour hours. 

Despite the many possible reasons for error all the way along the supply chain, from the very start and when the manufacturer sets up the item [incorrectly] all the way through to the consumer returns desk and the [inaccurate] recording and movement of the returned item to the stock file, retail store managers tend to see the reason why inventory records are wrong rather more simplistically, and as either caused by theft from the store or from a short delivery from the Distribution Centre (DC). 

This study is focused on understanding the extent to which the DC pick accuracy rate can explain the wrong inventory records at the store, and the potential for improved pick accuracy to reduce the number of store hours spent fixing the wrong records and to grow sales.

The objectives of the research are:

  • To baseline the occurrence of losses through the distribution and retail network and to identify the level to which poor pick accuracy within warehouse operations contributes to inaccurate inventory records
  • To identify how different organisations define pick accuracy, measure it, and track pick accuracy once orders have been picked.
  • To examine the strategies, processes, controls and measures that organisations use to ensure pick accuracy, including auditing procedures.
  • To review the wider systemic influences on pick accuracy including the suite of metrics employed, the management systems and wider policies on training, recruitment, pay, incentives and rewards
  • To recommend a set of strategies and approaches that can be adopted to improve pick accuracy and therefore productivity and stock record accuracy within store

The research will focus on the ambient food and drink categories (cold or frozen, and fresh categories are out of scope) and the distribution centre locations of participating UK and European retailers and their suppliers. 

The project deliverables are:

  1. A white paper summarising the findings from the research
  2. A maturity assessment model to inform and guide internal discussions on DC pick accuracy
  3. A presentation to the ECR group and a webinar to disseminate findings

The research will be divide into three phases – a literature review, the empirical investigation and the collation of findings. It is expected that the project will run from July 2019 until the dissemination phase in Oct-Nov 2019.

Exploratory study

This phase will examine a set of SKUs for a brand supplier, mapping their flow from the receipt into a selected retailer distribution channel into store. Transactional data across the distribution and store network, including any recorded losses, will be analysed to identify the scale of losses and where they occur through the chain.

Case studies

To build on the exploratory study, the pick processes across four different retail operations across the UK and the EU will be studied. The aim here will be conduct interviews and collect data to

  • Understand how organisations measure, track and monitor pick accuracy
  • Understand the core process flows within the distribution centre, particularly around picking and order preparation for delivery to store
  • Collate data on pick accuracy results, segmented by category and any other supporting data to understand through data analysis the extent to which pick accuracy can lead to store record inaccuracy
  • Review the approaches, controls, metrics and technology used to ensure pick accuracy including any audit procedures
  • Understand the wider systemic influences on pick accuracy including the management system, the wider suite of metrics, process improvement approaches, recruitment, training, pay and incentives

Participation

Each participating organisation will receive:

  • a presentation detailing the outcome of the review including their performance relative to other case studies undertaken
  • a set of observations on their approaches to pick accuracy and possible improvement ideas from third party academic experts.

There will no cost to participate but each participant will be expected to allocate time to the site visit and provide data downloads from their inventory and warehouse managements systems. Individuals NDAs and data sharing agreements, where appropriate, will be put in place to ensure confidentiality. Each case study will follow the same structure:

  • Pre-visit call to arrange the day and identify any reporting or metrics already in place
  • 1 day site visit to map the warehouse processes and to interview key staff to determine the system and technology in use and the performance and management systems
  • Post-visit provision of data as agreed with researchers during the on-site meeting

Research Team

Professor Janet Godsell – Professor of Supply Chain

A chartered engineer with over 25 years’ experience of operations and supply chain management across a broad range of industrial sectors.  Sponsored through University by ICI, Jan continued to work in Zeneca Pharmaceuticals on graduation. She moved to Dyson to support their successful growth. An Executive MBA at Cranfield University provided a transition into an academic career, which has focused on improving the effectiveness and efficiency of end-to-end supply chains by adopting a demand driven approach.

Her research into demand driven supply chains is renowned with multiple publications in 4* journals. She is on the board of EurOMA (European Operations Management Association), the cabinet of the UK roundtable of CSCMP (Council of Supply Chain Management Professionals) and the manufacturing steering committee of the IMechE. She is on the editorial board of 3 journals, including the International Journal of Operations and Production Management.

Current relevant research includes :- From Productivity to Prosperity: inclusive growth for the West Midlands - ESRC funded - Improving supply chain value with Tata Global Beverages - Supply Chain Responsiveness in Practice - funded by Shell International Jan also leads and teaches modules on Demand Profiling, End-to-end supply chain optimisation and demand driven supply

Dr. Kate Bailey – Principal Engineer

After graduating with a degree in Electronic Engineering from UMIST, Kate has gained 25 years of experience working in Operations and Supply Chain across industry, academia and consultancy. She started her career working in operational roles in the electronics and automotive manufacturing sectors, including a position at Toyota. She has spent the last few years working in both research and consultancy, helping organisations to build more effective supply chains. At Cardiff University, she was part of the Food Chain Centre project to map food supply chains from farm to fork, identifying over £13M of improvements for supply chain members. She gained her PhD in 2016, which examined the robustness of UK food supply chains in light of increasing global uncertainties.

She joined WMG in 2018 and is responsible for the delivery of the applied research portfolio for SCRG. Her current research projects include optimising end-to-end supply chains within the automotive sector, developing novel approaches for supply chain diagnostics and the development of new supply chain hybrid models to combine make-to-stock and make-to order systems

 

Miray Kay – Project Engineer

Miray received her BSc degree in Industrial Engineering in SIUE and completed an MSC in Management at UCL. She started her career at Bayer AG, working as Supply chain and Material planning specialist. Accepted onto the Management Training programme for Bayer, she worked as part of the strategic supply chain team across numerous countries including UK, Germany and Switzerland. She joined WMG in 2018 as a project engineer. She is currently working on ways to apply SCRG’s research tools to help organisations develop customer responsive supply chains and is part of the Research team delivering the Transform Construction initiative, a £1M joint partnership between WMG, UCL and Imperial College.