Maybe DC managers should take some cues from baseball. As baseball fans are well aware, some of the most successful pro teams have made big changes in the way they evaluate players in the past few years. Gone are some of the old standbys like batting average, runs batted in or earned run average. In their place are newer stats like onbase percentage and slugging percentage that better predict how much a player will contribute to the desired outcome—a win.
There could be a lesson in that for the DC world. Asked what measures they use to evaluate their operations' performance, managers in DCs across the country reel off their own old standbys—inventory count accuracy, cost per unit shipped or processed, or on-time delivery. Problem is, the measures they're using are oftentimes not aligned with their overall business strategies. Their metrics may tell them many things, but not what's really important: how far they've come toward achieving their corporate goals and how far they have to go.
To find out more about how metrics are used in today's supply chain operations, DC VELOCITY and a research team from Georgia Southern University and the University of Tennessee launched a two-part study earlier this year. By the time the survey cutoff date rolled around, more than 700 of DC VELOCITY's readers had responded to a pair of online questionnaires. (Download the full report of the findings.) When the tabulations were complete, it was clear that plenty of DCs are measuring their operations' performance. What wasn't so clear was whether they're doing it right.
No standards
When it comes to the metrics companies are using today, are there "baseline" metrics that everybody applies? Most emphatically not. There's no single set of metrics in widespread use; in fact, there's no single universally accepted logistics measure—no supply chain equivalent of baseball's slugging percentage or on-base percentage. Indeed, there's nothing even close. Asked to indicate which metrics they used (from a list of 80), the respondents' answers ranged all over the map.When all the results were tallied, not a single metric—even basic measures like on-time deliveries or cost per unit shipped—scored in the 90-percent range.
Though they could not identify a single universally accepted measure, researchers were able to identify basic groups of metrics that seem to be in fairly widespread use. Regardless of industry or type of business, most respondents used metrics from at least one of the following three broad categories: time-based measures, financial measures and service quality measures.
Within each of those categories, however, usage scores for the individual metrics varied widely. Among the time-based measures, for example, on-time delivery topped the list, mentioned by more than two-thirds (68 percent) of the respondents. Next on the list was orders shipped on time (63 percent), followed by finishedgoods inventory turns (57 percent) and number of overtime hours logged (55 percent). At the bottom of the list was dwell time (12 percent). It seems safe to say that nobody cares much about dwell time as long as an order departs and arrives on time.
As for financial metrics, cost per unit shipped or processed topped the list (63 percent), followed by total cost per order shipped (55 percent). Moving further down the list, fewer than half the respondents said they measured transportation as a percentage of revenue (47 percent), return on investment (43 percent) and cost per order (42 percent).
To measure service quality, companies typically resort to traditional inventory-based measures. The most commonly used metric was inventory count accuracy (71 percent), followed by overall customer satisfaction (54 percent). Other service metrics in relatively widespread use focused on order fulfillment; these included order picking accuracy (51 percent), picking errors (50 percent) and order fill rate (49 percent).
What measure to take?
Given that there are no clear industry standards where metrics are concerned, how do companies decide what to measure? Logic would dictate that they're choosing measures that best indicate how they're performing against the company's strategic goals. But surprisingly, that's not the case.
Respondents to the first part of the study were asked to identify not only the metrics they used but also their companies' overall strategy (in broad terms). Though you might assume that the companies whose focus was on, say, cost containment would focus on financial metrics, that wasn't the case. The researchers were unable to establish any real correlation between the metrics companies said they used and their corporate objectives (broadly categorized for survey purposes as cutting costs, maximizing asset utilization, increasing customer satisfaction or maximizing profitability).
Researchers did find a stronger link between the metrics used and a company's "location" within the supply chain—that is, whether its primary customers were end consumers, manufacturers, distributors/wholesalers, or retailers. That's not to say that all companies serving, say, retailers used the same set of clearly defined measures. Yet researchers were able to identify some statistically significant differences from group to group. (See Exhibit 1.)
Take units processed per labor hour, for example. Companies whose primary customers are retailers rarely track these numbers. But those that provide service to manufacturers and distributors/wholesalers live and die by this measure. Perhaps manufacturers are accustomed to thinking in terms of labor costs and timemotion studies. Or perhaps these are critical measures given the labor intensity and repetitive nature of their industries. Whatever the reason, most of them can quote this number down to the fraction of a unit.
Beyond measure
Given the apparently scattershot approach to metrics in the nation's DCs, it appears there's an opening here for companies seeking a competitive edge. It seems safe to say that a company that adopts metrics aimed at satisfying customers and supporting corporate strategy —not to mention increasing operational efficiency or cutting costs—could reap rich marketplace rewards.
But it won't just happen automatically. Becoming a "power user" where metrics are concerned means getting familiar with the corporate strategy. It means adopting and using metrics that align with that objective. And above all, it means finding out what customers regard as key metrics. (Many times, customers will provide scorecards to identify what they see as critical measures.)
All that requires time and effort, to be sure. But it could put you on track for a winning season.
Exhibit 1
Who's using what metrics?
Respondent's Primary Customer
Commonly Used Metrics
Less Commonly Used Metrics
Manufacturers
Customer satisfaction
Cost to serve
Units processed per labor hour
Source: Georgia Southern University, University of Tennessee and DC Velocity
Editor's note: This study represents the first step in what's expected to become a continuing investigation. Possible topics for future studies include developing a more in-depth understanding of benchmarking levels, defining specific metrics and perhaps developing recommendations for the best metrics for different types of companies to use.
A move by federal regulators to reinforce requirements for broker transparency in freight transactions is stirring debate among transportation groups, after the Federal Motor Carrier Safety Administration (FMCSA) published a “notice of proposed rulemaking” this week.
According to FMCSA, its draft rule would strive to make broker transparency more common, requiring greater sharing of the material information necessary for transportation industry parties to make informed business decisions and to support the efficient resolution of disputes.
The proposed rule titled “Transparency in Property Broker Transactions” would address what FMCSA calls the lack of access to information among shippers and motor carriers that can impact the fairness and efficiency of the transportation system, and would reframe broker transparency as a regulatory duty imposed on brokers, with the goal of deterring non-compliance. Specifically, the move would require brokers to keep electronic records, and require brokers to provide transaction records to motor carriers and shippers upon request and within 48 hours of that request.
Under federal regulatory processes, public comments on the move are due by January 21, 2025. However, transportation groups are not waiting on the sidelines to voice their opinions.
According to the Transportation Intermediaries Association (TIA), an industry group representing the third-party logistics (3PL) industry, the potential rule is “misguided overreach” that fails to address the more pressing issue of freight fraud. In TIA’s view, broker transparency regulation is “obsolete and un-American,” and has no place in today’s “highly transparent” marketplace. “This proposal represents a misguided focus on outdated and unnecessary regulations rather than tackling issues that genuinely threaten the safety and efficiency of our nation’s supply chains,” TIA said.
But trucker trade group the Owner-Operator Independent Drivers Association (OOIDA) welcomed the proposed rule, which it said would ensure that brokers finally play by the rules. “We appreciate that FMCSA incorporated input from our petition, including a requirement to make records available electronically and emphasizing that brokers have a duty to comply with regulations. As FMCSA noted, broker transparency is necessary for a fair, efficient transportation system, and is especially important to help carriers defend themselves against alleged claims on a shipment,” OOIDA President Todd Spencer said in a statement.
Additional pushback came from the Small Business in Transportation Coalition (SBTC), a network of transportation professionals in small business, which said the potential rule didn’t go far enough. “This is too little too late and is disappointing. It preserves the status quo, which caters to Big Broker & TIA. There is no question now that FMCSA has been captured by Big Broker. Truckers and carriers must now come out in droves and file comments in full force against this starting tomorrow,” SBTC executive director James Lamb said in a LinkedIn post.
The “series B” funding round was financed by an unnamed “strategic customer” as well as Teradyne Robotics Ventures, Toyota Ventures, Ranpak, Third Kind Venture Capital, One Madison Group, Hyperplane, Catapult Ventures, and others.
The fresh backing comes as Massachusetts-based Pickle reported a spate of third quarter orders, saying that six customers placed orders for over 30 production robots to deploy in the first half of 2025. The new orders include pilot conversions, existing customer expansions, and new customer adoption.
“Pickle is hitting its strides delivering innovation, development, commercial traction, and customer satisfaction. The company is building groundbreaking technology while executing on essential recurring parts of a successful business like field service and manufacturing management,” Omar Asali, Pickle board member and CEO of investor Ranpak, said in a release.
According to Pickle, its truck-unloading robot applies “Physical AI” technology to one of the most labor-intensive, physically demanding, and highest turnover work areas in logistics operations. The platform combines a powerful vision system with generative AI foundation models trained on millions of data points from real logistics and warehouse operations that enable Pickle’s robotic hardware platform to perform physical work at human-scale or better, the company says.
Bloomington, Indiana-based FTR said its Trucking Conditions Index declined in September to -2.47 from -1.39 in August as weakness in the principal freight dynamics – freight rates, utilization, and volume – offset lower fuel costs and slightly less unfavorable financing costs.
Those negative numbers are nothing new—the TCI has been positive only twice – in May and June of this year – since April 2022, but the group’s current forecast still envisions consistently positive readings through at least a two-year forecast horizon.
“Aside from a near-term boost mostly related to falling diesel prices, we have not changed our Trucking Conditions Index forecast significantly in the wake of the election,” Avery Vise, FTR’s vice president of trucking, said in a release. “The outlook continues to be more favorable for carriers than what they have experienced for well over two years. Our analysis indicates gradual but steadily rising capacity utilization leading to stronger freight rates in 2025.”
But FTR said its forecast remains unchanged. “Just like everyone else, we’ll be watching closely to see exactly what trade and other economic policies are implemented and over what time frame. Some freight disruptions are likely due to tariffs and other factors, but it is not yet clear that those actions will do more than shift the timing of activity,” Vise said.
The TCI tracks the changes representing five major conditions in the U.S. truck market: freight volumes, freight rates, fleet capacity, fuel prices, and financing costs. Combined into a single index indicating the industry’s overall health, a positive score represents good, optimistic conditions while a negative score shows the inverse.
Specifically, the new global average robot density has reached a record 162 units per 10,000 employees in 2023, which is more than double the mark of 74 units measured seven years ago.
Broken into geographical regions, the European Union has a robot density of 219 units per 10,000 employees, an increase of 5.2%, with Germany, Sweden, Denmark and Slovenia in the global top ten. Next, North America’s robot density is 197 units per 10,000 employees – up 4.2%. And Asia has a robot density of 182 units per 10,000 persons employed in manufacturing - an increase of 7.6%. The economies of Korea, Singapore, mainland China and Japan are among the top ten most automated countries.
Broken into individual countries, the U.S. ranked in 10th place in 2023, with a robot density of 295 units. Higher up on the list, the top five are:
The Republic of Korea, with 1,012 robot units, showing a 5% increase on average each year since 2018 thanks to its strong electronics and automotive industries.
Singapore had 770 robot units, in part because it is a small country with a very low number of employees in the manufacturing industry, so it can reach a high robot density with a relatively small operational stock.
China took third place in 2023, surpassing Germany and Japan with a mark of 470 robot units as the nation has managed to double its robot density within four years.
Germany ranks fourth with 429 robot units for a 5% CAGR since 2018.
Japan is in fifth place with 419 robot units, showing growth of 7% on average each year from 2018 to 2023.
Progress in generative AI (GenAI) is poised to impact business procurement processes through advancements in three areas—agentic reasoning, multimodality, and AI agents—according to Gartner Inc.
Those functions will redefine how procurement operates and significantly impact the agendas of chief procurement officers (CPOs). And 72% of procurement leaders are already prioritizing the integration of GenAI into their strategies, thus highlighting the recognition of its potential to drive significant improvements in efficiency and effectiveness, Gartner found in a survey conducted in July, 2024, with 258 global respondents.
Gartner defined the new functions as follows:
Agentic reasoning in GenAI allows for advanced decision-making processes that mimic human-like cognition. This capability will enable procurement functions to leverage GenAI to analyze complex scenarios and make informed decisions with greater accuracy and speed.
Multimodality refers to the ability of GenAI to process and integrate multiple forms of data, such as text, images, and audio. This will make GenAI more intuitively consumable to users and enhance procurement's ability to gather and analyze diverse information sources, leading to more comprehensive insights and better-informed strategies.
AI agents are autonomous systems that can perform tasks and make decisions on behalf of human operators. In procurement, these agents will automate procurement tasks and activities, freeing up human resources to focus on strategic initiatives, complex problem-solving and edge cases.
As CPOs look to maximize the value of GenAI in procurement, the study recommended three starting points: double down on data governance, develop and incorporate privacy standards into contracts, and increase procurement thresholds.
“These advancements will usher procurement into an era where the distance between ideas, insights, and actions will shorten rapidly,” Ryan Polk, senior director analyst in Gartner’s Supply Chain practice, said in a release. "Procurement leaders who build their foundation now through a focus on data quality, privacy and risk management have the potential to reap new levels of productivity and strategic value from the technology."