Warehouse benchmarking
A way to measure non-financial performance of warehouses is benchmarking, which identifies
warehouse inefficiencies of the critical resources such as labor, space, storage and handling
equipment. Benchmarking is defined as ‘’[…] continuous measurement and improvement of an
organization’s performance against the best in the industry to obtain information about newworking methods or practices (Kozak, p.1).’’ Benchmarking does not mean to adopt the methods
of the benchmarkee (the organization being benchmarked), but rather to compare the
performance, to look at the way the other companies are more efficient, to learn valuable lessons,
improve quality and customer satisfaction and by this, to gain superior performance (Kozak ;
Watson 1993; Johnson, Chen, and McGinns 2009).
Effective benchmarking requires a frame of reference from a wide group of best-practice
warehouses for the measurement of performance. The primary hindrance for the implementation
of this method is gathering sufficient data for characterizing the best performance since
companies are sensitive for data-sharing, especially for proprietary information about a firm’s
operations or financials. However, due to the development of Internet technology the problem of
collecting data can be solved by Internet performance measurement tools. An ongoing
collaboration between academia and the warehousing industry has laid the foundation of the
iDEAs-W tool for Internet benchmarking by which through online collection and maintenance of
data, firms could get both individual firm evaluation, and industry-level trends. This
benchmarking tool can provide efficiency estimates, gap analysis (pie charts describing the
connection between partial productivity analysis and the efficiency estimates), and practice and
attribute information for the efficient production processes identified as benchmarks (Johnson,
Chen, and McGinns 2009)