WERC Warehouse Certification Benefits: The Secret of Qualitative ImprovementJuly 11, 2013 by Janna Finch
It’s been just three years since the 2010 launch of Warehouse Education & Research Council’s (WERC) warehouse certification program. To date, 33 major distribution centers have received the WERC Certified seal of approval for adhering to industry best practices in their operations, and more will soon join the phalanx.
“The program’s reception has been very positive,“ says Michael Mikitka, WERC’s CEO. “Companies who have gone through the certification process, which measures how well warehouse operations follow industry standards, have come back to have us assess multiple facilities and to analyze their network of providers. We believe that all warehouse facilities, no matter their size, will benefit from this program.”
In this article, we explain how WERC Certification works, what you need to know before being audited and how to ensure you get the most from the entire process.
WERC Certification Sets the Bar for Warehouse Best Practices
Many traditional benchmarking studies rely on quantitative key performance indicators (KPIs), such as rate of return and inventory turnover, to measure a facility’s performance. The WERC warehouse certification program, on the other hand, uses qualitative metrics to evaluate performance. This evaluation assesses eight common warehousing functions:
- Receiving and inspection
- Material handling and putaway
- Storage and inventory control
- Warehouse management systems
- Shipping documentation
- Picking and packing
- Load consolidation and shipping
An independent auditor performs an on-site heuristic evaluation based on standards set forth in WERC’s Warehousing & Fulfillment Process Benchmark & Best Practices Guide. He or she grades 114 process attributes on a five point scale, with “1” being a poor practice, “3” being a common practice and “5” being a best practice. WERC’s auditors are supply chain and logistics professionals from a third party consulting firm who are considered expert practitioners and thought leaders in their fields.
WERC’s Process Assessment Framework
The auditor then compiles a comprehensive report detailing the grading methodology used, grades for each function area and a gap analysis. The gap analysis table (pictured below) shows the number of attributes in each grading category for each key process group. Practices in the “Poor” to “Common” columns indicate to the company that there is room for improvement, while practices in the “Good” and “Best” columns indicate areas in which the company is performing well.
WERC’s Gap Analysis: Circles indicate areas where practices can be improved
The report also includes recommendations for improvements, as well as a “three wishes” summary, where the auditor asks the facility’s key players to list the three main changes they would like to see to increase efficiencies and reduce costs. According to Mikitka, this summary is helpful because companies sometimes forget to ask their teams what they need in order to perform their jobs more efficiently.
WERC’s explicitness when it comes to process recommendations is what makes the audit so valuable, as this enables companies to make effective changes. For example, rather than merely telling a manager that their perfect order rate is too low, a WERC auditor will zero in on the root cause of your facility’s low rate and recommends specific improvements. Such improvements may include revising the cycle count process, implementing an automated picking system, or another specific process change relevant to your facility and industry.
A Straightforward Process
Furthermore, WERC warehouse certification is complementary to any International Organization for Standardization (ISO) certifications you may already have. “ISO works very well to document processes, but it doesn’t tell you if it’s a good process or not. That’s where WERC comes in,” says Mikitka. Essentially, ISO tells you what you’re doing and WERC tells you how well you’re doing it. By obtaining both certifications, you show that your company is committed to operating according to industry best practices.
The WERC Certification process consists of five steps:
- Apply. Read the program guidelines and complete the application and licensing agreement. Submit the completed form and fee, which is $12,500 per facility as of the date this article was published.
- Prepare. The assigned auditor provides a pre-audit questionnaire and schedules a date for the on-site assessment.
- Assess. The auditor conducts an on-site assessment and interviews key managers and employees.
- Report. You’ll receive a comprehensive audit report. If your facility’s score qualifies, begin using the WERC certification logo within the licensing guidelines. If your facility doesn’t meet minimum requirements for certification, you may reapply at any time to be re-evaluated.
- Discuss and Give Feedback. The auditor arranges a time to present their findings and answer your questions. A post-audit evaluation to get your feedback is also provided, which is used to refine WERC’s process.
WERC Audit Reinforces Starbucks’ “Good Practice Transfer”
Greg Javor, Starbucks’ senior vice president of Supply Chain Operations, EMEA, says the companies sought certification because “the process provided a standard set of benchmarking items that would fit our improvement journey. The audits confirmed our strengths and areas of opportunity.”
One way Starbucks used the audit findings was to reinforce their dedication to “good practice transfer” within their distribution network. The audit reported listed the gaps and strengths of each facility, which made it easy to see how they compare to one another. Javor says it’s “expected that managers in a facility that scores low in an area collaborate with managers in a facility that scores high to figure out how to implement the better practice.”
One recommendation resulting from the audit process was that Starbucks and OHL adopt a more rigorous internal audit process that assesses and measures 21 of the most important KPIs each week. Weekly audits at a high level are conducted randomly, usually between an OHL representative and the on-site Starbucks logistics manager, and facilities receive either a pass or fail on the audit point. Reviews at an operational level are also performed daily.
For example, in the assembly accuracy process, a pallet load is chosen at random, broken down and inspected, item by item, prior to being shrink wrapped and loaded into a trailer to ensure that everything that needs to be in the order is in fact there. “We check to see whether the order was picked accurately and that the merchandise is in the proper condition to be received by the customer,” says Javor. “One in fifteen orders go through the process on a random basis by every business unit every day.”
Dedication to good practice transfer and internal audit processes, both of which were shaped by the WERC audit findings, has increased Starbucks and OHL’s fulfillment accuracy to around 99.93 percent. Javor says it’s the ultimate metric because it equates to satisfied customers. “If you have an exceptional customer satisfaction rate, it filters down positively to other important cost, efficiency and productivity metrics,” he explains.
Overall, Javor says the WERC certification program is easy to carry out and is a great investment that he recommends to other warehouse facilities.
WERC Helps REI Increase Inbound Audit Efficiency
Sporting and recreational goods retailer REI was awarded certification at their two distributions centers in Sumner, WA and Bedford, PA. “We felt we were already on the right track, but wanted confirmation and to find out where we could continue improving,” says Chris Joyce, director of vendor operations.
While both of REI’s distribution centers performed very well, WERC’s audit found they were putting more energy than required into inbound product audits. “We performed inbound audits of all providers at the same percentage rate,” Joyce says. “WERC suggested varying the inbound audits, doing fewer audits on providers with a history of high accuracy and more audits on providers with a history of lower accuracy.”
This change reduced the time spent auditing reliably accurate providers, which resulted in several benefits. “We can focus on catching more errors from poor performing vendors, saving future time in corrections, and receive the high performing vendors more quickly, making products ready for retail sooner,” says Joyce.
The audit also affirmed that a new automated receiving technology REI was considering at the time, which would considerably speed up the receiving process, aligned with industry standards. As a result, they approved the rollout of the new system. Joyce says the variable inbound audit process and automated receiving technology are “working well together and showing a production gain of more than 40 percent. We wanted to validate our systems and processes, and WERC had the competency to do that.”
How to Get the Most from a WERC Audit
You don’t have to make special preparations for the certification process, but managers who have gone through it say there are certain things to consider to make sure you take full advantage of WERC’s expertise.
- Understand WERC’s Audit Points. Starbucks’ Greg Javor says familiarizing yourself with WERC’s audit points is essential to understanding the feedback you receive from the audit. Before the audit, WERC provides preparation materials, which managers should use. “Follow the process and you’re sure to see a payback,” Javor says.
- Make Time to Interact with the Auditors. REI’s Chris Joyce says that it’s important for warehouse managers to take the audit seriously. REI recognized the expertise of WERC’s auditors and welcomed their feedback. “We answered the pre-audit questionnaire completely and made sure managers were available to interact with the auditor during the visits,” he says.
- Consult the Best Practices Guide. Even after receiving its Certification from WERC, Invacare continued to use WERC’s Warehousing & Fulfillment Process & Best Practices Guide. In a WERC case study, David Zuern (then vice president of North America logistics for Invacare), said his company referenced the Guide as they took on new business, using its best practices to understand what they should be doing and where they should be headed in the long term. You can read the full case study here.
The WERC Warehouse Certification program is a smart choice for managers seeking to continually improve warehouse processes and practices. It can confirm what you know you’ve been doing right and guide future process improvement. WERC has found that improvements in even a single area can result in significant productivity and customer satisfaction gains.
For more information about WERC Warehouse Certification, please contact Chris Pilbeam at firstname.lastname@example.org or (630) 320-5808.