TECHNOLOGY’S IMPACT ON WHOLESALE DISTRIBUTION BRANCH OPERATIONS

Abstract

The primary role of a warehouse is to decouple supply from demand, minimize cost, maintain a high degree of inventory control, and assure customer service. To these ends, organizational capabilities, technology, and business practices will determine an operation’s effectiveness. This research investigated the impact of technology and warehousing practices on key performance indicators for wholesale distribution branch operations. An on-line questionnaire gathered objective data from distribution branches on types of technologies utilized, warehouse best practices employed, and inventory control or customer service metrics used to monitor performance. Correlation analysis, multiple linear regression, analysis of variance, and stepwise regression were utilized to determine the impact of the individual technologies, as well as interactions between technology and practices. A salient insight of this research was that technology adoption alone did not produce a discernible difference in performance, and appeared to require industry best practices to generate improvements. Also, when information technology was adopted, there seemed to be approximately one year of implementation required before positive operational results materialized and/or stabilized. The research pointed to warehouse management systems as the predominant information and communication technology (ICT) for discernible differences in inventory related performance, with improved performance realized when combined with ABC inventory stock analysis and/or physical inventory practices. The use of automatic identification and data capture (AIDC) technologies did not show any effect on inventory or customer service metrics, indicating that they are a support tool rather than an impact technology. Neither ICT nor AIDC technologies demonstrated a predictive value for inventory accuracy or on-time shipping performance. Predictive models were created for fill rate and inventory accuracy, but the veracity of the models is somewhat limited by the sample size and study population.