With a warehousing operation, it makes business sense to monitor performance in order to maintain and improve efficiency.
If you do not, then you can guarantee problems will start to arise; the movement of goods and products will be hampered, costs may grow and ultimately your customers will complain.
The most effective way to measure operating performance is to establish a set of relevant warehouse key performance indicators (KPI).
Here is the Quickline guide to KPIs for warehouses.
Why have Warehouse KPIs?
Warehouse KPIs provide targeted information on specific business functions that will help maintain and improve performance by showing which are improving and which are failing.
Data from KPIs becomes a valuable work tool. It arms warehouse managers with valuable insight for setting benchmarks and enables informed business decisions to be made in areas such as training, investment and recruitment.
From an internal communications and “reputation” perspective, KPIs provide demonstrable information on performance and can support staff motivation.
KPIs can also foster innovation as the insights they provide may prompt the development of better ways to carry out specific warehousing activity.
The warehouse KPIs to Select
There are hundreds of KPIs for warehousing and logistical operations. Select measurements that relate to the specifics of your operation and provide you with the best metrics.
Some KPIs have significance when measured individually, others are more useful when clustered in groups based around a particular function.
In short, select the KPIs that matter to you, that give you useful information and that enable you to take action to improve.
Major Areas of KPIs for Warehousing
- Stock receiving process – the initial function of any warehouse operations so having a streamlined system for shipments is vital.
- Stock putaway – the ability to shift shipments from receiving and place them in the correct location within the warehouse.
- Stock storage – not just where the goods are kept but knowing how many and how much space is needed and when.
- Order fulfilment– responding to an order by supplying the required goods.
- Pick and pack – the process of picking and packing orders.
- Order returns – goods once sold may be returned for any number of reasons.
- Warehouse safety – with health and safety always a priority, tracking incidents can help you achieve safety targets and identify any areas of concern.
How to Track warehouse KPIs
There are many software packages for tracking KPIs so you will want a package that can join up the various elements of your operation.
The package should be able to produce well-designed visuals to illustrate performance and have a historical or library function as well as real-time performance indicators.
Analytical and predictive functions will support the identification of positive and negative trends and any issues that already exist or may develop.
Selecting, applying and measuring warehouse KPIs on a consistent basis lays the groundwork for increasing warehouse performance, implementing efficiency, managing potential problems and fostering customer satisfaction.