One of the basic tenets of warehouse performance indicators is that you can’t improve what you can’t measure. This is why it’s important to use the best performance indicators when you measure warehouse efficiency and success. Without the right productivity metrics, you can waste time, money, and energy pursuing the wrong direction while more effective and efficient areas for improvement go unnoticed. Instead of trying to measure anything and everything, make use of the best practices for warehouse metrics to find the most optimal path to warehouse improvements.
Important Warehouse Performance Indicators
Carrying Cost of Inventory
Every bit of inventory stores in your warehouse has a cost associated with it. These costs include the money spent on storage, any environmental controls, capital costs, inventory risks, inventory service costs, and possible obsolescence. These costs can and should be quantified and assessed in order for you or your warehouse manager to effectively forecast and respond to buying and selling.
Inventory Turnover
Inventory turnover is the number of times per year that your operation is able to go through its entire inventory. This is a good thing when it happens since it means the stock you have bought and stored perfectly matched the demand for the products. Part of ensuring effective inventory turnover requires the examination of inventory rates in order to get the right warehouse performance indicators. Your warehouse management system should be capable of providing the necessary visibility and forecasting to help with this.
Order Pick-and-Pack Accuracy
Beyond shipment and delivery status, order accuracy is a key part of how to measure warehouse efficiency. Inaccurate orders, after all, get inventory sent back to the shelves, hurt your returns, raise shipping times, and generally inconvenience and add costs to everyone involved. Observing your pick-and-pack process and looking for ways to streamline pick-and-pack helps promote a high order accuracy rate.
Inventory-to-Sales Ratio
This particular metric helps you predict any cash flow problems that may arise in response to shifting economic conditions. Being able to track and realize that inventory levels are going up but orders are going down, for instance, lets you quickly adjust to avoid wasted money and product. The reverse is also true, since it can let you predict positive fluctuations in order ratios so that you don’t get caught unprepared by sudden spikes in product demand.
Shipping
Most parts of the shipping process can become useful warehouse productivity metrics. Costs per item shipped, cost per shipped order, labor hours per order, time from pick-and-pack to order departure, how shipping docks are used (or not used), and more can all allow you to find sources of inefficiency that can have their performances improved upon.
Inventory Accuracy
Simply put, inventory accuracy is how much what your database says actually reflects the real-world situations. While some discrepancy is inevitable in large-scale distribution operations, this doesn’t mean it should be tolerated. A high rate of inaccuracies could lead to dissatisfied customers waiting for backorders, more costs for you, and a loss of confidence in the systems that ought to be reliable. Implementing regular checks against the database figures and making use of techniques like cycle counting can help ensure proper validation.
Look to APS for Third-Party Fulfillment Services
APS Fulfillment Inc. is a leading order fulfillment service company that operates out of Miami, Florida. Our integrative approach tackles supply chain management, real-time inventory management, warehousing services, shipping, and everything else needed to ensure your goods get to their destination. We’ve stored, sorted, delivered, and quality-assured products of all shapes and sizes for all kinds of companies across a wide variety of industries. Contact us by phone at 954-582-7450 or by e-mail at [email protected] for more ways third-party logistics services can support and grow your business.
