This is the total cost of picking an item, including the cost of labor for picking and labeling. This is the number of orders picked completely accurately divided by the total number of orders. Consider benchmarking the warehouse cost structure and productivity per person against other distributors. KPIs help to identify bottlenecks, plan out warehouse operations, and measure overall customer satisfaction (which highly correlates with repeat purchases). It also matters which metrics are easiest to measure. Every warehouse strives for Perfect Orders, in which customers consistently receive the right product, on time, undamaged, and with the correct documentation. This capability should make it easy to quickly identify problems. src + "&" + get : src + "?" A warehouse can be running at peak efficiency, but until warehouse management formulates a stringent list of metrics and goals that all personnel can stand behind, the operation is only half-baked.Establishing smartly-set goals and indicators such as KPIs allows managers the ability to provide not just the warehouse, but the entire supply chain with the exact numbers they need to know … if(window.location.href && window.location.href.indexOf("?") But there’s another reason to get the right KPIs in place: all that warehouse data boasts a fair amount of business intelligence. Warehouse managers constantly are told to do more with less. There is a vast difference between an order that’s one day late and one that’s a whole month late. If this is not close to 100%, there’s an issue somewhere in your warehouse. Cost of Receiving Per Receiving Line: T he expense that the warehouse incurs on the receiving process of each receiving line. Remember, the more you measure certain aspects of the business, the more your team will pay attention to those areas. When customers have a problem with an order received, they notify their distributor. We’ll cover those here. So the best way to measure order accuracy is to track the number of returns you have due to the wrong item being shipped. If on-time delivery rate is 99.2 percent, invoice accuracy rate is 96 percent, shipped without damage rate is 99 percent, and order entry accuracy rate is 99.2 percent, then the total Perfect Order metric is 94.04 percent. In the second part of ‘How to Measure Warehouse Efficiency’ you learn about necessary KPIs and the value of these KPIs to warehouse or disturbing center supervisors. Productivity metrics are a valuable way to provide you with useful data about your business and your projects. Instead of becoming overwhelmed with data, managers should identify and focus on the most useful warehouse metrics to gather, report, and apply. Percentage on-time full delivery is the percentage you get right (i.e., not late) over total number of orders delivered. Percentage on-time delivery tells you that there’s a problem. ), you should also have an overall measure of how much the entire process costs, from receiving to shipping back out the door. In today’s fast-paced and competitive environment, setting benchmarks and goals for a company is essential, but it’s not enough to set lofty goals for the coming year in terms of revenue, profits, or production. on Spreaker. src = args[1] + ':' + args[2]; A 100% pick accuracy means that there are no returns due to wrong orders being fulfilled. else if (window.document.mozCancelFullscreen) window.document.mozCancelFullScreen(); Instead of becoming overwhelmed with data, managers should identify and focus on the most useful  warehouse metrics to gather, report, and apply. Was the item not what the customer expected? By tracking packing costs, a lot of warehouses make some startling discoveries. The respondents in the WERC report listed a total of 34 metrics used to measure their performance levels. This data is then calculated to determine the Perfect Order metric. We’d be happy to help you get set up. To learn more about GlobalTranz, please visit. All other warehouse operations happen downstream from receiving, which means that if you have problems here, they will cascade down to the rest of the warehouse. If, for example, five warehouse pick accuracy errors are flagged on 10,000 lines, total warehouse pick accuracy rate is 99.95 percent. if (window.addEventListener) { Accounting for warehouse travel is an imperative component in creating fair and reasonable labor standards. Warehouse Productivity KPIs (Labor) Labor is quite simply the cost of the people required to execute the tasks within the warehouse. Inventory turnover measures your inventory’s velocity over the course of time. The closer this number is to 100%, the better. But what’s the most effective method for increasing warehouse productivity? But if your software lacks these metrics or you don’t use software at all, getting these KPIs will be that much harder. break; Inventory Turnover. The Perfect Order is a calculation of the error-free rate of each stage of a purchase order. 5. Once you do this, it will become obvious how important both an efficient warehouse layout and efficient picking procedures are. When you fully understand key inventory metrics unique to your company and apply them to your operations, you can focus your efforts in all facets of your business, from the sales floor to the warehouse. Managers should also track the cost per line item, the accuracy and timeliness of inbound freight and the labor costs associated with receiving. var args =":"); But you probably won’t—at least, not at first. When it comes down to it, warehouse efficiency is less about promoting speed and more about looking at the hard data; you will always be able to quickly and confidently define the most sluggish points when you carefully chart these metrics. But they do tell us something important about how the warehouse is running (or how it needs to change).