A productive warehouse is a more profitable warehouse, but how do you measure warehouse efficiency? It all starts with identifying key performance indicators, or KPIs, setting goals, and then tracking them over time. In this post, we’ll cover some of the KPIs that you might consider tracking in your warehouse to gauge productivity and identify ways to improve. Here’s a closer look at five metrics for measuring warehouse performance:
Today’s consumers want their products on time. They want just-in-time delivery, and without compromise. Of course, there’s something to be said for on-time shipments and maintaining order accuracy too – but these two variables are not mutually exclusive. It’s estimated the best warehouses ship their products on time 99.7 percent of the time. What are your warehouse’s stats when it comes to on-time shipments? It makes sense to prioritize this metric. Not only will it increase customer satisfaction and lead to happier customers, but it puts less burden on your customer service team.
Are you measuring how much warehouse capacity you’re using? Keep in mind that your warehouse is a fixed asset. You spend money to light, heat, cool, and run it. If you’re not using enough of its capacity, that’s a problem. If you’re using too much of its capacity, that’s also a problem. A good warehouse management software can help ensure that you’re using adequate warehouse capacity year-round, which is especially important as inventory changes.
Inventory Accuracy (By Location)
Inventory count accuracy is crucial for ensuring you have enough supplies in each location to keep timely order fulfillment high. It’s also important to help detect any issues, such as theft or damage of certain items. But perhaps the biggest consequence of incorrect inventory counts is order fulfillment problems and material shortages that can impact shipments and lead to dissatisfied customers.
Peak Warehouse Capacity Used
Do you know your peak warehouse capacity utilization? This is similar to determining your average warehouse capacity usage, except you already know its peak capacity and are striving to hit – or get close to – 100 percent. If the peak capacity used is too low or a far cry from 100 percent, it makes sense to try to raise that number gradually up to 100 percent. Getting to peak capacity is critical, but so too is sustainable growth. You don’t want to shoot for it all at once and miss. Instead, aim for marginal improvements year after year.
Order Picking Accuracy
Just as important as your on-time shipping number is your order picking accuracy number. This is a metric that gauges how accurately a warehouse’s workers pick products for orders. The more items that need to be picked for an order, the more complicated the order can become. But the results of this KPI shouldn’t just fall on the warehouse worker. Aside from human error, you may also find issues with the process that needs to be adjusted.
Start paying more attention to these KPIs for a more efficient warehouse. You’ll likely start seeing incremental productivity improvements. If you have any questions or concerns about your warehouse metrics or warehouse productivity, reach out to our team at A-Lined Handling Systems today!