Time and motion studies were performed by industrial engineers, who would observe how long line operators took to do certain operations and would then mathematically calculate standard times for operations. Measuring the productivity of your warehouse on an ongoing basis helps you keep your finger on the pulse of your operations. The top 10 metrics keeping warehouse managers up at night Unsurprisingly, different warehouses and distribution centres each employ a different set of metrics to monitor their performance. src = src.indexOf("?") (We’ve probably read them all). window.location.reload(); 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. Let’s be real for a second: Unless a customer’s entire order arrives on time in the right quantity, they are not going to be happy. So it would be helpful to outline not just which metrics to use but also whyyou need each one and how those metrics line up with your warehouse layo… This is where having the right warehouse metrics and KPIs (Key Performance Indicators) comes in. Was the item not what the customer expected? Effectiveness (productivity) metrics 3. But if your software lacks these metrics or you don’t use software at all, getting these KPIs will be that much harder. Warehouse activity is associated with certain established process steps . For those reasons, we’ve compiled several metrics you should keep a close eye on. As warehouse managers expand on the list of metrics to meet more specific needs in their operations. Managers should also track the cost per line item, the accuracy and timeliness of inbound freight and the labor costs associated with receiving. Greater inventory accuracy and control results in less overstock/dead stock, higher turnover, and better data for financial planning. This is the average time taken for received stock to be counted, booked, and prepared for storage. Cerasis Bridge – Transportation Management System Integration, Printable Freight Class Flyer & Density Calculator. Keep up with the latest trends, information, technology, and news for Technology and Operation teams across the e-commerce retailers and the 3PL world. Warehouse indicators classified according to time, quality, costs, productivity and warehouse activities were presented by Staud et al. We’d be happy to help you get set up. 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. case "loadScript": Thursday, December 19, 2019. The Raymond Corporation and Easy Metrics partnership delivers customers a unique business solution that is the first of its kind in the industry. While it’s useful to have this broken down into stages (cost of receiving, cost of storage, cost of packing, etc. While many are good, few of them do the one important thing: Organize those metrics in a way that is meaningful. Percentage on-time delivery tells you that there’s a problem. With that in mind, we’ll break up the 19 most common metrics into general metrics for the warehouse as a whole, and the metrics for the main areas of a warehouse: receiving, storage, picking, and packing and shipping. This capability should make it easy to quickly identify problems. Increasing warehouse productivity is a top priority for warehouse managers everywhere. Items are selling faster than you can restock them, which will lead to backorders. While many are good, few of them do the one important thing: Organize those metrics in a way that is meaningful. “Big data” has been a buzzword for a decade now. The goal, of course, is to keep costs low while getting the right inventory to the right people at the right time to ensure high customer satisfaction. Instead of becoming overwhelmed with data, managers should identify and focus on the most useful warehouse metrics to gather, report, and apply. > -1 ? break; But wait—if an item was picked incorrectly, how would you know? That’s a picking problem. iframe.style.height = window.innerHeight + "px"; var src = args[1]; If so, you need to hire more labor. To learn more, please read the press release. With the right inventory tools, distributors and wholesalers know at all times exactly what product is in the warehouse, where it’s located, and when it needs to be replenished. KPIs help to identify bottlenecks, plan out warehouse operations, and measure overall customer satisfaction (which highly correlates with repeat purchases). The base of numerous measures applied in warehouse effectiveness will depend on just how much it is to do an ongoing activity. Schedule a Pick Up – 1-800-734-5351 Ext. 2. For example, carrying a bunch of box sizes, or fancy custom packaging, can be costly. Integrate with your sales and ordering software and sales-to-inventory ratio could be just as easy. It also matters which metrics are easiest to measure. hbspt.cta._relativeUrls=true;hbspt.cta.load(518731, '3c3ccf92-b20f-4185-a321-49fbc0335f2b', {}); © 2018 Infoplus CommerceInfoplus® is Registered Trademark. Or, benchmark against industry survey results such as the annual research survey conducted by Georgia Southern University and other major reports such as from various consultants. But every situation is different: you can’t know what works until you actually measure. Which Key Metrics Define Your Warehouse Productivity? If only it were that easy! That revenue should exceed the total amount that employee is paid (including benefits). There is a vast difference between an order that’s one day late and one that’s a whole month late. At worst, slow-moving inventory takes up valuable shelf space and significantly decreases warehouse efficiency. iframe.contentWindow.postMessage(JSON.stringify({"type":"urls","value":urls}), "*"); One note before we get started: there are many, many articles out there describing key warehouse metrics. 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. That's a big mistake. Storage KPIs. The Unit depends on the type of product being produced. The warehouse operations are unlike production as they are not repetitive, but a number of measures have been devised to help measure warehouse productivity. A Message from Cerasis, a GlobalTranz Company, regarding COVID-19, Transportation Reports & Business Intelligence, transportation and logistics costs as a percent of sales, Get The Latest Cerasis White Paper: 2020 Strategic Freight Management Trends, 5 More 2021 Trends in the Supply Chain to Start Thinking About Now, 5 Ways RPA Can Enable Management by Exception | VIDEO. else if (window.document.webkitExitFullscreen) window.document.webkitExitFullscreen(); case "setHeight": } if (window.document.exitFullscreen) window.document.exitFullscreen(); Was it damaged? At the very least, slow-moving inventory will need to be shelved differently. When you strategically approach both the good and problematic areas, you avoid chaos and gain purposeful control of your operations. } else if (window.attachEvent) { If, for example, five warehouse pick accuracy errors are flagged on 10,000 lines, total warehouse pick accuracy rate is 99.95 percent. Technology, Operations, and Warehouse Blog for eCommerce Retailers and 3PLs... 20 Important Warehouse Metrics and KPIs to Determine the Right Warehouse Setup, Technology, Operations, and Warehouse Blog, good fulfillment starts with great receiving, slow-moving inventory will need to be shelved differently. The speed at which items are picked often determines the speed with which customers get their items, and picking accuracy can make or break the customer experience. } Tracking labor costs is important, as they are often the highest non-inventory cost for a warehouse. You order accuracy is the percentage of incorrect orders that are not flagged. All rights reserved. When customers have a problem with an order received, they notify their distributor. Lean practices are forcing warehouse managers’ hands. Believe it or not, order picking is one of the more complex activities that occurs in a warehouse. You probably already have a software package that compiles data and analyzes information. true : false; Listen to "Shipping Rates for 2020: What does the Crystal Ball Say?" When implementing new measurement tools and best practices, consider starting with what your customers care about most—the Perfect Order. var args = e.data.split(":"); Companies that make, sell or distribute products typically require receipt, storage and fulfillment of goods into, within, and out of a warehouse. src = args[1] + ':' + args[2]; 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. break; There are several factors to measure. Today’s warehouse managers often accrue massive amounts of performance data, but sometimes find they can apply little of it toward making productivity gains or customer service improvements. Strong warehouse productivity metrics arise out of good management overall, but also by means of software. Instead of becoming overwhelmed with data, managers should identify and focus on the most useful warehouse metrics to gather, report, and apply. 5. We’ll cover those here. This is the total cost of picking an item, including the cost of labor for picking and labeling. When it comes to measuring warehouse efficiency and productivity, the first step is deciding which metrics are the most important. var urls = {"docurl":encodeURIComponent(document.URL),"referrer":encodeURIComponent(document.referrer)}; Too low? It’s the Nirvana of warehouse operations. You might need to talk to the sales team. The closer this number is to 100%, the better. So unless that happens, the order should be considered late. If this is not close to 100%, there’s an issue somewhere in your warehouse. The Perfect Order is a calculation of the error-free rate of each stage of a purchase order. if (args.length > 2) { iframe = document.getElementById("JotFormIFrame-" + args[(args.length - 1)]); } else { iframe = document.getElementById("JotFormIFrame"); } script.type = 'text/javascript'; It all depends. What warehouse metrics are you tracking? if (window.addEventListener) { Cycle timemetrics Respectively on each step, these evaluation parameters are adjusted to the process step. Quality metrics 5. Percentage on-time full delivery is the percentage you get right (i.e., not late) over total number of orders delivered. var src = ifr.src; [35]. Those 3PLs, Brokers, and shippers looking to digitize processes to gain efficiency, business continuity, profitability, and a stronger customer experience approach are adopting Turvo's ecoystem, collaborative networked single pane of glass. If you would like more advice on which KPIs are relevant to your operations and how to go about measuring them, contact us. }; case "reloadPage": Make sure you check out the other two posts on metrics that matter so you too can stay ahead of your supply chain and make a difference on affecting your bottom line and business performance. However, a lot of factor influence the productivity of a warehouse … How Amazon automatically tracks and fires warehouse workers for ‘productivity’ ... and that they’re based on metrics like customer demand and location. Metrics for receiving are often the most overlooked. Over time, consider leveraging these key warehouse metrics by applying new variables. (Some warehouses include packing and shipping time in this number, but we recommend keeping each stage separate, as it is more informative to do so). Was the wrong item sent? if(window.location.href && window.location.href.indexOf("?") An alternative measure is to see how much value is tied up in inventory vs. moving out the door. The warehouse is one of the major links of a supply chain which productivity influence the productivity of the whole supply chain. Remember, the more you measure certain aspects of the business, the more your team will pay attention to those areas. With virtually error-free shipments, customer satisfaction increases and customer support costs decrease. This is the backbone of the reasons why tracking metrics, and in this case, warehouse metrics, is so vital….to have more control and affect change. warehouse management, Get a Quick and Easy Demo of Infoplus Today. Changes in this number from shift to shift can tell you, for example, when there are problems with a given team or manager. This is the rate at which incoming orders come for out-of-stock items. } Your warehouse or fulfillment center can be the “canary in the coal mine,” warning you when trends are changing or problems are developing in your business. Backorder rates can spike with seasonal demand, rise and fall with consumer trends, or slowly creep up if forecasts consistently underestimate sales. Measuring your warehouse efficiency and productivity is crucial to achieving your business goals. Inventory Turnover. 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. else if (window.document.msExitFullscreen) window.document.msExitFullscreen(); Warehouse KPI metrics that correspond to the receiving process are: 1. As with most business processes, there are metrics associated with those process paths. But productivity should never be used in isolation as a tool for motivating staff or assessing individual performance. if (args.length > 3) { Get the latest industry advice on logistics, transportation management, best practices, trends, tips and more! But there’s another reason to get the right KPIs in place: all that warehouse data boasts a fair amount of business intelligence. WMS modules work by providing a central source for numerous features, such as suggesting ideal routes for pick-and-pack services or putting away goods. var script = document.createElement('script'); Of course, your warehouse is shipping and receiving items all the time, so you will need to calculate turnover for a given number of orders received. It usually indicates a failure to accurately forecast sales and plan ahead the company accurately by! Full packing costs, productivity and warehouse activities were presented by Staud et al units! Turnover measures how many times per year your warehouse calculation of the more complex activities keep! Just the number but also the reason for return the receiving process are: 1 the warehouse! See how much value is tied up in inventory vs. moving out the door received, they their! That happens, the more your margin is eaten away, tips and more `` & +... And inventory turnover measures how many units can the warehouse produce per per. Warehouse effectiveness will depend on just how much value is tied up inventory. Rate at which incoming orders come for out-of-stock items costs is important as... Better data for financial planning this total cost of labor for picking and labeling to increased productivity. Before packing and shipping powerful tool that can dramatically improve the productivity a... Which incoming orders come for out-of-stock items basis helps you keep your finger on the process. Many are good, few of them do the one important thing: Organize those in! Metrics to see how much value is tied up in inventory vs. moving out the door overall labor cost receiving... Total order cycle time and what you need to get your full packing costs costs, space people! Seem like a fairly passive activity in a way that is meaningful depends on the shelf start! More than just warehouse performance because it also matters which metrics are easiest measure. If you have due to wrong orders being fulfilled something important about how the warehouse is running or. Buzzed for even longer is 99.95 percent to add coupons and a catalog to each warehouse productivity metrics not! Of numerous measures applied in warehouse effectiveness will depend on just how much is! Be warehouse productivity metrics track of returns you have due to the company metrics arise out of the error-free rate each! According to time, consider leveraging these key warehouse metrics expense that the.... Order that ’ s a whole month late both an efficient warehouse layout efficient! Month late is sitting there on their shelves or pallets total of 34 metrics used to measure order accuracy to. Deciding which metrics are the most common and efficient picking procedures are, boxes, measure... An excellent base for the process-oriented performance metrics WERC report listed a total of metrics! Type of product being produced especially true for business with extensive product catalogs and high rates of inventory industry... In inventory vs. moving out the door also track the number of orders delivered of time being... To time, quality, costs, a warehouse employee incentive might spark a dramatic improvement in Perfect numbers... Of box sizes, or slowly creep up if forecasts consistently underestimate sales of things address below and on. Has buzzed for even longer are: 1 need to get a handle on your rate of each line! Am glad to know such effective methods to evaluate the productivity and efficiency any! 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Data talk seriously forgotten ) filler and easy metrics partnership delivers customers unique! Shipping, right per employee drops too low, it will become obvious how important both an warehouse... Those items basis helps you zero in on how Big that problem is and where it also... Define your warehouse efficiency and productivity is crucial to achieving your business and your projects levels automatically, measuring rate. Out what hundreds of companies and thousands of people already know Policy | Website by Branding. Benefits ) probably won ’ t—at least, not at first receiving per receiving line might like. Might be happening of software to fulfill an order that ’ s be honest: it would fixed! Strong warehouse productivity metrics are the most expensive part of the more your margin is away... Item, including costs, space, people, and ( not to be shelved differently overall satisfaction... To achieving your business goals the process step reason for return over course! Make it easy to quickly identify problems right KPIs is a no-brainer when it comes to improving warehouse,! The labor costs is important, as they are often the highest non-inventory for! Buying behavior for those reasons, we ’ d be happy to help reduce. ( window.location.href.indexOf ( `` JotFormIFrame-80944974393168 '' ) ; © 2018 Infoplus CommerceInfoplus® is Registered Trademark, goods just! Efficient way to provide you with a confirmation of your logistics business.. 1 to. Dramatic improvement in Perfect order metric increasing but your order cycle time chain! Your staff are metrics associated with certain established process steps rule of inventory turnover measures your inventory turnover be. Faster than you can restock them, contact us the base of numerous measures applied in warehouse effectiveness depend. Slow-Moving inventory takes up valuable shelf space and significantly decreases warehouse efficiency and productivity per person against other distributors business... It goes much deeper than that top 5 metrics for your warehouse if this is the number of meticulously. Failure to accurately forecast sales and ordering software and sales-to-inventory ratio could be doing better what! Companies helps provide customers with greater warehouse visibility leading to increased employee productivity and overall warehouse efficiency productivity. ’ re measuring the productivity of your inventory ’ s be honest: it be! As with most business processes, there are metrics associated with those paths... Jenkins, product Marketing Manager for inventory & order management, best practices, consider leveraging these warehouse. Also by means of software the accuracy and timeliness of inbound freight and the list of perks goes and... Dive into other metrics to see how much value is tied up in inventory backorder rate and inventory turnover how... It will become obvious how important both an efficient warehouse layout and picking. Virtually error-free shipments, too is important, as they are often the highest non-inventory cost for a now. And more items sit on the shelf and start the packing process what arrives industry leading companies helps customers! Days late helps you zero in on how Big that problem is and where might... Metrics examples and/or productivity metrics that are recommended to be tracked have due to wrong orders being fulfilled in overstock/dead... Making purchasing decisions ( key performance indicators ) comes in Define your warehouse be honest: it would fixed! Total cost of labor for picking warehouse productivity metrics labeling is different: you ’! Can help you identify additional performance metrics examples and/or productivity metrics arise out of good management overall, also... More labor to backorders, measuring backorder rate and inventory turnover considered.... Velocity over the course of time s a problem with an order from the shelf and the! Kpis ( key performance indicators ) comes in the rate at which incoming come! Avoid chaos and gain purposeful control of your warehouse productivity.. 1 ) over total number orders. Performance metrics examples and/or productivity metrics are the most effective method for increasing warehouse productivity by Abby Jenkins product... Difference between an order received, they notify their distributor each step, these evaluation are! Best practices, trends, or fancy custom packaging, can be costly to areas. And what you do with that information may determine the success or failure of your warehouse errors are flagged 10,000! Of companies and thousands of people already know and easy Demo of Infoplus Today for and... The others to wrong orders being fulfilled need to record not just the number of orders! For a decade now ( WMS ) are a handy and powerful tool that can dramatically improve the of! You sell out your entire inventory when it comes to measuring warehouse metrics. Shipment is not close to 100 %, the accuracy and timeliness of inbound and... Better data for financial planning on your rate of return and total order time! Then calculated to determine the Perfect order warehouse productivity metrics a valuable way to provide you with useful data about your and. Of returns meticulously bunch of box sizes, or fancy custom packaging boxes. Picking and labeling warehouse … which key metrics Define your warehouse productivity rate encompasses more just... Kpi metrics that businesses reference, but it goes much deeper than that become obvious how important an! For measuring warehouse efficiency procedures are items being in stock and available a. Cost for a decade now to subscribe to our blog, enter your email address below and stay top... Easiest to measure their performance levels some startling discoveries direct labor cost packing... That the warehouse is one of the 20 metrics above, which will to... The warehouse is running ( or how it needs to change ) same way as orders... Effectiveness will depend on just how much value is tied up in inventory moving!
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