Warehouse management always faces many challenges: Customers need to get the products they order with quality service. Employees deserve a healthy and non-boring working environment. Suppliers need to have access to inbound freight routing information immediately. Facing these challenges all at once can be overwhelming, but Warehouse Managers can simplify processes by tracking the following top KPIs:
1/ Receiving and Put-Away KPIs
- Workforce Utilization
- Volume per employee
- Cost per item
- Accuracy and timeliness of delivery
- Labor costs
- Backorder rate
Managers must track the cost of each order item, the accuracy and timeliness of inbound shipping, and the labor costs associated with receiving the goods. These KPIs can be leveraged to improve supplier relationships and increase employee productivity.
2/ Storage KPIs
You need to keep track of your inventory turnover, inventory costs, and average inventory value when managing a warehouse. The 2 most important storage KPIs are calculated from the following formulas:
- Inventory Turnover = The Cost of Total Goods Sold During a Period / Average Inventory Value
A high inventory turnover is a good sign for your warehouse. These KPIs allow you to assess and control purchasing and product demand, and forecast demand to keep your inventory at optimal levels.
- Carrying Cost of Inventory = Inventory Carrying Rate (How Long a Product Stays in the Warehouse) * Average Inventory Value
3/ Picking and Packing KPIs
Most managers consider picking to be one of the most expensive and difficult processes because it is labor intensive. Pick-up and packaging operations are typically more complex than other stages, and greatly affect organizational output because of their close relationship to customer satisfaction.
With these KPIs, You can measure accuracy, picking and packing speed, and perfect pick line rate (pick line: number of orders of an item taken at one time).
- Average number of items picked per employee
- The total value of picks
- Cost per line item
- Labor costs
- Cost of packaging
- Order cycle time
4/ Shipping KPIs
These KPIs may seem similar to the aforementioned picking and packing KPIs, however, these metrics will focus more on the total quantity of goods shipped than on the number of items expected to be shipped. For example, the company delivered 100 products but 150 products had to be shipped on schedule, so you didn’t meet your Shipping KPIs, indicating delays or warehouse operations issues.
Shipping KPIs = Total Orders Shipped / Number of Planned Orders.
An ideal result is equal to 1. An increasing result means the operation is getting more efficient, and conversely, a decreasing result indicates a decrease in productivity.
5/ Reverse Logistics KPIs
Reverse Logistics KPIs are indicators that revolve around products that are recycled or need to be returned from the consumer back to the business. There are many indicators of reverse logistics, but the most important is the return rate
Return rate = Number of units returned / Total units sold.
As results increase, businesses need to rethink the quality of their products.
6/ Inventory Accuracy
These are important KPIs for the warehouse because if inventory tracking isn’t accurate, your costs will skyrocket and your customer satisfaction levels will drop. If you rely solely on Excel or manual processes, inventory accuracy is low and you will most likely encounter duplicate orders or re-production of already-existing parts due to incorrect quantities.
One solution for inventory control is to choose a system that uses barcodes to track stock. Some warehouses are using barcode systems that integrate with existing computerized maintenance management systems (CMMS) to improve control by providing a framework for managing inventory, supplies, and other items. other warehouse materials. Additionally, some CMMS programs have the ability to track shipments, manage orders, and track stock and inventory levels.
7/ Equipment KPIs – KPIs về thiết bị
Any warehouse manager understands the value of work equipment. Equipment should be monitored for possible maintenance and extended uptime.
These KPIs are calculated by dividing the current time used since the last maintenance by the average time between maintenance visits. The results show how long devices can last before needing maintenance.
8/ The Big Picture
Warehouse managers and Supply Chain executives should also track replenishment rates and average number of late deliveries by vendors. By tracking all these KPIs, the manager can keep control of the warehouse operations and be ready to operate the omni-channel distribution channel.
The following pivot table, produced by NewCastle Systems, showcases a few other KPIs that can be tracked to improve the organization’s warehouse operations.
| Internal performance KPIs |
KPIs for suppliers |
Customer KPIs |
|
Perfect Orders
On-Time Deliveries
Inventory Accuracy
Inventory Turnover Ratio
Order Cycle Time
Order Entry Accuracy
Workforce Utilization
Shipping Accuracy
Order Fill rate
Customer Satisfaction
|
Inbound Cost/ Order Value
On-Time Deliveries
Lead Time
Fill Rate
IT / Technology Resources
Service Flexibility
Attitude
Return Policy
Value Added Service
VMI Capabilities
Ethics/ Compliance |
Profitability
Sales Volume
Growth Potential
Credit / Payment History
Shared Strategic Vision
Return rate
Order Frequency
Loyalty
Cost to Serve
Competitive Pressure
Hassle to Serve |
|
Theo cerasis.com & business.com
Quote from electronic information source: “Indispensable KPIs in Warehouse Management”, See at: https://vilas.edu.vn/nhung-kpis-khong-the-thieu-trong-quan-ly-nha-kho.html
