10 Warehouse Metrics That Matter

Traders Den

Warehouse/Distribution Centre KPI’s will determine how efficiently you operate and that determines your profit at the end of the day. You in all probability have software the likes of SAP and other tools assisting you in compiling data and analyzing information, but does it raise red flags when needed?. We all are also aware of the issues surrounding “silo’d” software – one cannot chat with the other etc……..hence we also need to implement “Metrics” allowing for daily monitoring of all operations.

Below a couple I feel are very important:

1. Inventory Turnover
Your inventory turnover measures how many times per year your warehouse goes through its entire stock. A high turnover rate means you’re doing something great. Products flow in and out readily and without any hitches. A warehouse management system lets you figure out weak points in your inventory before things start to sit there for a long time.
2. Inventory Accuracy
Inventory accuracy is extremely important if you want to fill orders properly. If your accuracy isn’t high, you might lose a lot of customers because you don’t have anything in stock when your computer says you do have something there.

3. Carrying Cost of Inventory
In the big picture, your entire warehouse makes money based on this KPI. The carrying cost of inventory measures how much it costs to store inventory over a period of time. This factors in energy costs, labor, down time, shipping, freight and insurance.

4. Days on Hand 
Days on hand is part of inventory turnover because it measures how much your storage costs build up over time. When products sit there for several days, it costs you money.

5. Inventory to Sales Ratio
Your inventory to sales ratio changes depending on the economy and how your company gets through disruptions. Predictive analytics software lets your managers figure out a way to get through cash flow problems in the future. An inventory to sales ratio can prevent back orders as well.

6. Time to Receiving and Pick Location
How long do you need to offload, check and store inventory? This metric measures the speed and efficiency with which your staff unloads something and gets product to its place in the warehouse.
This ties into your truck time in the dock and days on hand.

7. Truck Time at the Dock
Everything within your warehouse needs to  leave your unit  to be profitable. If a truck spends too much time at the, dock it identifies possible staffing problems, low inventories, infrastructure or some kind of handling difficulty. Trucks should spend the least amount of time at the dock as possible so another truck can come in and load or unload.

8. Order Picking Accuracy
Inaccurate orders leads to more returns, dissatisfied customers and less sales because clients go elsewhere. In today’s high-tech world of online ordering, a world-class accuracy order rate is 99.9
percent. Can you handle that?

9. Cost Per Line Item Shipped
The cost per line item shipped examines the microeconomics of your logistics operation. This metric measures how much it costs to handle and ship one item out of your warehouse. It’s a good bit of data to have on hand because shipping one item can be very costly: consider staff, computer systems and transportation of products. Any increases in metric percentages requires a closer look so you can keep costs and prices down.

10. Perfect Order Management
Perfect order management indicates which links in the chain are broken, whether it’s procurement, production, transportation, labor or any stage of the warehouse process.

Email Loray – megasolutions1999@gmail.com