Key Warehouse Performance Metrics and When to Use Them

Blog Post 4

All companies utilize Key Performance Metrics to some degree. Performance Metrics provide businesses with benchmark standards, and allow them to identify areas of possible improvement through use of their collected data. Companies in the distribution and warehousing industries can benefit massively from utilizing the right mix of Performance Metrics.  These industries are built on scientific management and streamlining processes as to maximize productivity in terms of time, space, and customer satisfaction. Below, we will discuss some of the most helpful metrics that Distributors can leverage to produce high level efficiency in crucial warehouse areas. Let’s take a look at some of the most beneficial metrics that Distribution Warehouses can use for each basic supply chain stage.

Unloading:

  • The Unload to Stocked Span encompasses all of the time taken for a product to reach it’s warehouse position from the time it arrives by truck at the warehouse. Many important processes are measured using this metric, including the speed at which trucks are being unloaded, as well as how fast the loads are being inventoried. These are vastly important processes and monitoring them can give important insight into the amount of staff needed on hand during drop-offs  and how well warehouse infrastructure is set up for drop-offs. A fast unload-to stocked span will also reduce the amount of time that products spend in “limbo”, in other words, the time between being received and being able to be shipped.

Stocking:

  • The Storage Span metric gives insights into the amount of time products are stored within the warehouse. While it’s obvious that managers don’t want a warehouse to be overstored, being aware of how long products have been in the warehouse is also helpful for keeping all steps of the supply chain on schedule. Whatever measuring approach ( automated, manual) or time frame (days, weeks, etc) used, being aware of the time spent in the warehouse by each product is very important  because each product is on a distribution schedule and should be in and out of the warehouse according to that schedule. Managers lose money every second that products are staying in the warehouse past schedule.  Inventory Turnover Rate  is a similar metric to the storage span, but it measures your products as a whole (inventory), rather than as individual products.  Inventory Turnover Rate essentially measures how many times per year that the Warehouse go’s through the entirety of its stock. This is an extremely important metric for measuring the overall health of the warehouse storage space as well as  its in and outflows, however it cannot be measured as frequently as the product specific Storage Span metric.

Order Filling:

  • The Order Picking Accuracy metric measures the percentage of orders that are filled with 100% accuracyIt’s crucial that customer orders are filled correctly. Speeding up order filling can maximize productivity, but not if it’s harming the accuracy of the orders being filled. Inaccurate orders are devastating to client satisfaction, and returned products will increase delivery times exponentially. Ensuring orders are filled accurately will ultimately save loads of time down the road.

Delivery:

  • On Time in Full Delivery represents the portion of orders that are delivered to customers on time and correctly. It is an essential metric in the delivery stage because it places a high emphasis on customer satisfaction. A high on time in full delivery rate ensures that customers are getting what they want, when they want it, which is possibly the most important outcome in distribution. While it’s pretty easily calculated (On time in full deliveries / Total deliveries *100), managers need to ensure that they have  fluid processes in place for seamlessly recording and measuring customer satisfaction data. That may mean implementing automated systems in which customers record their satisfaction directly, or using a more manual process where delivery employees record and report on customer satisfaction.

Key performance metrics should be leveraged to strategically measure the efficiency of every supply chain function, and while the metrics we described above are some of the most useful in the industry, they represent just the tip of the iceberg.