What is not measured or controlled cannot be improved.
The warehouse is one of the company’s main areas and its correct management is fundamental for ensuring company success. Measuring and controlling the main processes of the logistics activity that takes place in the warehouse will allow us to identify our strengths and weaknesses and to identify opportunities for improvement.
But measuring the processes that take place in the warehouse is of no value per se. These measurements need to be aligned with the company’s objectives. Also, unexpected circumstances, as in the case of Covid, force companies to constantly analyse data to obtain a global vision of the situation so that decisions can be made, reacting swiftly and appropriately. Now more than ever, quickly adapting to changes is proving to be one of the most valuable skills.
Therefore, irrespective of the size of the company or working with a specific warehouse software, it is necessary to control the actions that take place inside the warehouse. Otherwise, how can we anticipate a stockout? What is the warehouse capacity for managing and dispatching orders? Or, how will we know if there are bottlenecks in reception?
To measure and quantify our work we will use KPIs (Key Performance Indicators). These indicators are important reference points that will help us to measure whether or not we are fulfilling our targets. Indicators must be measurable over time, quantifiable, centre on a single aspect to be measured, and be relevant to our goals.
Every warehouse manager knows that warehouse management needs to be measured and controlled, but often these metrics are not correctly used because they do not align with the company’s objectives, or because the information obtained is not adequately interpreted. Therefore, to define the metrics, we will choose those that help us to measure the key processes and activities for achieving the goals of the organisation.
There are a series of processes that we ought to measure as a general rule, such as goods reception, dispatch, inventory, order management, warehouse occupancy, or transport. But, what are the main indicators every company ought to control to assess the different phases of a warehouse’s logistics activity?
INDICATORS FOR MANAGING INCOMING GOODS RECEPTION
Time taken between receipt of incoming goods and placement of the stock in the warehouse. Reflects the warehouse’s operational capacity to inventory goods received.
This KPI helps to detect order reception peaks, for the purposes of coordinating arrivals with suppliers.
Provides information regarding operator productivity and other factors intervening in goods reception.
Provides information on the percentage of each supplier’s goods that arrive in perfect condition. This indicator provides information on supplier quality of service.
Percentage of suppliers who deliver the goods on time. Offers information regarding supplier efficiency.
INDICATORS FOR MANAGING DISPATCH OR OUTGOING GOODS
% of complete lines satisfied for all orders. Reveals the operational efficacy of the warehouse in dispatching orders and efficacy meeting customer demand.
Measures the number of orders we dispatch to clients within a period compared to the orders requested. It is important to know whether the warehouse adequately manages and dispatches orders.
Offers information regarding warehouse processes and operator performance.
Indicates the warehouse productivity level.
The time it takes between the order arriving in the warehouse and leaving for delivery. Provides information on the warehouse’s capacity to meet demand and detects delays in order preparation.
Percentage of completed orders for dispatch on the planned dispatch date.
STOCK OR INVENTORY INDICATORS
Levels of stock available in the warehouse for each reference. Provides data for optimum planning of procurement to avoid stockouts.
Number of orders unable to be prepared due to lack of stock for several reasons. Provides stockout data and helps to identify the causes of the stockout.
Stored inventory with no market demand. Avoids stock surpluses and indicates whether a stock clearance is required.
Compares the theoretical stock with the real stock available to note whether there is any unknown impairment or deterioration of the stock. It lets us know whether there is a risk of being left without stock and whether there may be inventory shrinkage due to theft, damage, loss…
Number of orders not met due to insufficient stock. Knowing how many times there are stockouts will help us to find a balance between demand and the stock required. Having surplus stock can be just as counterproductive as not having safety stock.
Reflects the frequency with which the goods are replenished and offers information regarding which products sell and which do not.
ORDER MANAGEMENT INDICATORS
Helps to reduce errors in order preparation.
Allows errors in order preparation to be identified and reduced.
Provides data of orders delivered on time out of the total orders delivered to improve the quality of service to the client.
Average cost of all phases that take place from the moment the order is received until it is delivered. Allows us to identify whether we can reduce costs in any of the phases
Time that passes between receipt of an order and its delivery. This data helps us to assess whether order preparation times need to be shortened. It is the way to achieve punctual deliveries and guarantee customer satisfaction.
WAREHOUSE UTILISATION INDICATORS
Helps us to know whether we are using the full capacity of the space available, whether we need to restructure the warehouse, whether an extension is required, etc.
Allows us to identify the destination of locations according to articles and to optimise use of the warehouse.
Measurement of the time a reference remains in the warehouse.
DISTRIBUTION AND TRANSPORT INDICATORS
Calculates the average costs of fuel, driver sustenance, truck maintenance, etc., for all trips made. This indicator controls this cost to see if it requires adjustment.
Allows us to know whether the truck’s capacity versus the load volume transported by the vehicle is cost-effective or not. Provides data of the vehicle’s minimum load to be profitable.
Percentage of deliveries made within the estimated timeframes.
At POLYPAL we configure your warehouse to be as dynamically adaptable as possible to improve your capacity to respond to situations that require quick adaptation due to unexpected changes in demand.
Wenn Sie nicht wissen, welche Lagerlösung am besten zu Ihren Bedürfnissen passt, kontaktieren Sie uns. Wir helfen Ihnen gerne bei der Konfiguration Ihres Projekts.
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