Knowing what works in your warehouse and what doesn’t is critically important. While a warehouse manager in tune with their operations may instinctively know those things, oftentimes upper management is looking for numbers to back up your gut instinct.
For that reason, it is important to determine what numbers what you want to track and develop the tools to do so. Here are some of the metrics commonly used:
Operational efficiency metrics focus on the number of daily work activities and their quality. In this category, you would keep track of the number of products received and shipped, number of tasks completed, amount of time per task, dollar value of handled merchandise and if those numbers are meeting your projections.
These metrics can prevent issues later by pinning down the optimal number of activities a worker can do in a day. From picking to packing, orders take a team effort and a streamlined process to prevent errors. Included in this measure is material handling equipment operation and inventory checks. Even ancillary tasks to the main jobs of order fulfillment will have an impact.
The metrics for stocking efficiency are a cost-effective way to monitor the output of your warehouse. This measures how your available storage space is being used and ways to improve it. Monitor your use of space to see if all of your wire shelving is being used as well as how your pallet rack systems are being used. Maybe some products can be re-located for faster pick times. There may be other products that need to be more secure. By monitoring your stocking efficiency, you can make those decisions.
It will also you determine if you need to upgrade your storage options. Push back pallet racks can increase productivity over traditional shelving, especially in first in first out (FIFO) inventory environments. Maybe you need to add some cantilever racking for odd size items to free up shelf space for another product. These metrics will help you demonstrate that to other decision makers.
Another series of metrics for your warehouse are metrics for fulfillment efficiency. These are probably the most important metrics to figure out how effective the processes are in your warehouse because they measure the amount of time it takes to receive and fill an order accurately.
For this measurement, you would track items like on-time order fulfillment – are they getting filled by their due dates? Is your staff able to fill all orders assigned within their normal duty hours? Look at the process – is there a bottleneck at one point or another that slows it down?
Also look at accuracy. If orders are being filled quickly, are you sacrificing quality to do so? Making sure orders are filled correctly is just as important as making sure it is going out the door on time. The final step in correct orders in a correct invoice. Are orders entered and billed in the ordering system properly? It is a good idea to implement quality spot checks or other quality control measures to make sure the right order goes out the door on time with a correct invoice for the customer to pay.