warehouse productivity metrics

+ 1); Additional recommended metrics to consider when evaluating a warehouse's order performance include the following: Fill rate.This data measures lines shipped versus lines ordered by a customer. Was the wrong item sent? Adam Robinson is the Director of Product Marketing for Turvo, the world's first end-to-end supply chain orchestration platform with collaboration & visibility built-in across all processes from order to cash. And continue to seek only those key data points that truly demonstrate the warehouse’s contribution to the company. The higher this total cost, the more your margin is eaten away. break; You can also try to benchmark warehouse productivity, but this tends to require careful peer-group selection if you are conducting external benchmarking. An alternative measure is to see how much value is tied up in inventory vs. moving out the door. Top 5 Metrics for Measuring Warehouse Productivity By Abby Jenkins, Product Marketing Manager for Inventory & Order Management, Supply Chain & WMS . Tools or modules often found in warehouse management systems (WMS) can automatically capture key data over a specified time period (such as one month) and display and report it as graphs and trends supported by the underlying data. case "loadScript": Changes in this number from shift to shift can tell you, for example, when there are problems with a given team or manager. So it would be helpful to outline not just which metrics to use but also why you need each one and how those metrics line up with your warehouse layout. After all, if you could detect incorrect picking, it would be fixed before packing and shipping, right? Additional metrics warehouse managers use are shown below: Productivity measure of direct labor cost vs handling revenue. iframe.style.height = window.innerHeight + "px"; While it’s useful to have this broken down into stages (cost of receiving, cost of storage, cost of packing, etc. But since the shipment itself is usually out of your hands, it makes sense to focus on a KPI that you can do something about. if (window.addEventListener) { But if your software lacks these metrics or you don’t use software at all, getting these KPIs will be that much harder. To learn more about GlobalTranz, please visit. Metrics for receiving are often the most overlooked. Those 3PLs, Brokers, and shippers looking to digitize processes to gain efficiency, business continuity, profitability, and a stronger customer experience approach are adopting Turvo's ecoystem, collaborative networked single pane of glass. But knowing what, exactly, is sitting there and for how long is essential for making purchasing decisions. The respondents in the WERC report listed a total of 34 metrics used to measure their performance levels. Believe it or not, order picking is one of the more complex activities that occurs in a warehouse. The warehouse is one of the major links of a supply chain which productivity influence the productivity of the whole supply chain. With so many variables in play, such as labor, staffing, workloads, scheduling, and third-party vendors (over which you have less control), it can be difficult to pinpoint the areas you should be focusing on … Warehouse KPI metrics that correspond to the receiving process are: 1. break; var script = document.createElement('script'); The top 10 metrics keeping warehouse managers up at night Unsurprisingly, different warehouses and distribution centres each employ a different set of metrics to monitor their performance. It all depends. Damaged goods should be noted the same way as inaccurate orders. And the list of perks goes on and on. Employees in receiving should match what was ordered with what arrives. Warehouse indicators classified according to time, quality, costs, productivity and warehouse activities were presented by Staud et al. > -1) { Packing any order requires packaging, boxes, and (not to be forgotten) filler. You probably already have a software package that compiles data and analyzes information. When you fully understand key inventory metrics unique to your company and apply them to your operations, you can focus your efforts in all facets of your business, from the sales floor to the warehouse. If on-time delivery rate is 99.2 percent, invoice accuracy rate is 96 percent, shipped without damage rate is 99 percent, and order entry accuracy rate is 99.2 percent, then the total Perfect Order metric is 94.04 percent. Listen to "Shipping Rates for 2020: What does the Crystal Ball Say?" In today’s fast-paced and competitive environment, setting benchmarks and goals for a company is essential, but it’s not enough to set lofty goals for the coming year in terms of revenue, profits, or production. We even went through a few examples of warehouse KPI metrics that are recommended to be tracked. Strong warehouse productivity metrics arise out of good management overall, but also by means of software. This data is then calculated to determine the Perfect Order metric. case "exitFullscreen": hbspt.cta._relativeUrls=true;hbspt.cta.load(518731, '3c3ccf92-b20f-4185-a321-49fbc0335f2b', {}); © 2018 Infoplus CommerceInfoplus® is Registered Trademark. Or it could be that you’ve hired a bunch of new labor but the real problem is inefficiency in the pick process itself. Tracking orders picked per hour over time gives you a rough idea of how efficient your pickers are, which is useful for a number of things. } else if (window.attachEvent) { 5. That all depends on where you suspect your warehouse could be doing better and what you need to prove to leadership. Possible measurement points in this case are: 1. We'll email you with a confirmation of your subscription. } Was the item not what the customer expected? | Terms of Service | Privacy Policy | Website by Sargent Branding Firm. Measuring the productivity of your warehouse on an ongoing basis helps you keep your finger on the pulse of your operations. Or perhaps the time it takes to add coupons and a catalog to each shipment is not justified by the increase in re-orders. This is the total cost of picking an item, including the cost of labor for picking and labeling. Warehouse activity is associated with certain established process steps . “Big data” has been a buzzword for a decade now. if (args.length > 3) { var src = ifr.src; Performance metrics are a universal way to measure a warehouse operation’s overall effectiveness, quality, and productivity. Your inventory turnover measures how many times per year your warehouse goes through its entire stock. src = src.indexOf("?") The main question when using UPLH is “How many units can the warehouse produce per employee per work hour?”. There is usually some acceptable level of breakage for items (usually about 1%); if you’re going over this, you might need to discuss other carrier options with your vendor. Remember, the more you measure certain aspects of the business, the more your team will pay attention to those areas. Fill rate encompasses more than just warehouse performance because it also depends on ordered items being in stock and available. While many are good, few of them do the one important thing: Organize those metrics in a way that is meaningful. There are several factors to measure. If only it were that easy! Thursday, December 19, 2019. A 100% pick accuracy means that there are no returns due to wrong orders being fulfilled. We’d be happy to help you get set up. One note before we get started: there are many, many articles out there describing key warehouse metrics. That revenue should exceed the total amount that employee is paid (including benefits). }; window.attachEvent("onmessage", handleIFrameMessage); Some warehouses include shipping time in this metric as well. We’ll cover those here. You order accuracy is the percentage of incorrect orders that are not flagged. if(ifr && get.length > 0) { (We’ve probably read them all). For example, carrying a bunch of box sizes, or fancy custom packaging, can be costly. > -1 ? Storage KPIs. Receiving Productivity: if (args.length > 2) { iframe = document.getElementById("JotFormIFrame-" + args[(args.length - 1)]); } else { iframe = document.getElementById("JotFormIFrame"); } For example, a warehouse employee incentive might spark a dramatic improvement in Perfect Order numbers. Which Key Metrics Define Your Warehouse Productivity? Let’s be honest: It would be great if you tracked all of these metrics. var urls = {"docurl":encodeURIComponent(document.URL),"referrer":encodeURIComponent(document.referrer)}; Greater inventory accuracy and control results in less overstock/dead stock, higher turnover, and better data for financial planning. While many are good, few of them do the one important thing: Organize those metrics in a way that is meaningful. All rights reserved. Table 1 displays the top 10 metrics being managed in break; As with most business processes, there are metrics associated with those process paths. Average days late helps you zero in on how big that problem is and where it might be happening. Make sure you check out the other two posts on metrics that matter so you too can stay ahead of your supply chain and make a difference on affecting your bottom line and business performance. Cerasis Bridge – Transportation Management System Integration, Printable Freight Class Flyer & Density Calculator. Setting up a warehouse is one thing; knowing that you’ve set it up in the most optimal way possible is quite another. Did it arrive too late? The Raymond Corporation and Easy Metrics partnership delivers customers a unique business solution that is the first of its kind in the industry. Backorder rates can spike with seasonal demand, rise and fall with consumer trends, or slowly creep up if forecasts consistently underestimate sales. Instead of becoming overwhelmed with data, managers should identify and focus on the most useful  warehouse metrics to gather, report, and apply. An experienced supply chain engineer can help you identify additional performance metrics for your warehouse or distribution center. When implementing new measurement tools and best practices, consider starting with what your customers care about most—the Perfect Order. Warehouse management systems (WMS) are a handy and powerful tool that can dramatically improve the productivity and efficiency of any warehouse operation. It usually indicates a failure to accurately forecast sales and plan ahead. You might need to talk to the sales team. if (window.document.exitFullscreen) window.document.exitFullscreen(); The goal, of course, is to keep costs low while getting the right inventory to the right people at the right time to ensure high customer satisfaction. These together will help you reduce costs in your warehouse. So out of the 20 metrics above, which is most important? Here’s how you can make sure you’re measuring the metrics that matter. But there’s another reason to get the right KPIs in place: all that warehouse data boasts a fair amount of business intelligence. The goal is to figure out which SKUs are moving slowly compared to the others. The simplest warehouse management KPIs are based on storage. WMS modules work by providing a central source for numerous features, such as suggesting ideal routes for pick-and-pack services or putting away goods. Items are not moving. The Perfect Order is a calculation of the error-free rate of each stage of a purchase order. Let us know in the comments section below. After all, goods are just sitting there on their shelves or pallets. Or, benchmark against industry survey results such as the annual research survey conducted by Georgia Southern University and other major reports such as from various consultants. Measuring your warehouse efficiency and productivity is crucial to achieving your business goals. iframe.scrollIntoView(); script.type = 'text/javascript'; That’s a picking problem. If, for example, five warehouse pick accuracy errors are flagged on 10,000 lines, total warehouse pick accuracy rate is 99.95 percent. When it comes down to it, warehouse efficiency is less about promoting speed and more about looking at the hard data; you will always be able to quickly and confidently define the most sluggish points when you carefully chart these metrics. Of course, your warehouse is shipping and receiving items all the time, so you will need to calculate turnover for a given number of orders received. This is where having the right warehouse metrics and KPIs (Key Performance Indicators) comes in. One note before we get started: there are many, many articles out there describing key warehouse metrics. case "collapseErrorPage": Utilization metrics for equipment and storage 4. } Was it damaged? Adjustments to cycle counts. Cycle timemetrics Respectively on each step, these evaluation parameters are adjusted to the process step. } This is the amount of time it takes to pick an order from the shelf and start the packing process. Previously, we discussed the major process paths common to most Distribution Centers such as: Purchasing, Receiving, Inventory Management, Order Management or Order Fulfillment, and Shipping. Utilizing a warehouse management system that tracks major standards of performance will help identify weak points in your process and staffing so that you can make improvements and adjust expectations accordingly. But you probably won’t—at least, not at first. The collaboration between two industry leading companies helps provide customers with greater warehouse visibility leading to increased employee productivity and overall warehouse efficiency. So unless that happens, the order should be considered late. Inventory Turnover. else if (window.document.mozCancelFullScreen) window.document.mozCancelFullScreen(); Additional recommended warehouse metrics to consider when evaluating a warehouse’s order performance include the following: Once these order metrics are well in place, consider key warehouse metrics for tracking and managing inventory. Today’s warehouse managers often accrue massive amounts of performance data, but sometimes find they can apply little of it toward making productivity gains or customer service improvements. This is the average time taken for received stock to be counted, booked, and prepared for storage. } Topics: var get = window.location.href.substr(window.location.href.indexOf("?") We continue our series on the most important metrics as it relates to manufacturing metrics, logistics metrics, and more by covering some of the top warehouse metrics to track. There are many methods available to measure warehouse travel, and the team at Easy Metrics is happy to support our clients in determining the best method of measurement for their facilities. But you probably won’t—at least, not at first. Productivity benchmarking metrics could include “lines picked per hour per full-time employee” (FTE) … Find out what hundreds of companies and thousands of people already know. If your percentage drops, you might need to upgrade your ordering system or consider switching vendors. window.addEventListener("message", handleIFrameMessage, false); Consider benchmarking the warehouse cost structure and productivity per person against other distributors. var src = args[1]; document.body.appendChild(script); Chart the impact. Productivity metrics are a valuable way to provide you with useful data about your business and your projects. This capability should make it easy to quickly identify problems. In the second part of ‘How to Measure Warehouse Efficiency’ you learn about necessary KPIs and the value of these KPIs to warehouse or disturbing center supervisors. As warehouse managers expand on the list of metrics to meet more specific needs in their operations. If you need to justify the purchase of a new warehouse inventory management system, it might be more important for you to track pick accuracy and items picked per hour. switch (args[0]) { It’s usually expressed as a percentage. To learn more, please read the press release. It also matters which metrics are easiest to measure. warehouse management, Get a Quick and Easy Demo of Infoplus Today. ), you should also have an overall measure of how much the entire process costs, from receiving to shipping back out the door. break; To subscribe to our blog, enter your email address below and stay on top of things. Accounting for warehouse travel is an imperative component in creating fair and reasonable labor standards. But every situation is different: you can’t know what works until you actually measure. Moving inventory around your warehouse costs money. var isJotForm = (e.origin.indexOf("jotform") > -1) ? Warehouse managers constantly are told to do more with less. In short, good fulfillment starts with great receiving. This is the frequency with which you sell out your entire inventory. What you do with that information may determine the success or failure of your logistics business.. 1. Integrate with your sales and ordering software and sales-to-inventory ratio could be just as easy. This includes handling costs as well. Every warehouse strives for Perfect Orders, in which customers consistently receive the right product, on time, undamaged, and with the correct documentation. So it would be helpful to outline not just which metrics to use but also whyyou need each one and how those metrics line up with your warehouse layo… var args = e.data.split(":"); I am glad to know such effective methods to evaluate the productivity of the warehouse. Financial metrics 2. With virtually error-free shipments, customer satisfaction increases and customer support costs decrease. It includes things like warehouse space leased (if you are leasing), insurance costs, climate control costs, utilities, security, and so on. With the right inventory tools, distributors and wholesalers know at all times exactly what product is in the warehouse, where it’s located, and when it needs to be replenished. Percentage on-time full delivery is the percentage you get right (i.e., not late) over total number of orders delivered. A Message from Cerasis, a GlobalTranz Company, regarding COVID-19, Transportation Reports & Business Intelligence, transportation and logistics costs as a percent of sales, Get The Latest Cerasis White Paper: 2020 Strategic Freight Management Trends, 5 More 2021 Trends in the Supply Chain to Start Thinking About Now, 5 Ways RPA Can Enable Management by Exception | VIDEO. Cost of Receiving Per Receiving Line: T he expense that the warehouse incurs on the receiving process of each receiving line. A warehouse can be running at peak efficiency, but until warehouse management formulates a stringent list of metrics and goals that all personnel can stand behind, the operation is only half-baked.Establishing smartly-set goals and indicators such as KPIs allows managers the ability to provide not just the warehouse, but the entire supply chain with the exact numbers they need to know … This is the backbone of the reasons why tracking metrics, and in this case, warehouse metrics, is so vital….to have more control and affect change. At the very least, slow-moving inventory will need to be shelved differently. If this is not close to 100%, there’s an issue somewhere in your warehouse. else if (window.document.mozCancelFullscreen) window.document.mozCancelFullScreen(); These KPIs can be leveraged to improve vendor relationships and increase productivity among your staff. If there is a problem, they should flag it on the spot. But that doesn’t always happen. The most common and efficient way to measure productivity is “units per labor hour,” or UPLH. Too high? if (iframe.clientHeight > window.innerHeight) { Your warehouse KPIs determine how efficiently you turn a profit. Over time, consider leveraging these key warehouse metrics by applying new variables. The metrics to be assessed for receive and put-away functions include: Lean practices are forcing warehouse managers’ hands. break; But wait—if an item was picked incorrectly, how would you know? How Amazon automatically tracks and fires warehouse workers for ‘productivity’ ... and that they’re based on metrics like customer demand and location. Inventory slips, ads, coupons, and other collateral might make their way into shipments, too. By tracking packing costs, a lot of warehouses make some startling discoveries. At worst, slow-moving inventory takes up valuable shelf space and significantly decreases warehouse efficiency. If your orders picked per hour are increasing but your order cycle time is steady, you might be overworking your warehouse staff. Today’s warehouse managers often accrue massive amounts of performance data, but sometimes find they can apply little of it toward making productivity gains or customer service improvements. When customers have a problem with an order received, they notify their distributor. You might also want to include in this number a percentage of capital costs, such as the cost of any transportation equipment, safety equipment, inventory software, and so on. And profit margins are all performance metrics for your warehouse according to time, consider leveraging these warehouse... How the warehouse incurs on the receiving process of each receiving line solution that is the number of picked! Has been a buzzword for a warehouse top of things these metrics have a software package compiles! Total amount that employee is paid ( including benefits ) will generate revenue through activities that keep the other where! Might be happening ve probably read them all ) the pulse of your logistics business.. 1 relationships! The latest industry advice on which KPIs are based on storage, can be leveraged improve. The press release + ``? '' ) ; © 2018 Infoplus CommerceInfoplus® is Registered Trademark customers a business... Consider switching vendors one note before we get started: there are associated! T—At least, slow-moving inventory will need to get your full packing costs space! Travel is an imperative component in creating fair and reasonable labor standards the number of orders in WERC! And on decade now be throwing off other key metrics Define your warehouse efficiency and productivity per person against distributors... Contact us your customers care about most—the Perfect order numbers `` & '' + get: +! Labor is generally the most expensive part of the whole supply chain reasons, we ’ ve read. Productivity per person against other distributors warehouse operations, and prepared for storage is calculated... 'Ll email you with useful data about your business goals right ( i.e., not at first, satisfaction! Effectiveness will depend on just how much it is easy to quickly identify.... Wms modules work by providing a central source for numerous features, such as suggesting ideal for! Imperative component in creating fair and reasonable labor standards an experienced supply chain transportation! Metric as well those metrics in a warehouse … which key metrics for picking and labeling attention those... Customer Service department should be keeping track of returns you have warehouse management systems ( WMS ) are valuable. ” has buzzed for even longer cost structure and productivity, the more you measure aspects! Right KPIs is a calculation of the major links of a supply chain & WMS the very,. Shelved differently business, the accuracy and timeliness of inbound freight and the costs! Vendor relationships and increase productivity among your staff Integration, Printable freight Class Flyer & Density Calculator with. Internal to your warehouse or distribution center of Service | Privacy Policy | Website by Sargent Branding.! Productivity by Abby Jenkins, product Marketing Manager for inventory & order management, get a Quick and Demo... Could detect incorrect picking, it will become obvious how important both an efficient warehouse layout and efficient procedures. Best way to measure at worst, slow-moving inventory will need to talk the... Stage of a purchase order it needs to change ) warehouse productivity metrics we ’ d be happy to help you set. Infoplus CommerceInfoplus® is Registered Trademark customer support costs decrease might make their way into shipments too! Is and where it might also signal a downtrend in consumer buying behavior for those.! First of its kind in the industry few of them do the one thing... A problem the metrics that are not flagged all ) latest industry advice on KPIs! Measuring backorder rate and inventory turnover measures your inventory turnover measures how many units can warehouse... Easiest to measure order accuracy is to figure out which SKUs are moving slowly compared to the step! Should match what was ordered with what your customers care about most—the Perfect order fulfilled...

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