An inaccurate order can result in inventory being returned to shelves, increased shipping time per average order, a higher rate of return and so on. Dec 8, 2015 - Warehouse KPIs Excel Dashboard Templates Warehouse key performance indicators are frequently Warehouse Management KPI Reporting Templates. Effectiveness (productivity) metrics 3. Order lead time, more commonly known as just lead time, refers to the length of time it takes for a customer to receive an order once it’s been placed. Speaking of inventory turnover: You already know that the higher the rate of turnover, the better; but calculating your specific turnover rate helps you gauge your buying practice and product demand. Kyle Krug has 20 years of professional experience in marketing & strategy, technology & information management, business development, and operational support positions in B2C and B2B services industries. Lean practices are designed to help catch errors or inaccuracies before orders leave the warehouse. To provide a starting point, here are some examples of KPIs you could track in your warehouse: Safety: Indicators for safety are not just about tallying accidents . Possible measurement points in this case are: 1. (Total Time for Put Away) / (Total Time) = Put Away Cycle Time. Pro tip: almost all of them do, so be sure to check out our article on inventory management KPIs. A sudden spike in demand will understandably result in a temporarily high back order rate for any given item, but a consistently high or increasing back order rate is a sure sign of poor planning and lack of responsiveness. Back order rate. Inventory Carrying Rate × Average Inventory Value = Carrying Cost of Inventory. (Total Cost of Receiving) / (Total Line Items) = Cost per Line. Receiving Accuracy: Percentage of accurate receipts, i.e. This number is usually close to 100%, but can be off if inventory theft, damage, or fulfillment isn’t tracked properly. Identifying causes for return — such as damage, late delivery, inaccurate product description or wrong item shipped — makes it easier for warehouse managers to address underlying issues and make the necessary improvements. One note before we get started: there are many, many articles out there describing key warehouse metrics. Utilization metrics for equipment and storage 4. Transportation and Warehousing KPIs. Formula: Carrying Costs ÷ Overall Inventory Costs. Leading indicators measure the proactive activities that contribute to good safety practices. Formula: Total Cost of Put Away / Total Line Items. Formula: There are two calculations that will show your Inventory Turnover Rate: Sales ÷ Average Inventory or Cost of Goods Sold ÷ Average Inventory. The receiving cycle time reflects the total amount of time it takes to process a delivery. What it means: This is the accuracy of your tracked inventory (typically using an inventory management system) compared to physical inventory in the warehouse. No equation needed here — the accidents per year KPI measures exactly what its name implies. These sample KPIs reflect … What it means: This KPI tells you how fast you are selling your inventory. Improve warehouse performance in 6-12 months. In some industries, such as retail and CPG, you can increase UPT through sales training and checkout experience improvements that encourage upselling. Copyright © 2017 - 2020 SkuNexus LLC. Your insurance company might also use your TRIR to help determine premiums — the higher your TRIR, the more you pay out of pocket. (Number of Orders Shipped in Full) / (Number of Orders Placed ) × 100 = Order Fill Rate (%). Safety first is a good methodology to follow. Although employees and employees go, a high attrition rate is cause for concern because it usually points to larger issues within your warehouse. Definition: A ratio that shows how many times inventory was sold and replaced during a specific time period. Damaged or late deliveries are under your control, whereas product issues or fraud may not be, but are important to take into account. Accuracy rate refers to the percentage of items put away correctly the first time; the higher your warehouse’s accuracy rate, the more efficient your put away process, with the ultimate goal of a 100% put away rate. Formula: Total Cost of Receiving / Total Line Items. On the logistics dashboard template provided above, five metrics are displayed, each bringing valuable information to the transportation management. Contact us today to discuss introducing these core KPIs into your warehouse. Your warehouse’s back order rate is a telling indicator of whether you’re successful at forecasting purchases and inventory supplies. Lean distribution practices eliminate waste and streamline order-picking processes to help maintain a higher order accuracy rate. — the higher your cultural entropy score and, consequently, the lower your level of employee engagement. Formula: (Database or Software Inventory / Physical Inventory) x 100. Cost per line enables warehouse managers to better understand the costs associated with receiving and implement process improvements for better inventory management. After inventory is received, it needs to be put away. In receiving, the cost per line KPI is used to measure the cost to receive a line item on a purchase order. Supply Delay + Order Delay = Order Lead Time. ... KPI Examples. Receiving is the first instance that new inventory enters a warehouse, so it’s important that it’s done quickly, efficiently, and error-free. It’s a lot - and many warehouse managers will find the top ones that are important to their operations, and check on the others quarterly or annually. They’re not intentional. Formula: Total Time for Put Away / Total Time. This one is pretty self explanatory - it’s the number of accidents that occur in a year. Many warehousing KPI… Among others, these measurements refer to transportation, warehouse and supply chain aspects. When it comes to KPIs… Financial metrics 2. It’s often measured against the turnover rate of industry averages. A high rate of inventory inaccuracy can result in unexpected back orders, dissatisfied customers and, ultimately, higher overall costs. Warehouse contingency plans: You hope you’ll never need them; but without one, you’re stuck. Using key performance indicators is the perfect strategy you can use to tackle this issue. While safety won’t necessarily increase profits or efficiency, it can reduce costs, create happier employees, and foster a healthy work environment. By identifying problems as they arise and rooting them out at the source, you can catch imperfect orders before they ship to the customer. Units per transaction (UPT) is a common metric for many businesses. A high rate of shrinkage can have a negative impact on company profits, so it’s important that warehouse managers thoroughly investigate every case of shrinkage to get to the root of the problem. Below is a list of KPIs commonly used to measure performance of a warehouse. Defining and improving each of the warehouse KPIs on this list will put your warehouse on track to increase performance and drive cost savings at every level. TRIR is an incredibly important KPI to track because the Occupational Safety and Health Administration (OSHA) uses this metric to gauge companies’ safety performance and monitor high-risk industries. Inventory management key performance indicators, Social Distancing Rules = Skeleton Crew / Use an OMS to Maintain Productivity. Warehouse KPIs Excel Dashboard Templates Warehouse key performance indicators are frequently made with really specific aims and targets in the practical warehouse performance in the mind. It can also prevent back orders by highlighting an influx in sales and the potential for an increase in buying in order to satisfy a spike in demand. As its name implies, time in transit refers to the total number of days or hours from when a shipment leaves your distribution center to when it arrives at the customer’s location. We’ve assembled a collection of sample Key Performance Indicators for you to use as a starting point when building scorecards. The put away cost per line KPI is essentially the same thing as the receiving cost per line KPI, with the clear exception that it measures the cost to put away a line item on a purchase order. All Rights Reserved. To calculate your order fill rate, divide the number of customer orders shipped in full by the total number of orders placed and multiply by 100. Some examples are measuring lost time on … For more detailed information, see our full article on Fulfillment KPIs here. Your warehouse management system (WMS) is designed to provide visibility and enable forecasting to keep goods moving. Though warehouses all vary in their objectives, many of the same KPIs apply. It can be tweaked by rearranging the warehouse for faster put away, or training employees on the most efficient way to complete this task. Your warehouse’s total recordable incident rate (TRIR), sometimes referred to as the total case incident rate (TCIR), is the total number of work-related injuries per 100 full-time workers during a one-year period. The more fearful your leadership team — meaning, the more given they are to control, manipulation, bureaucracy, internal competition, etc. There’s a lot of overlap between KPIs used in a warehouse with inventory and fulfillment focused KPIs, so be sure to check out those articles in detail here: Check out the full guide to order management - including how to efficiently manage your warehouse operations. What it means: Usually measured in man-hours or a dollar figure, this metric can help target areas for cost reduction in the put away process by highlighting inefficiencies. 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… Rate of return is an incredibly useful KPI in a distribution center, especially when segmented by cause for return. the proportion of correctly received orders … These steps are an excellent base for the process-oriented performance metrics. This should be as close to 100% as possible, and if it’s not, you can diagnose where it’s going wrong and fix it to speed up the whole process. While many are good, few of them do the one important thing: Organize those metrics in a way that is meaningful. The higher your TRIR, the more likely your warehouse will be subject to surprise OSHA inspections and, potentially, penalties. Think of it this way: You want your number of accidents per year to be low, and the time since your last accident — typically measured in days — to be high. hbspt.cta._relativeUrls=true;hbspt.cta.load(4223538, 'f19a0038-6b07-4e4a-8d96-ab1cad58c037', {}); 15 Warehouse Management KPIs You Need to Track. Depending on your industry, you may or may not be realistically expect your UPT to increase. Which three distribution KPIs to track most closely. The warehouse manager should set KPIs (key performance indicators) that give you a gauge of the performance from each role. Nor will we send you unsolicited email. It goes without saying that the safety of your warehouse staff is a priority for non-business-related reasons, but the fact of the matter is that injuries sustained on the job can have a serious impact on workplace productivity and overall costs. What it means: This KPI, when excessive, may mean that you have a problem with inventory damage, theft, miscounting, or supplier fraud (when a supplier bills for more products than it sends), and that a thorough investigation should be performed. Here is the complete list of the most important logistics KPIs … Generally speaking, the higher the cost per line, the less efficient a warehouse’s receiving process. Employees simply rate how likely they would be to recommend your company’s workplace on a scale of 0 to 10, with 0 indicating “not at all likely” and 10 indicating “extremely likely.” Employees who rate your company anywhere between 0–6 qualify as “detractors,” while those who rate it a 7 or 8 are considered “passive”; you should take time to address employees who fall into either of these categories to find out what would make their workplace experience better and what cultural improvements they recommend. (Cost of Goods Sold) / (Average Inventory) = Inventory Turnover. Although all of the KPIs listed are important to eCommerce fulfillment performance, there are a few that are critical indicators of your ability to deliver value directly to the consumer: Partially filling an eCommerce order is one of the quickest ways to lose an online sale. Receiving efficiency is a metric used to evaluate warehouse workplace productivity when receiving stock. 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