Just as a farmer knows the lay of the land and a surgeon knows the body's inner workings, a warehousing manager needs to know the state of his or her warehouse at all times. This includes not only operational warehouse management data, but warehousing KPIs that speak to the day's work — not merely the materials involved in it. These trends are important, not only for internal improvements, but for reporting and collaborating with supply chain partners as well. If pushing to achieve X goal requires Y products and Z service, for example, the latter two must be consulted in order for the first to manifest. What metrics does your warehouse need to read to succeed?
Here are a few questions to ask yourself as you try to zero in on these elements.
Are My KPIs Right For Me?
There are many universal constants in business, but KPIs, strictly speaking, aren't one of them. While certain key performance indicators may seem similar, in practice, they must evolve to incorporate the nuances of a given brand. While "orders processed" may sound straightforward, if the company attempting to harness that data has a seasonal business or tends to experience well-defined sales cycles, their KPI metrics will seem dismal when compared to others. The first step in successfully using metrics to assess and improve warehouse functionality is to clearly define the goals and rationale for your metrics program. Once you know where you stand, where you want to be and how to measure that progress, all that remains on the to-do list is to implement the plan and apply skillful course-correction as time goes by.
Are My Metrics Holistic?
Whenever you're looking at or designing metric-gathering processes, always make sure they're balanced between customer-facing facets and internal ones. If your fill rate or perfect order measurement are on target, but your supply chain cycle time is an unchecked mess, it won't be long before it catches up with that positive metric and drags it down for the ride. System ID's Jay Schofield emphasizes the need to track the true cost of inventory in your metrics: storing it, moving it, counting it and even liquidating it, in extreme cases.
It's entirely possible your facility is hemorrhaging money by letting stock age out, untouched, while sales and fulfillment steal the spotlight. Part of warehouse management is knowing your opportunity costs and liabilities, and sluggish or outdated stock is definitely a liability to be addressed. Metrics help identify and isolate this issue before it creeps up into an alarming percentage of your on-hand inventory.
Are My People Doing Their Jobs?
A big part of management is assigning tasks and looking in on your team as they complete them. Efficiency is, after all, the name of the game when it comes to pick/packing. However, as an individual, there are only so many picking instances you can actively observe, so what you're really watching is a representative sample. Well-maintained order accuracy KPIs, on the other hand, give you a better "top down view" of your entire staff at work, highlighting problem areas or underperforming employees.
Now, more than ever, managers are expected to thoroughly document a team’s progress. Order accuracy KPIs offer insight into the areas where a warehouse staff needs extra coaching—or your processes need to be streamlined.
How Current Is My Information?
Batching. Aggregation. Reports. The old way of doing business rested very heavily on computation time and failed to deliver timely indicators to the managers that ordered them. Today, warehouses can lean on technology like the IoT to get in-the-moment updates on the whereabouts of stock, employees or both. These days, the real-time data collected by your warehouse IT is your best resource for decision-making. Having access to these metrics allows managers to make more complete decisions and to stop outgoing waste while still capitalizing on available opportunities.
Technology delivers unprecedented oversight that extends to every shelf in a warehouse, updating itself so that product movement is reflected in real-time stock inventories. When this data is made transparent, it can then be delivered to supply chain partners, clients, end consumers and more through direct access or reports delivered periodically.
How is My Stock Arriving?
Broken components, late deliveries and shoddy delivery practices not only require a great deal of effort in sleuthing and filing insurance claims, they also hold up the works, costing your company time and money. Preserve your resources by making a KPI to measure delivery accuracy points, cautions Paul Trujillo of Business to Community. Without documented evidence, over time your 3PL provider might take criticism as an unjustified attack when it was never intended to be. When you have a complete in-hand picture of times, dates and issues, they'll likely to be much more accommodating. You can leverage issues like these to build your relationship with a supply chain partner, potentially gaining upgraded delivery services and a smoother experience at your fulfillment center docks. Remember, a solid relationship is built on communication.
Additionally, even if you don't need a record to start a QA conversation with your 3PL, having documentation on delivery accuracy could give you a place to start if you're ever looking to replace delivery/shipping provider. Simply put, if your potential new company can't beat the delivery metrics you'd casually observed, you'll have an uphill battle getting better performance out of them when you're actively watching.
Does My Warehouse Consider ME a Good Leader?
Yes, warehousing KPIs are even powerful enough to give the person running the show a better idea of their leadership style and success rate. While this KPI works best if you have multiple managers' information to compare, even a lone manager can see the difference in some short-term metrics when leaving a second-in-command in charge. In fact, taking a vacation and leaving a metrics-gathering staff to run the warehouse can be one of the best ways to gain actionable insights! You'll get to see, by omission, exactly what kind of leader you are while simultaneously checking out the performance of your top employees without your presence nearby. Demand Media's Sharon R. Barstow reminds managers that employee turnover isn't just an arbitrary number: think of it as part of your success rating as a manager.
Warehouse management will always boil down, in some way, to making the right decisions at the right time. KPIs are like an alarm clock that tells you when that "right time" is, helping you solve problems before they get out of hand. Warehousing KPIs aren't a "magic bullet" that will instantly turn around a struggling warehouse, but they'll certainly point to ideas to fix and potential resources and opportunities to jump on.
If you aren't sure where to begin, remember that efforts like these almost always start with pen and paper, formulating a metrics goal with the help and input of your team. Measure frequently, record everything you comfortably can each day and make time to study that data for trends. You may be surprised at how powerful metrics can be for your business.