flevyblog

Flevy Blog is an online business magazine covering Business Strategies, Business Theories, & Business Stories.
MANAGEMENT & LEADERSHIP STRATEGY, MARKETING, SALES OPERATIONS & SUPPLY CHAIN ORGANIZATION & CHANGE IT/MIS Other

Warehouse Key Performance Indicators

Editor's Note: Take a look at our featured best practice, KPI Compilation: 800+ Corporate Strategy KPIs (186-slide PowerPoint presentation). This presentation is a comprehensive collection of Key Performance Indicators (KPI) related to Corporate Strategy. A KPI is a quantifiable measure used to evaluate the success of an organization, employee, or process in meeting objectives for performance. KPIs are typically implemented [read more]

Also, if you are interested in becoming an expert on Performance Management, take a look at Flevy's Performance Management Frameworks offering here. This is a curated collection of best practice frameworks based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts. By learning and applying these concepts, you can you stay ahead of the curve. Full details here.

* * * *

245562110_c74339c2feKey performance indicators (KPIs) are measures of a company’s strengths and weaknesses of the business. They should be used in comparison to the external competition and internal customers to improve company’s economic standing. In Supply Chain, the warehouse is a critical function. Should products not move effortlessly within the warehouse, a business could come to face serious challenges to its welfare. The warehouse must be continually measured by key performance indicators. In this age of continuous improvements, it is vital to compare against industry standards, and if none to set the tone.

This narrative of a company’s well being is called benchmarking. It is the process by which to measure a business’s internal processes against the competition. The narrative includes productivity, quality, time, and cost. The idea is to discover weaknesses, learn from them and to execute better and in a more cost effective manner.
Warehouse costs are driven by people, cost, space and systems. Thus, KPIs in a warehouse are based on these drivers and supposed to be tied directly to these usual activities:

  1. Receiving
  2. Put-Away
  3. Storage
  4. Pick-n-pack
  5. Shipping

We shall discuss each activity in detail below.

The receiving activity is basic to any warehousing function. If the merchandise is not properly received, it will be difficult to handle subsequent operations. Merchandise is received against a purchase order and posted to the Warehouse Management System (WMS) through Electronic Data Interchange (EDI). The most important performance indicators to be ascertained are: cost of receiving per receiving line, volume received per man hour, receiving dock utilization expressed in a percentage, accurate receipts expressed in percentages and time taken to process a receipt.

After properly receiving the goods, it has to be stored in a location that is convenient for retrieval. This is the put-away process. The following indicators are needed at this stage: cost per put away line, put-away per man hour, utilization of labor and equipment, quality of the put-away and cycle time for put-away.

At this point is becomes a bit more complex as there are two possible storage systems a warehouse can use: manual storage or automated storage / retrieval system. If use a manual type of system there are a number of types.

  1. Block stacking – Units’ loads stacked on top of each other and stored in the lanes.
  2. Stacking frames – self contained units made up of decks and posts. These are portable and can stack several layers upon each other.
  3. Single-deep selective pallet rack – a combination of metal uprights and cross bars allowing for quick picks.
  4. Drive-in racks – merely extend the reduction of aisle space
  5. Drive-thru racks – rack accessible from either side.

The key performance indicators for measuring shipping process are: storage cost per item, inventory per square feet, percentage location without inventory discrepancies and inventory days on hand.

Order picking is the most expensive part of warehouse operations as it is very labor intensive and it is estimated to be 50% of all warehouse costs. Not to mention this is tied directly to customer satisfaction. Usually broken into two parts – case picking and then small item picking. Relevant key performance indicators for Pick-n-Pack operations are cost of picking per line order, order lines picked per hour, picking labor and equipment usage shown as a percentage, the percentage of perfect picking lines and cycle time per order. Remember, any incorrect pick could lead to an unhappy customer – something we want to avoid if at all possible.

Shipping is not just the goods to the customer. It can be internal shipping between departments, functions, workstations and stock transfers. The latter being the origin for moving product from point to point to point. Important performance indicators, but by no means all of them, are cost of each shipping order, labor or man hour for each order, utilization of shipping docks, percentage of perfect shipping and the time order is picked till it actually leaves the dock.

These are general guidelines. The volume of labor used the costs of the operations and equipment earmarked for warehouse activity depends upon the products handled. Therefore, key performance indicators should be adapted to the product type. The warehouse is the busiest place in any business and the potential in productivity, costs and safety improvements is huge.

To most of us involved in Inventory and or Warehouse operations these may seem obvious measurements to engage. However, too often they are seen as superfluous to the overall business operation. This is an error organizations can ill afford (dollar value and inventory issues) to make.

141-slide PowerPoint presentation
This presentation is a comprehensive collection of over 600+ Key Performance Indicators (KPI) related to Sales Management and Strategy. Leverage these Sales KPIs to elevate the performance across your Sales Organization. A KPI is a quantifiable measure used to evaluate the success of an [read more]

Want to Achieve Excellence in Performance Management?

Gain the knowledge and develop the expertise to become an expert in Performance Management. Our frameworks are based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts. Click here for full details.

Performance Management (also known as Strategic Performance Management, Performance Measurement, Business Performance Management, Enterprise Performance Management, or Corporate Performance Management) is a strategic management approach for monitoring how a business is performing. It describes the methodologies, metrics, processes, systems, and software that are used for monitoring and managing the business performance of an organization.

As Peter Drucker famously said, "If you can't measure it, you can't improve it."

Having a structured and robust Strategic Performance Management system (e.g. the Balanced Scorecard) is critical to the sustainable success of any organization; and affects all areas of our organization.

Learn about our Performance Management Best Practice Frameworks here.

Readers of This Article Are Interested in These Resources


21-slide PowerPoint presentation
There are clear and measurable differences that exist between organizations that use Key Performance Indicators (KPIs) to monitor and assess performance and those that use KPIs to guide and drive performance improvements. Data-driven and customer-oriented leaders use KPIs to transform their [read more]


 
35-slide PowerPoint presentation
 
 
854-slide PowerPoint presentation

About Stuart Rosenberg

Stuart Rosenberg has a regional reputation as a subject matter expert and published author in Supply Chain Management and Lean Six Sigma disciplines. He has outstanding knowledge of all inventory control functions in both manufacturing and distribution environments, and grasp of all data involved with all inventory systems, cost analysis and product evaluations. Stuart has initiated, managed and oversaw all inventory control environments and situations, with direct supervision of various warehouse locations, to certify continuous accuracy, reliability and integrity of companies inventory operational and financial data. He has influenced, counseled, and directed major revisions to enhance companies operational efficiencies. You can read more about Stuart on his blog and find him on Linkedin here. Stuart also has several thought leadership papers available on Flevy (srosenbe7).

, , , , , , , , ,



Complimentary Business Training Guides


Many companies develop robust strategies, but struggle with operationalizing their strategies into implementable steps. This presentation from flevy introduces 12 powerful business frameworks spanning both Strategy Development and Strategy Execution. [Learn more]

  This 48-page whitepaper, authored by consultancy Envisioning, provides the frameworks, tools, and insights needed to manage serious Change—under the backdrop of the business lifecycle. These lifecycle stages are each marked by distinct attributes, challenges, and behaviors. [Learn more]

We've developed a very comprehensive collection of Strategy & Transformation PowerPoint templates for you to use in your own business presentations, spanning topics from Growth Strategy to Brand Development to Innovation to Customer Experience to Strategic Management. [Learn more]

  We have compiled a collection of 10 Lean Six Sigma templates (Excel) and Operational Excellence guides (PowerPoint) by a multitude of LSS experts. These tools cover topics including 8 Disciplines (8D), 5 Why's, 7 Wastes, Value Stream Mapping (VSM), and DMAIC. [Learn more]
Recent Articles by Corporate Function

  

  

  

  

  

The Flevy Business Blog (https://flevy.com/blog) is a leading source of information on business strategies, business theories, and business stories. Most of our articles are authored by management consultants and industry executives with over 20 years of experience.

Flevy (https://flevy.com) is the marketplace for business best practices, such as management frameworks, presentation templates, and financial models. Our best practice documents are of the same caliber as those produced by top-tier consulting firms (like McKinsey, Bain, Accenture, BCG, and Deloitte) and used by Fortune 100 organizations. Learn more about Flevy here.
  


OUR CORE OFFERINGS
Flevy Marketplace: Top 100
· Strategy & Transformation
· Digital Transformation
· Operational Excellence
· Organization & Change
· Financial Models
· Consulting Frameworks
· PowerPoint Templates
FlevyPro (Subscription Service)
KPI Library
Streams (Functional Bundles)
Flevy Executive Learning (FEL)
PowerPoint Services

FREE Resources

About Flevy
Management Topics
Marcus (AI-Powered Consultant)
Partner Program
LinkedIn Influencer Marketing
FAQ / Terms / Privacy / Blog
Contact Us: support@flevy.com



CONNECT WITH US!
       
TOP 100 TRENDING TOPICS
Acquisition Strategy
Agile
Analytics
Artificial Intelligence
Balanced Scorecard
Best Practices
Big Data
Breakout Strategy
Business Continuity Planning
Business Plan Financial Model
Business Transformation
CMMI
COBIT
Change Management
Cloud
Communications Strategy
Company Financial Model
Competitive Advantage
Competitive Analysis
Consulting Frameworks
Continuous Improvement
Core Competencies
Corporate Culture
Cost Reduction Assessment
Customer Experience

BROWSE BY FUNCTION
Strategy, Transformation, & Innovation
Digital Transformation
Operational Excellence and LSS
Organization, Change, & HR
Management Consulting

Customer Journey
Customer Service
Cyber Security
Data Privacy
Decision Making
Digital Marketing Strategy
Digital Transformation
Digital Transformation Strategy
Due Diligence
ESG
Employee Engagement
Employee Training
Enterprise Architecture
Growth Strategy
HR Strategy
Hiring
Hoshin Kanri
ISO 27001
ITIL
Information Technology
Innovation Management
Integrated Financial Model
Kaizen
Kanban
Key Performance Indicators

ADDITIONAL RESOURCES
Business Strategy Frameworks
Case Studies
Consulting Training Guides
COVID-19 Trend Data
Digital Transformation
Financial Advising Services (FAS)

Knowledge Management
Leadership
Lean
Lean Manufacturing
Logistics
M&A (Mergers & Acquisitions)
Manufacturing
Market Research
Marketing Plan Development
Maturity Model
McKinsey PowerPoint
McKinsey Templates
Operational Excellence
Organizational Change
Organizational Design
Performance Management
Post-merger Integration
Pricing Strategy
Process Improvement
Process Maps
Procurement Strategy
Product Launch Strategy
Product Strategy
Project Management
Quality Management


Free Resources
KPI Library
Lean Management
Lean Six Sigma Training Guides
Marcus Insights
Operational Excellence

Real Estate
Remote Work
Restructuring
Risk Management
Robotic Process Automation
SWOT
SaaS
Sales
Scrum
Service Design
Six Sigma Project
Social Media Strategy
Strategic Planning
Strategic Thinking
Strategy Development
Supply Chain Analysis
Sustainability
Target Operating Model
Team Management
Total Productive Maintenance
Value Chain Analysis
Value Creation
Value Stream Mapping
Visual Workplace
Workplace Safety


Product Strategy
Small Business Owner
Startup Resources
Strategic Planning
Strategic Planning Process
Value Innovation Strategy


© 2012-2024 Copyright. Flevy LLC. All Rights Reserved.