KPIs are metrics used by warehouse managers to make strategic decisions

10 KPIs for warehouse managers to monitor

June 28, 2022

Key performance indicators (KPIs) are an essential tool for logistics managers and warehouse supervisors, as they enable them to monitor the activities taking place in their distribution centers (DCs).

With the help of the objective data provided by the KPIs, the warehouse manager can identify areas in need of improvement and make strategic decisions about the company’s supply chain.

Below are 10 very useful KPIs for warehouse managers:

Receiving KPIs

The receipt of goods sent from production or by suppliers is the first operation performed in any logistics facility. Properly organizing the products received is critical for preventing inefficiencies and delays that could alter your entire supply chain.

1. Dock to stock cycle time

This KPI measures the time elapsed from the point when the goods are unloaded at the warehouse docks until they are recorded by the warehouse management software and stored on the racks.

Speedy identification of products received is crucial for efficiency in your facility. Why? Shortening stock identification times with a warehouse management system (WMS) frees up space at the loading docks and streamlines the putaway process.

2. Undamaged shipment rate, by supplier and day

One of the priorities of any business is to ensure that the correct goods are received damage-free and in the right quantities. Any incident in the receiving process could delay your other warehouse operations.

To guarantee damage- and error-free goods receipts, operators need to verify that the products are in proper condition and, via the WMS, that the right quantities have arrived. Tracking the items received with a digital program ensures strict and real-time inventory control.

3. Supplier on-time daily delivery rate

Businesses also need to monitor the timeliness of their suppliers and make sure that goods are delivered in the right conditions and at the right time. Any delay will have a direct impact on the planning of work and could hold up daily dispatches of orders.

Warehouse managers evaluate the service rendered by their suppliers to make decisions based on the actual performance of the company’s logistics operations.

Thanks to KPIs, warehouse supervisors can make decisions to improve the goods receipt process
Thanks to KPIs, warehouse supervisors can make decisions to improve the goods receipt process

Product storage KPIs

The goods storage process is fundamental in a logistics facility because it affects order fulfillment. Warehouse managers need to analyze indicators such as stock distribution and location occupancy to ensure the availability of the goods. Knowing which products are in your facility at any given time simplifies the preparation of orders placed by customers.

4. Space utilization by location type

Space utilization in the warehouse is an indicator that calculates the occupancy rate in your logistics facility, that is, the number of locations with products.

This indicator helps logistics managers analyze whether they’re making the most of the storage space in their DCs. The aim of any company is to store the right quantity of goods so as not to generate cost overruns and to avoid stockouts that could lead to interruptions to order fulfillment.

5. Inventory days on hand

This KPI calculates the time SKUs remain in stock in your facility. It consists of the estimated number of days it takes to sell the existing inventory of a specific type of item.

Businesses use inventory days on hand to view their stock turnover — the number of times warehouse inventory needs to be replenished over a particular period of time — and thus to establish ideal replenishment points.

Monitoring the products stored is a must for improving logistics operations
Monitoring the products stored is a must for improving logistics operations

Order fulfillment KPIs

Order processing is one of the operations requiring the most resources in any logistics facility. Using KPIs to assess order picking enables warehouse managers to optimize goods movements, cut costs, and fill the largest possible number of orders.

6. Order picking accuracy

This KPI shows warehouse supervisors the percentage of orders prepared with the quantity of goods requested by customers. It indicates the quality of order picking in your facility.

Warehouse managers should strive for 100% accuracy, as incorrect orders — those with the wrong items or quantities — will become returns, which could tarnish your company’s image.

7. Order fill rate

This indicator compares the number of items that have been dispatched with the quantity of stock ordered by customers. Hence, it calculates the percentage of orders that couldn’t be filled due to, in most cases, lack of stock.

Although the order fill rate assesses picking quality, warehouse supervisors can also use this information to make decisions to improve other tasks that impact order fulfillment, e.g., procurement.

8. Internal order cycle time

The internal order cycle time represents the time it takes to complete an order from the point your warehouse receives a purchase order (when a customer buys a product) until it leaves the loading docks. This KPI assesses the agility of your facility in responding to demand.

It lets warehouse supervisors analyze the speed and effectiveness of picking tasks. The data obtained from this KPI facilitate decision-making, for example, distributing products in the center efficiently to minimize operator travel when locating the goods.

KPIs enable warehouse managers to improve productivity in order fulfillment
KPIs enable warehouse managers to improve productivity in order fulfillment

Dispatch KPIs

Goods dispatch is an operation that affects customer satisfaction and the continued trust of your clientele in the brand. With dispatch metrics, businesses can measure their service performance rate.

9. On-time ready to ship

This KPI measures order dispatches that were carried out on schedule, without delays, on the day and at the time requested by the customer.

This metric makes it possible for warehouse supervisors to evaluate the dispatch process as well as the performance of all operations taking place in the facility until the products are distributed. Equipped with objective data, the logistics manager can apply strategic measures designed to streamline all processes and thus dispatches (e.g., assigning more operators to order picking).

10. Orders shipped per hour

This KPI refers to orders that have been correctly distributed, i.e., with the items and quantities requested by customers.

This indicator measures the number of orders dispatched every hour, showing the effectiveness of your facility in the final stage of verification prior to the distribution of the goods. In this phase, the operators must make sure that the orders contain all the products requested and in the correct quantities to avoid mistakes.

Optimizing dispatches with KPIs has a direct impact on customer satisfaction
Optimizing dispatches with KPIs has a direct impact on customer satisfaction

Digitization for monitoring warehouse throughput

In logistics facilities, operations such as goods receipt, order picking, and dispatch generate an enormous amount of data. To make decisions that will boost your company’s growth, it’s vital to analyze all these data in detail.

To do so, businesses need big data tools capable of segmenting and sorting this information. A warehouse management system like Easy WMS from Interlake Mecalux monitors the performance of logistics processes.

The software from Interlake Mecalux features the Supply Chain Analytics Software module. This program provides you with information on the status of all operations in your facility to ensure comprehensive control over decision-making. The system incorporates dashboards that include the majority of functionalities warehouse managers need to take into account.

Want to manage and analyze the huge amount of data generated in your facility? Get in touch. We’ll show you how the Supply Chain Analytics Software module will make it much easier for you to make strategic improvement decisions.

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