Tag Warehouse

Warehouse KPIs (Key Performance Indicators) can be vital to the efficiency of any warehouse operation because they permit you to track and establish benchmarks for your business. This is the way to create an efficient warehouse. They also aid in identifying areas in need of improvement, particularly those that have an impact on the overall cost of operations and the customer’s satisfaction.

Warehouse KPIs are typically unique to a particular operation however, they are not applicable to all businesses. In our opinion, there are some essential warehouse KPIs that must be monitored regardless of how big the business is for an efficiently managed warehouse. They include:

Order Fulfillment

Order Fulfillment begins with the placing of the order and ends with the delivery of the items to the customer for distribution. There are a variety of metrics that can be analyzed in the process of fulfilling orders, including:

• order fill rate: Fill rate is the measure of the proportion of the order that was filled. An acceptable fill rate should be between 97 and 99 percent of the total amount. Anything less than 94% could be due to inefficiencies within the processing of the warehouse and replenishment process. A fill rate of 100 percent is believed to be the highest of its kind in the industry.
• Order Fulfillment Timeliness: A 100% fill rate has no significance to the customer when the order isn’t delivered in time. The most common timeframe for order fulfillment is between 1-2 days, with the best in category being no more than 24 hours from the date of the order’s placement until the time of dispatch to the distribution center.
• Picks per hour are the main outbound metric that allows you to analyze and identify the effectiveness of your group of pickers as well as their performance on a daily basis. A typical picker will select between 120-180 pieces/ cases per hour. The top pickers get more than 250 picks an hour. Utilizing the latest technology, such as Voice Picking could increase the rate of picks by 30% when the conditions are right.
• On Time, In Full: If all of the above is achieved at the top of the line but if the products are not received on time this will have a negative impact on the business. On-time deliveries should typically be in the range of 98 to 99 percent. Anything that is higher than this is considered exceptional.

Inventory Accuracy

Your inventory should be in line with the one shown in your database, but it’s not always the case. an unbalance between the two at any big distribution center. A high percentage of inaccuracy in inventory can lead to unexpected delays in orders, unsatisfied customers, and eventually more expensive overall costs. Improve your accuracy in inventory by performing regular checks against your database and using cycles as a method of continuously verifying your database’s records.

Physical Inventory Count ÷  Database Inventory Count Percentage of Accuracy in Inventory

Also read: 10 Inventory Management KPIs for Better Performance

Overall Throughput

Warehouse throughput is the number of units handled and moved around your warehouse every day. To determine your throughput rate be sure to monitor the flow of goods through your warehouse over the duration of. For instance, if you would like to know the number of orders processed by your warehouse in the eight-hour period You can monitor the quantity of orders processed in the time frame and the time it takes for each item to be moved from the pick stage to packing and labeling. If your warehouse can process 400 orders in just eight hours, this means that employees are processing about 50 orders every hour.

Replenishment

Replenishment refers to the movement of inventory from the reserve or central storage space to the primary storage bins to allow for moving downstream into picking faces to perform pick/pack operations. This is a crucial metric for warehouses that deal with many products in large quantities, especially in e-commerce settings. The replenishment metric evaluates the processes employed to execute the movement and also how efficient it is. By utilizing effective replenishment strategies warehouses/companies will:

• Avoid dead stock and overstocked
• Check for shortages
• Ensure on-time deliveries
• Ensure proper product rotation
• Make sure you have a safe stock
• Accuracy in Picking and Shipping

The main purpose of a warehouse’s operation is to make sure that customers receive the items they requested within the time frame they want them to be delivered. So, order accuracy is among the most crucial metrics warehouses must track daily. The best warehouse operations aim for order accuracy between 99.5 percent to 99.9 percent.

Turning Inventory

The ratio of stock turnover is a measure used to measure how often and when a specific item of stock is received processed and shipped within a certain timeframe. This is a crucial gauge of a company’s quality of inventory and its order processing. Turns in inventory (also known as “speed category” for an object could be tracked within a WMS. This allows you to manage inventory in an organization in a different way. For instance, using counting inventory cycles it is possible to count those who move faster more often than slow movers, which gives you the capability to put your labor effort directly where it could have a direct impact instead of taking all items of inventory by using the same processes for managing inventory.

Dead Stock

Dead stock refers to inventory that isn’t moving due to a lack of demand. It is stored in warehouses in a warehouse, taking up capacity. It is comprised of stock that has been damaged and/or expired or not sellable due to reasons of any kind. The metrics for dead stock are vital to track because dead stock can cause costs for inventory and block space for more profitable products. The best practice is to monitor dead stock and send reports to the management team that provides sales incentives to get these items out.

Supplier KPIs

The measurement of the supplier’s KPI is crucial to establishing top-of-the-line procurement. It will help improve communication, improve spend and order visibility, enhance process efficiency, and identify savings opportunities in cost and more. Supplier KPI measures to be considered include performance, reliability compliance, as well as customer service.

Also read: 7 Key Steps To Developing A Winning Customer Experience Strategy

Customer Satisfaction

Customer satisfaction is heavily dependent on the overall performance of the entire warehouse operations. The customer satisfaction scores reflect all the performance you can get from your outbound and inbound operations, the overall management of inventory, and communication protocols. The level of satisfaction with your customers can be assessed by looking at:

• On-time delivery
• Shipping accuracy
• Stock accuracy
• Inventory turnover
• Activity reporting, like shorts and returns

Conclusion

If you’re not keeping track of what works and what does not, it’s hard to tell the things your business requires to succeed and if you’ve got a well-managed warehouse. Selecting the best warehouse KPIs to monitor in line with your business goals will be the initial step to making your business profitable and having satisfied customers. Once the warehouse KPIs which best fit your business are determined take a regular look at them and adjust them according to the lessons you’ve learned. You may discover that you require additional space, more workers, or even new technology, such as the latest WMS system. Whatever your requirements you have, proper KPI monitoring will allow you to identify them.

A lot of business leaders are trying ways to make their businesses more sustainable. That primary concern is spreading to the supply chain. Warehouses have a significant environmental impact and are a major location for companies trying to cut back on carbon emissions.

The focus on this is growing in the ranks of material handling experts too.

40% of executives and managers responsible for the decision-making process for handling materials think that sustainability is an important concern today, according to the “Annual Warehouse and Distribution Center (DC) Equipment Survey” by Logistics Management. In 2022 only 36% of those who participated in this Logistics Management survey believed environmental sustainability was an important aspect.

Warehouse owners and managers are able to take action to ensure that their buildings are more eco-friendly, from choosing the best location for their warehouse to purchasing equipment. Here are eight suggestions for how to improve warehouse sustainability.

1. Create a business case for more sustainable warehouses

Supply chain professionals are likely to face resistance as they attempt to improve the sustainability of their warehouses because doing so could require large investments or process modifications.

Supply chain managers are able to provide a number of reasons why they push for more sustainable facilities, for example, the increase in regulations from the government that require reports on or reducing greenhouse emissions of gas. Demand from business partners as well as consumers to be greener has grown and reducing energy usage and environmental impact can help save money.

“[Making Warehouses sustainable] is beneficial for the environment however, it could also make sense for business,” said Suzanne Fallender vice head of global environmental and social governance at Prologis an international real estate firm that specializes in logistics within San Francisco.

Also read: What is Warehouse Automation: Definitions, Types or Benefits

2. Pick warehouse locations more carefully

Warehouses have been built by companies traditionally in areas that were not populated due to the ease of securing the huge spaces needed for their building.

Many companies are currently reconsidering their strategy for warehouse locations for a variety of reasons, not least environmental issues, according to Magali Amiel who is director of CGI which is an IT and business consulting company based in Montreal. Since many companies are now placing warehouses nearer to their customers the delivery vehicles — which are the most commonly used method of transporting products to and from these warehouses — aren’t required to travel as far, which could help to reduce emissions.

In many instances warehouses located close to areas with high population levels allows warehouse owners to choose more sustainable transport options than truck, Amiel said. For instance, some businesses in the Netherlands are building warehouses close to waterways, allowing workers to move more items through barges and ships. Both modes of transport typically are less carbon-intensive than trucks.

3. Choose more sustainable designs

Sustainable warehouses begin by building them.

Prologis which aims to be net-zero in emissions throughout its value chain by 2040, is making sustainability a part of the warehouse’s operations right from the start, Fallender said. This could mean choosing more efficient and environmentally friendly construction materials, choosing those that are more suited to the climate in which the facility is located, and also requiring designs that make use of less concrete.

Prologis is also working to design buildings so that they comply with the requirements of Leadership in Energy and Environmental Design certification. This is a designation given to buildings that have met certain standards of sustainability and efficiency, Fallender said.

Other actions could make a warehouse more sustainable from the start.

Warehouse designers should ensure that buildings can make the most of natural light according to Tamar Warburg director of sustainability at Sasaki which is an interdisciplinary landscape, architecture, planning, and design company based in Boston. This will reduce energy usage by reducing the requirement for artificial lighting, and possibly, cooling and heating.

Facilities owners are also able to work with contractors and architects for ensuring that construction components such as insulation are designed to meet the purpose of the building and the environment around it, Warburg said. This could further cut down on heating and cooling requirements as well as the footprint of the building’s carbon footprint.

These steps don’t require the construction of a brand-new facility.

Warehouse owners are able to employ these design strategies when retrofitting or renovating their facilities, Warburg and Fallender said.

4. Choose energy-efficient lighting

Supply chain managers can improve the sustainability of their warehouses by using artificial lighting. LED light bulbs are 95 percent more efficient in creating light than incandescent lightbulbs, as stated by Energy Star.

However it is true that not all warehouse operators have made the change, Fallender said.

“Some do not know how much this will aid,” she said.

5. Switch to electricity

The switch to electric power can improve the efficiency that warehouse operation more environmentally sustainable.

Prologis has switched to electric forklifts as well as other equipment on site which could help cut down on greenhouse gas emissions as well as decrease the need for fossil fuels Fallender said. Prologis has also begun employing more efficient HVAC systems and has also implemented charging stations for electric vehicles so that its customers can convert their fleets of commercial vehicles into electric cars (EVs). The construction of charging stations assists warehouse workers who use electric vehicles.

6. Go solar

Solar is a crucial method to investigate since warehouses can be a great option to install solar photovoltaic (PV) solar panels.

Warehouse facilities are a good source of land and roof where PV panels collect the energy Warburg said. The amount of space that is available inside warehouses and around them means that they can usually satisfy their own energy needs by using solar PV panels.

“[If the building is equipped with electric systems that are all-electric and complemented by solar PV, then it’s an ideal choice for a zero-energy building or one that produces all the energy that it consumes when you spread it out over a 12-month period,” Warburg said.

Also read: How Blockchain Technology Helps Develop Smart Buildings

7. Build a smarter building

Utilizing automation and smart building technology such as sensors that switch off the heating and lighting on and off when the building is empty can aid in reducing energy usage and improve efficiency.

Warehouse operators and owners must also be able to digitize and automate their processes for business, Amiel said. This will reduce the amount of paper usage.

8. Rethink how you use land

Operators of and owners of Warehouses need to be aware of what changes to the environment around their buildings could improve sustainability.

At one time, businesses cut down on trees and plants around their warehouses as far as they could, since warehouse operators and owners believed that the greenery could affect operations or hinder the visibility of vehicle operators, Amiel said.

Warehouses are also traditionally situated on hardscapes that were impermeable.

The type of landscaping can cause an excess of erosion and water runoff and may negatively impact the water quality in the area, Warburg said. Many businesses are adding more plants to their warehouses for carbon sequestration. They’re also putting in permeable flooring and installing more plants that resorb stormwater that is on the premises.

The management of a warehouse involves the fundamental principles and procedures necessary for efficiently supervising the daily activities within the facility. This encompasses activities such as the receipt and arrangement of goods, scheduling of labor, management of inventory, and fulfillment of orders. Upon closer analysis, proficient warehouse management revolves around optimizing and merging these operations. This is why to facilitate smooth coordination and enhance productivity, finding warehouse management systems Australia wide is a much-needed solution.

The Advantages of Efficient Warehouse Management

Although customers may not directly witness warehouse operations, their seamless execution is pivotal in ensuring punctual product delivery. Proficient warehouse management is key to achieving this objective. It encompasses the optimization of various warehouse processes, including the strategic utilization of storage space to maximize inventory capacity, ensuring staff’s easy access to inventory, maintaining appropriate workforce levels, expediting order fulfillment, and establishing effective communication channels with logistic partners and providers to ensure timely material procurement and order shipment.

The advantages of effective warehouse management, such as prompt delivery of excellent service while minimizing costs, extend beyond the confines of the warehouse itself. They have a positive ripple effect throughout the complete network of suppliers and enhance vendor relationships alike. However, optimizing warehouse management can be complex due to its multifaceted nature. Hence, many organizations are embracing the implementation of warehouse management system software to streamline these operations and enhance overall efficiency.

Also read: How to Reduce Warehouse Costs & Increase Profits

Understanding Warehouse Management Systems

A tailored or bespoke software solution, known as a warehouse management system (WMS), is created to streamline and simplify the intricate challenges of overseeing warehouse operations. Typically included as an integral part of an integrated suite of enterprise resource planning (ERP) situations, a WMS provides comprehensive support and optimization for every facet of warehouse management.

The capabilities of a WMS include:

• Utilise the potential of data and automation to perform comprehensive demand analyses, precisely predict sales, and generate streamlined daily operational strategies.
• Delivering real-time insights into the precise placement and number of inventory, enabling precise tracking and management.
• Effortlessly integrating data with other modules within an ERP system or independent software solutions like accounting systems and transportation management tools, augmenting the overall operational efficiency of the business.
• Monitoring and reporting productivity metrics to provide a comprehensive understanding of warehouse efficiency, identifying areas for warehouse layout optimization and effective space utilization.
• Providing users with a comprehensive and structured framework that navigates them through daily processes, including tasks like order receiving, picking, and packing, while strictly following predefined rules and guidelines.

Distinguishing Inventory Management from Warehouse Management

To gain a comprehensive understanding of warehouse management, it is vital to establish clear distinctions between commonly used terms, such as inventory management, warehouse management, and stock management:

• Inventory Management: At its essence, inventory management centers on the seamless and proficient coordination of tasks related to procurement, storage, logistics, and material selection. These activities are essential for manufacturing products and fulfilling customer orders with precision and effectiveness.
• Warehouse Management: Expanding the view, warehouse management encompasses a range of aspects related to efficient warehouse operations. This includes strategic planning and design of warehouse layout, effective labor management, optimised order fulfillment processes, and meticulous monitoring and reporting of warehouse activities.
• Stock Management: While “stock” and “inventory” are sometimes used interchangeably, it is vital to distinguish the difference, especially within the context of manufacturing companies. Specifically, stock refers to the inventory consisting of finished products that are ready for sale or distribution. On the other hand, inventory encompasses a broader range of items stored within the warehouse, encompassing raw materials, materials in various stages of production, and finished products (i.e., stock).

Within the realm of inventory management, stock management serves as a specialized subset that focuses on minimising stock levels to optimise space utilization, reduce costs, and satisfy customer needs effectively.

Principles of Effective Warehouse Management

Developing a deep understanding of the foundational principles of managing a warehouse can greatly contribute to streamlining warehouse operations. These principles encompass:

• Establishing Purpose: A warehouse operation needs to define precise goals that align with its distinctive needs. For instance, are there specific customer delivery expectations that must be met? Does your inventory necessitate specialized storage arrangements? Furthermore, every warehouse operation strives to optimize the utilization of warehouse space, labor, and equipment for enhanced efficiency.
• Comprehensive Control: Warehouse management encompasses the coordination of complex processes involving various components, including personnel, equipment, orders, and inventory. Effective warehouse managers possess the skills to meticulously monitor and track each process, guaranteeing smooth operations and swift resolution of any obstacles encountered. Maintaining rigorous quality control measures is essential to ensure accurate order fulfillment.
• Adaptability and Robustness: Warehouse managers must exhibit adaptability in swiftly adjusting plans when faced with issues like damaged materials or shipping delays due to unfavorable weather conditions. In addition, optimizing workflows to maximize efficiency is of paramount importance, which might entail reorganizing the warehouse or reevaluating picking procedures.
• Customer Focus: Timely and accurate product delivery is a critical factor in customer satisfaction. Expediting order fulfillment while maintaining precision is key to achieving on-time delivery and exceeding customer expectations.
• Fact-Based Decision-Making: The smooth functioning of warehouse processes does not necessarily indicate peak efficiency. By leveraging a warehouse management system (WMS), managers can identify areas that require improvement and make informed decisions based on comprehensive data analysis.

By adhering to these fundamental principles, warehouse managers can enhance operational efficiency, maximize customer satisfaction, and drive overall success.

Also read: 15 Ways to Maximize Warehouse Space Utilization

Warehouse Monitoring and Reporting

Measuring and tracking key performance indicators (KPIs) that reflect warehouse efficiency can pinpoint issues and reveal opportunities for improving efficiency and fulfilling customer orders more quickly and accurately. For example, setting a target for improved picking and packing accuracy and subsequently implementing changes to picking processes enables organizations to evaluate the effectiveness of those changes in achieving the desired goal.

Choosing a Warehouse Management System (WMS)

Choosing the right WMS is crucial for your warehouse. It should enhance efficiency, accuracy, and cost-effectiveness, ensuring a strong ROI. A reliable WMS acts as a guide, providing real-time insights into receiving, shipping, inventory management, order fulfillment, and labor allocation. It should offer user-friendly reports, accommodate business growth, and adapt to market changes. Elevate your warehouse operations with the right WMS to boost competitiveness, customer satisfaction, and cost management.