Part Two of The Importance of Measuring and Utilizing KPIs in Warehousing

This article is part two of our six-part KIPs in Warehousing series. Click here to read part one: The Importance of Measuring and Utilizing KPIs in Warehousing

KPIs, or key performance indicators, are a measure of performance of the business that provide insights and opportunities to improve. They are essentially a “performance scorecard” of benchmarks that are unique to each business, gauging progress towards the company’s goals, identifying areas that need improvement, and comparing performance to competitors and industry standards.

A common method for identifying KPIs is to break down warehouse activities and assess the importance of each.

Generally, people, costs, space, and systems drive the performance inside the warehouse. Hence, warehouse KPIs are often based on the above-mentioned drivers and focused on activity in order micromanage the performance. The following activities are common in any warehouse, so we will look at the KPIs that could be utilized in each:

• Receiving;
• Put-away;
• Storage & Inventory;
• Pick-n-Pack;
• Shipping;
• Order processing;

In this article we will be focusing on the receiving process and the most common KPIs utilized in this area of the warehouse.

Receiving:

A warehouse operation all starts with receiving and recording in incoming stock.

Receiving activity is fundamental to warehousing functions – unless the merchandise is properly received, becomes difficult to handle all other subsequent functions. The receiving process could include goods physically received at the warehouse and stored or directly delivered at the customer site or cross-docked.

The relevant KPIs for receiving function should include the following:

1. Receiving Productivity

Determined in terms of labor by measuring the volume of goods received per warehouse clerk per hour.

2. Receiving Cycle Time

The time taken to process each receipt.

3. Receiving Accuracy

Percentage of accurate receipts, i.e. the proportion of correctly received orders against purchase orders.

4. Cost of Receiving Per Receiving Line

The expense that the warehouse incurs on the receiving process of each receiving line. This includes handling costs as well.

5. Dock Door Utilization

Percentage of how many of the total dock doors were utilized.

Tips for improving receiving efficiency

• Systemise the process and assign the task only to trained staff.
• Adopt a digital receiving system with the use of a barcode scanner.
• Create a unique SKU to individual product variants.

Next in the series of the top 25 KPIs in warehousing – Put-Away