Challenges in Tracking Supply Chain Data in 2020 

Supply chain data provides a comprehensive view of specific and enterprise-wide company functions. However, tracking the wrong data or failure to recognize the problems with poor quality data may cause supply chain leaders to make terrible mistakes and increase the chances of worsening productivity. Taking a proactive role in data management can make a difference, and the right data is not necessarily the same as that of your top competitors. In other words, individual companies may have different data priorities, but they should all follow a similar structure—involving the collection, cleansing, analysis, and reporting of insights.  

Data Improves Operational Excellence When Used Correctly 

The value of data increases in the quest for supply chain efficiency. With the implementation of API- and web-connected supply chain systems, businesses can manage their inventory and follow up on stock movement more easily and automatically. Various connections beyond API, like the use of Internet of Things (IoT) connected sensors, allow professionals to track products and their movement from the factory up to the retail store. The impact of these connection technologies to better track movements in the supply chain includes reduced costs and improved service delivery. The data is collected in a central system and can then be analyzed to derive valuable insights. The application of data in supply chain management aids supply chain leaders in improving operations, products, services, hiring processes, marketing strategies, and risk management. 
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Thus, companies that track supply chain insights and apply data-driven decision making can reduce costs, isolate problems, provide a roadmap for correction, and validate gains in performance after making applicable changes.  

Supply Chain Data to Track Through 2020 

A brief look at the top-performing supply chain data points to track in 2020 include: 

• Real-time shipment/order data 
• Real-time inventory levels 
• Product cycle times 
• Available/closed trade lanes 

• ROI of new system implementations 
• Actual versus planned ROI of optimization efforts 
• Employee safety data, including incidents and illness-related information 
• Yard efficiency 
• WMS YTD costs 

• Inventory reconciliation results 
• Labor productivity 
• Average order size and shipment data 
• Use of BOPIS fulfillment rates 
• Customer experience and satisfaction measures  

Deploy Next-Generation Connectivity in Your Supply Chain to Better Track Data  

Supply chain advancement provides scalability, responsiveness, emergency management, and execution of core processes. As the world grew closer through e-commerce, a divide has arisen between the limits and challenges of tracking traditional data versus the possibilities of advanced, analytics-driven insights. To ensure your company tracks the right supply chain data in 2020, approach data management from a critical view—considering its impact from procurement through outbound freight and even reverse logistics. Fortunately, working with an expert supply chain consultant can help your organization maximize results and improve profitability. To get started, request your consultation with Veridian online today.  

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In part one of this blog series of the top warehouse KPIs to know, we addressed 11 warehouse key performance indicators in the categories of internal operations and staffing. In part two of the series, we pick up where we left off and discuss 9 additional KPIs including the original categories and further incorporating supplier and customer-based KPIs in the mix.  

If you’re a supply chain leader or warehouse manager, read on to learn about the next 9 top warehouse KPIs to know to improve operations, reduce costs, and improve customer satisfaction below.  

1. Internal Operations—Inventory Carrying Costs: Calculating inventory carrying costs is perhaps the most important metric of all. It is calculated by dividing the total carrying costs by overall inventory costs. Of course, having the technologies and capabilities in place to track inventory carrying costs is crucial. 
2. Suppliers—Backorder Rate: The backorder rate is an equally important metric and warehouse key performance indicator for supply chain management. Calculate the backorder rate by dividing the total number of items on backorder by the total number of items that arrived successfully. 
3. Suppliers—Supplier Quality Index: Different suppliers offer products of varying quality. Track the rate of returns for products ordered that originated from different carriers or suppliers. By separating the returns rates, as well as considering the success of put-away and dock management efficiency, warehouse leaders can better determine which suppliers have higher performance. 
4. Suppliers—Lead Time: While the lead time may not seem like an important metric to track, insights into supplier lead-times help supply chain leaders better plan replenishment. In addition, lead-time analytics also reduce the risk of out of stocks, and depending on your facility, lead-time analysis may help build the business case for cross-docking or drop shipping. 
5. Suppliers—Value Added Services: Tracking value-added services, including auditing and accounting practices provided by suppliers, can go a long way in promoting inventory management, as well as improving supply-chain scalability. Track the use of these services, as well as their ROI, including both indirect and direct benefits. 
6. Suppliers—Attitude of Suppliers: The attitude of suppliers also impacts efficiency on the dock schedule and willingness to continue working with that supplier. This is a highly subjective measure, so compile the above-listed supplier warehouse key performance indicators, averaging them together, to create a one-stop view of a supplier’s efficiency or deficits. 
7. Staffing —Workforce Utilization: Workforce utilization must be your next top metric to track. This is the total number of workers that have fulfilled their duties accurately and efficiently divided by the total number of workers employed by a given facility. As workforce utilization increases, companies have less wiggle room with working with internal staff resources. As a result, staff augmentation may be necessary. 
8. Customers—Loyalty: Customer loyalty is best expressed as customer retention (repeat order) rates. Measure this warehouse key performance indicator by dividing the total number of repeat customers by the total number of customers for a given period. A higher result means your brand loyalty is increasing. 
9. Customers—Competition Pressure: The final in the lineup of warehouse key performance indicators is also subjective. Competition pressure describes the changes made in your organization as a result of a competitor’s new service or product. It may include a lower customer retention rate, decreased order volumes, increased services offered by competitors and more. As a result, it is best to define the variables that affect competition in your organization, consider their weight, and devise an “average-like,” prioritized list of competitors.  

Start Defining Your Warehouse Key Performance Indicators Now 

There is not a set rule that requires all warehouses and distribution centers to track the same key performance indicators. However, the common warehouse key performance indicators have a proven record of establishing both transparency and better management practices. Start tracking the full lineup of key performance indicators, including those listed here, to achieve a successful 2020 now. Also, contact Veridian online to learn more about what other specific metrics and technologies might help your company grow faster and more effectively.

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• Internal Operations
• Staffing 
• Suppliers 
• Customers 

Let’s cover the top 10 warehouse KPIs for supply chain leaders and warehouse managers to succeed in 2020. 

1. Internal Operations—Shrinkage of Inventory: Inventory shrinkage refers to the amount of inventory listed in the accounting records, but such inventory is no longer within the facility. This may be the result of theft, damage, incorrect measuring, or supplier failures. Supply chain leaders can calculate the inventory shrinkage percentage by conducting a physical inventory, subtracting that value from the presumed value within accounting, and dividing the result by the presumed value in accounting. 
2. Internal Operations—Inventory Turnover Ratio: The inventory turnover ratio allows companies to manage fluctuating inventory throughout the year. It is calculated by dividing the cost of goods sold by the average inventory for a given timeframe. Higher ratios reflect the number of times a company has successfully sold its inventory again and again throughout the year. 
3. Internal Operations—Receiving—Cost Per Line: The cost per line in receiving allows supply chain leaders to better understand the costs of receiving. Understanding the cost per line within receiving can help managers better plan inventory, reorder, and account for variations to meet demand during peaks and lulls. 
4. Internal Operations—Receiving Cycle Time: The receiving cycle time is the total amount of time it takes to process a delivery. It is calculated by dividing the total time for a delivery by the number of total deliveries. As the result shrinks, receiving cycle time, the time needed to process an average delivery, will decline. Obviously, faster-receiving cycle times amount to more efficient processes within inbound operations. 
5. Internal Operations—Rate of Customer Returns: Understanding the rate of returns is essential to preventing the dissolution of inventory, keeping inventory under control, and identifying potential defects within a product. To achieve the best customer satisfaction levels possible, companies must offer returns. However, the rate of returns can be easily calculated by dividing the total number of returned products by the total number of products sold. Additional metrics can be calculated by dividing the cost of returned goods by the total cost of goods sold. As the values decline, the volume of returns will decline, and companies can rapidly judge the overall health of their returns management practices. 
6. Staffing—Time Since the Last Incident: The time since the last incident, such as an injury, is another essential warehouse management KPI to track. Since the top warehouse KPIs include a high focus on safety and keeping company costs in check, a longer time since the last incident alludes to a safer, healthier workplace. As a result, more employees are likely to stay with your company, reducing staff turnover rates. 
7. Staffing—Time Lost Due to Injury: Time lost and costs incurred as a result of an injury should also be tracked. The volume of time lost due to an injury amounts to un-worked hours on the floor, so it creates additional expenses. Furthermore, efficiency and other supply chain inventory and performance metrics may suffer as a result of time lost. 
8. Internal Operations—Putaway Efficiency: Tracking the putaway inventory efficiency includes KPIs for the putaway cycle time, the accuracy rate of locating the inventory, and the putaway cost per line. Putaway cycle time is calculated by taking the total time for putaway activities and dividing by the total time worked. Location putaway accuracy is determined by dividing the inventory units located correctly by the total inventory units located. Finally, the putaway cost per line is calculated by dividing the total cost of putaway activities by the total putaway activities completed. Putaway efficiency is improved when the cycle time decreases, accuracy increases, and the cost per line decreases.  
9. Internal Operations—Cost Per Order: Tracking the cost per order is an average that helps businesses understand product pricing and quickly judge overall profitability or contraction within the operation. The simplest way to calculate this metric is to average the total value of all costs by the total number of orders. In other words, add all costs together, and divide by the total number of outbound order transactions. 
10. Internal Operations—Order Picking Accuracy: Order picking accuracy is another of the vital top warehouse KPIs to track, and it is easy to calculate. Divide the total number of orders accurately picked by the total number of orders picked.  As the value increases, overall accuracy increases. 

Start Applying the Top Warehouse KPIs for Success in 2020 

Finding the best way to improve operations is not always simple, but supply chain leaders that understand the top warehouse KPIs can better manage inventory, supplier relationships, deliver on higher customer service levels and stay competitive. Stay tuned for part two of the warehouse KPIs for supply chain professionals to track in our next blog. Learn more about what your organization needs to do to improve warehouse efficiency by working with an expert in supply chain systems and technology, such as Veridian. Visit Veridian online to get started now. 

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Where Do Supply Chain Leaders Go Wrong with Omnichannel Supply Chain Analytics?

The biggest problems with omnichannel analytics can be traced back to a simple issue. Supply chain leaders can implement the best systems on the planet, but if every possible scenario is not considered, the system lacks value. In other words, the subpar integration between systems and failure to gain real-time visibility into all assets remain a key obstacle to the application of omnichannel supply chain analytics. As explained by Supply Chain 24/7, there is another factor that affects the performance of supply chain analytics. The sheer diversity of the analytics themselves leads to misconceptions about their value. As an example, consider analytics covering insights in transportation management. However, transportation management involves hundreds of individual processes. The simplest misapplication could result in poor outcomes.

Additionally, warehouse managers and supply chain leaders may lack the resources to apply analytics. Analytics can focus on the smallest issues, but their most significant potential lies in the diverse application. Therefore, it is essential to manage omnichannel supply chain analytics proactively.

Omnichannel Analytics Enable Insight Across Your Entire Supply Chain

Omnichannel supply chain analytics have the potential to give supply chain leaders insight across their entire enterprise. While it is a counterproductive process to lump analytics into one group, they must possess the capability to communicate with one another. This is no different from customers working to find the best deal on a product or service. Omnichannel analytics bridge digital and physical channels, giving supply chain leaders the ability to uncover relationships between data. Yes, data refers to people in this case. However, it is not just the personal attributes of a shopper that make supply chain analytics valuable. It is their implication for better demand forecasting, management of inventory placement, distribution strategies, and more.

How to Apply Analytics to Drive Greater Results

Applied analytics in supply chain management can lower overhead expenses, offer real-time visibility in product location, and empower leaders with better collaboration, boosting labor management along the way. However, the best benefits in the world fall on deaf ears if the process falls short. Supply chain leaders should follow these tips to improve their use of analytics and bolster supply chain performance.

• Connect every asset and process to the Internet. Connected systems allow for real-time data tracking. More importantly, all connected assets must provide a direct path forward. In other words, the information should build to arrive at a recommendation.
• Recognize the unique circumstances that influence your operation. Every supply chain is different, and varying processes will affect the performance of your operation. Depending on the individual needs of your customers, additional supply chain services may be necessary. For example, added last-mile delivery services, such as installation or white-glove service for large and bulky items, may be required.
• Get the expert assistance necessary to deploy supply chain analytics to their fullest potential. Let’s be honest. Supply chain leaders are focused on management, not data analysis. According to Pierre Mitchell via SpendMatters.com, supply chain leaders become so focused on automating processes that they overlook the potential of analytics. Regardless of how many devices are connected, their application and processing through analytics are what makes them valuable. As a result, supply chain leaders should seriously consider working with an expert in selecting analytics platforms, as well as integrating them to ensure success.

Advance Your Organizational Goals with the Right Analytics Strategy

Omnichannel supply chain analytics are about understanding your customers, their habits, the actions of your supply chain partners, your transportation network, your raw material suppliers, warranty service managers, and everything in between. There is ample opportunity for error, but you can avoid these risks by following the three critical steps to success outlined above. Learn more by visiting Veridian online today.

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The Growth of E-Commerce and Omnichannel Are Top Driving Factors in Warehouse Management System Adoption 

The growth of e-commerce and omnichannel stand out among the drivers of modern-day warehouse management system adoption. E-commerce and omnichannel sales have continuously broken records for demand and volume. The 2018 holiday shopping season saw more customers shop for online-only purchases through Amazon, as well as a record number of shoppers in traditional brick-and-mortar stores. In addition, Whttps://veridian.info/warehouse-automation-technology/almart saw a significant increase in the number of purchases made online and picked up in store. The days of using legacy systems and manual processes are inefficient and ineffective at handling the strong demand placed upon the industry by the growth of e-commerce and omnichannel.

Worsening of the Talent Shortage

The talent shortage of supply chain management is continuing to grow worse. More than 50,000 baby boomers retire each day, and the industry is struggling with attracting members of the newer generations, including millennials and Gen Zers. As the talent shortage worsens, supply chain executives will be forced to adopt a new warehouse management system capable of managing scarce labor resources and deploying automation in warehouses, distribution centers, and logistics networks alike.

Technological Obsolescence of Existing Systems

The technological obsolescence of existing systems is another factor driving more companies to warehouse management system adoption. SKU proliferation exceeded the limits of most homegrown WMS solutions and even those that have managed to keep up still struggle with updates and improvements necessary to meet the demands of e-commerce and omnichannel. Therefore, the costs of maintaining an in-house or homegrown WMS may be higher than adopting a new system that leverages the latest technologies and functionalities.

Automation in Warehouses, Distribution Centers, and Logistics Networks

Automation in warehouses, distribution centers, and logistics networks is essential as companies have moved away from regional networks and toward globalization. Today, consumers may shop from anywhere in the world, so the increase from e-commerce and omnichannel is much more significant than it appears. Automated technologies, including virtual reality, automated storage and retrieval systems, RFID, AIDC, pick to light and put to light, automated conveyors and even order streaming systems, require advanced integration with WMS platforms. In addition, the variety of platforms and systems in use necessitate an open architecture that exists in modern, cloud-based WMS. In other words, open architecture allows systems to integrate more readily and with fewer coding changes if any.

Inventory Visibility and Optimization, Including Reslotting and Order Streaming

Staying competitive with Amazon, Walmart, Target and other Big Box retailers requires an unmitigated level of inventory visibility and optimization. Seasonal and sudden changes in product demand and variety mean warehouses must continuously reslot items to reduce pick times and ship products faster. These demands can be met with modern-day warehouse management system adoption.

Start the Search for the Right, Modern-Day WMS for Your Supply Chain Now

Implementing a warehouse management system is one of the most effective and essential steps in maintaining a competitive advantage and meeting the demands on today’s supply chains. Instead of risking it all to keep your existing system running, start looking for a new system immediately, and if you are uncertain where to start, Veridian can help.

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Challenges in WMS Cycle Counting

Managing a WMS and cycle counting is essential to reducing supply chain costs and fulfilling more orders. Managing a WMS in the world of eCommerce while maintaining stringent cycle counting practices derived from increased product volume and activity can create many challenges. These challenges include:

• Multiple SKUs.
• Increasing number of vendors.
• Greater demand for efficiency by stakeholders and consumers.
• Poor slotting practices.
• Lack of visibility into bin locations.
• Failure to track replenishment and procurement activities.
• Multiple locations and continuous operations.

The Right Cycle Count KPIs Make or Break Productivity

The right cycle Count KPIs can make or break productivity, and as explained by Shane Starr of Explore WMS, Warehouse Managers need to implement a process known as “skilled cycle counting.” Skilled cycle counting refers to reducing instances of documenting discrepancies, following up on issues that led to inaccurate cycle counts, enabling process improvement, and taking corrective actions to minimize the inaccuracies in the future. Achieving these goals requires the use of data to measure performance and accuracy in inventory management, so Warehouse Managers must develop robust inventory management KPIs to enable such improvements.

Which Inventory Management KPIs Are the Best?

Identifying the best KPIs for your facility can be a difficult task. Dozens, if not hundreds, of KPIs can exist for every activity. The distinction between typical KPIs and the best KPIs is that the best KPIs can be leveraged to reduce demand for physical cycle counts. This may include the use of a WMS to reconcile issues and prevent problems from arising in the first place. According to Paul Trujillo of Business2Community, the right inventory management KPIs must include:

• Inventory turnover. Warehouse Managers need to understand inventory turnover, and how it could adversely affect inventory levels.
• Carrying cost of inventory. The carrying cost of inventory KPI should also consider added expenses, like labor costs to manage inventory, insurance, and both packaging and shipping costs.
• Efficiency during receiving. Maintaining an inaccurate cycle count goes back to accuracy during receiving. Efficiency and accuracy should be tracked through a common KPI.
• Order picking and packing. Similar to the importance of accuracy and efficiency, and receiving, order picking and packing will affect inventory accuracy. As a result, Warehouse Managers may need to integrate picker performance metrics with this KPI.

Leverage Data With Full System Integration Now

The best WMS and cycle counting practices lack value if your organization does not understand how to develop and leverage inventory KPIs. Make sure your organization understands the challenges in WMS cycle counting and start working on developing proper inventory management KPIs today.

Veridian, a Manhattan Associates, HighJump, and JDA warehouse management system implementation company, can help you realize your supply chain success. Fill out the contact information below in order to schedule a consultation call with one of our supply chain professionals.

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What You’ll Learn in this Warehouse Metrics White Paper

In this all new white paper from Veridian, you’ll learn the following Warehouse Metric you should be tracking as a supply chain executive to aid you in your quest to continually improve & root out inefficiencies in your warehouses:

• General Warehouse Management Metrics
• Picking Metrics
• Customer Metrics
• Employee Performance Metrics

Learn more by filling out the form below to download your copy today.

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The modern supply chain grows increasingly complex with each passing day. The digitization, focusing on fundamentals and change, augmented reality, artificial intelligence, and many other factors are transforming how the supply chain functions. Once, the lean supply chain was considered to be the most effective form of manufacturing and supply chain management. However, a new concept in supply chain processes, the agile supply chain, is quickly growing to replace the often overused term.

Unfortunately, many supply chain entities do not understand or fail to grasp the full scope and concept of agility and how and it functions in relation and contrast to a lean supply chain. Let’s take a look at how the agile supply chain is quickly replacing the lean supply chain.

What Is the Agile Supply Chain?

The agile supply chain basically refers to the use of responsiveness, competency, flexibility, and quickness to manage how well a supply chain entity operates on a daily basis. Unlike the lean supply chain, the agile supply chain uses real-time data and updated information, as reported by Martin Christopher in Industrial Marketing Magazine, to leverage current operations and real-time data against demand forecast, which helps to improve the overall efficiency and productivity of the given entity.

Another key benefit of agility in the supply chain is focusing on avoiding potential shortages and eliminating excessively stocked inventory. In a sense, overstocking inventory was a typical response of lean concept. Since lean concept focuses on making processes more effective and efficient, many supply chain entities often ended up with a huge stock of merchandise. Unfortunately, changes in the economic market, consumer demand, and the growing customization of goods has led lost costs as inventory was incapable or became unwanted over time.

In a report by McKinsey & Company, up to 94 percent of companies that had implemented supply chain practices with other solutions, are able to deliver on time and in full, without keeping inventory in excess of 85 days. Similarly, companies that did not implement agile practices often had inventory levels remain in the warehouse for more than 108 eight days, and only 87 percent of deliveries were on-time. This does not even consider how many deliveries may not have been fulfilled, such as delays in shipping processes, customization, or errors in order picking processes.

How Is Agility Fundamentally Different From Lean Concepts?

The aforementioned information provides insight into how lean concepts in the supply chain differ from an agile supply chain. However, a true understanding of agility in the supply chain must address how lean concepts are applied to the agile supply chain.

For supply chain entities who has used or implemented lean concepts in supply change management, the company has removed extra costs along the way.

For example, the use of a computerized system to automatically generate orders and robotics to pick these orders would refer to leaving concepts in the supply chain.

However, the fallacy in the lean supply chain rests on the fact that this information that has garnered from that lean supply chain is not used to make a predictive, quantitative analysis of what will be needed in the future. As a result, the supply chain often has overstocking issues and is incapable of delivering a near perfect degree of visibility.

Additionally, the agile supply chain is able to adapt to rapidly changing environments, such as the economy, customization, trends, and customer demands, among many other factors. By making a supply chain able to respond to such issues immediately, supply chain entities can successfully navigate the turmoil that may arrive and present itself throughout the course of manufacturing, shipping, and the reverse logistics supply chain.

Why Does Agility Benefit of Supply Chain?

Agility practices enable the supply chain to change how processes operate. With the use of lean concepts, the supply chain may have improved the workflow of individual employees. Yet, as explained by GT Nexus and Kurt Salmon, implementing agile supply chain solutions with real-time data modular and raw material reserve formulations need to be placed close as possible to the end-product. Furthermore, agility allows supply chain partners to work together to produce the amount of product that is needed daily, not based on quarterly, monthly, or yearly forecasts. Essentially, agile solutions are a means of taking the lean supply chain and improving it to respond and foster supplier-to-customer-to-manufacturer relationships.

Agility also provides other benefits to the supply chain industry. By maintaining agility, supply chain entities can adapt to high variety, sudden changes in volume describes Martin Christopher. Unfortunately, this implies the supply chain may not be able to produce a high volume of goods if certain materials are available. As a result, supply chain entities who have implemented agile supply chain solutions understand that real-time data means the sudden change in demand could occur without warning, which could undermine the relationship between suppliers. Therefore, these entities have sought to find ways to still arrive at the same finished product, but at a customized result for each order.

For example, a supply chain entity in fashion or textile printing may not print the actual materials until those materials have already been ordered by a consumer. However, this implies the printing on the materials would not be able to take place until an order has been created, and subsequently, the printing processes would need to take place as close as possible to the area where the order would be fulfilled.  Ultimately, this critical point in the agile supply chain goes back to breaking down organizational silos and rigid structures to better meet the demands on a local level.

Putting It All Together

Agility in the supply chain is rapidly changing how supply chain entities operate, but executives and supply chain management solutions’ providers need to understand how agility and lean concepts must work together to produce a more efficient, demand-driven supply chain. Failure to employ both agility and lean concepts in tandem could result in severe delays for a given supply chain entity.

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Today’s warehouse managers often accrue massive amounts of performance data, but sometimes find they can apply little of it toward making productivity gains or customer service improvements. Instead of becoming overwhelmed with data, managers should identify and focus on the most useful warehouse management metrics to gather, report, and apply. 

The Perfect Order: Made by Understanding Warehouse Management Metrics

Tools or modules often found in warehouse management systems (WMS) can automatically capture key data over a specified time period (such as one month) and display and report it as graphs and trends supported by the underlying data. This capability should make it easy to quickly identify problems. When implementing new measurement tools and best practices, consider starting with what your customers care about most—the Perfect Order. Every warehouse strives for Perfect Orders, in which customers consistently receive the right product, on time, undamaged, and with the correct documentation.

With virtually error-free shipments, customer satisfaction increases and customer support costs decrease. This is the backbone of the reasons why tracking metrics, and in this case, warehouse management metrics, is so vital….to have more control and affect change. The Perfect Order is a calculation of the error-free rate of each stage of a purchase order. When customers have a problem with an order received, they notify their distributor. The distributor then tracks the error in the WMS with “reason codes” assigned to categories such as warehouse pick accuracy, on-time delivery, and invoice accuracy. This data is then calculated to determine the Perfect Order metric. If, for example, five warehouse pick accuracy errors are flagged on 10,000 lines, total warehouse pick accuracy rate is 99.95 percent. If on-time delivery rate is 99.2 percent, invoice accuracy rate is 96 percent, shipped without damage rate is 99 percent, and order entry accuracy rate is 99.2 percent, then the total Perfect Order metric is 94.04 percent.

Made to Order….Shaped by Tracking and Enacting Upon Insights Gleaned from Warehouse Management Metrics

Additional recommended warehouse management metrics to consider when evaluating a warehouse’s order performance include the following:

• Fill rate: This data measures lines shipped versus lines ordered by a customer. Fill rate encompasses more than just warehouse performance because it also depends on ordered items being in stock and available. From the customer’s perspective, fill rate represents the service level a distributor can provide.
• Ship to promise: This figure measures the timeliness of order filling, while the shipping accuracy rate measures the accuracy of order filling as viewed by the customer.
• Customer retention: This metric charts the number and percentage of customers during the prior time period who are also customers in the current period. Depending on the frequency of purchase, longer time periods, such as six months or one year, provide a more meaningful measurement. Over several years, you can chart the trend of increasing or decreasing retention.
• New customers: This record charts the number and percentage of new customers in each time period, where a new customer is one who bought in the current period but not in any preceding time period.

Warehouse Management Metrics to Know What’s In Stock

Once these order metrics are well in place, consider key warehouse management metrics for tracking and managing inventory. With the right inventory tools, distributors and wholesalers know at all times exactly what product is in the warehouse, where it’s located, and when it needs to be replenished. Greater inventory accuracy and control results in less overstock/dead stock, higher turnover, and better data for financial planning. Key inventory warehouse metrics include:

• Inventory accuracy: Used to identify product discrepancies, this measurement is typically derived from cycle counts, a function within a WMS that automatically counts a subset of inventory on a daily demand or on a scheduled basis.
• Inventory turnover: This figure measures purchasing management and timeliness of vendor returns. It is the number of times that inventory cycles or turns over per year.
• Expense Controls: The next recommended area of measurement, and the one that matters most to CFOs, is expense control. Specifically, this data looks at total warehouse costs as a percent of company sales. Warehouse costs typically include direct and indirect labor, employee benefits, supplies, operating equipment and maintenance, rent, utilities, and depreciation. Expense control also measures transportation and logistics costs as a percent of sales, as well as sales and lines shipped by each warehouse employee per hour.

Tying all the Warehouse Management Metrics Together

Once enough warehouse management metrics and transaction data points have been accrued, it is easy to establish some realistic productivity standards. Consider benchmarking the warehouse cost structure and productivity per person against other distributors. Or, benchmark against industry survey results such as the annual research survey conducted by Georgia Southern University and other major reports such as from various consultants. Measuring progress against the warehouse’s own targets is more useful, however, because performance depends on a variety of unique factors such as processes, specific customer expectations, and automated materials handling infrastructure. Over time, consider leveraging these key warehouse management metrics by applying new variables. For example, a warehouse employee incentive might spark a dramatic improvement in Perfect Order numbers. Chart the impact. And continue to seek only those key data points that truly demonstrate the warehouse’s contribution to the company.

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Throughout the supply chain, the use of metrics to track and understand processes provides an invaluable resource for ensuring increased production and customer satisfaction. Additionally, the use of metrics fosters positive relationships with coworkers and adherence to rulesets and best practices for the respective third-party logistics provider (3PL). Many of the following distribution center metrics to track closely mirror those found within transportation and manufacturing, but this listing will focus on those involved in distribution centers. Distribution centers have a tendency to become like the lost cousin when compared to other aspects of the supply chain, but they play a valuable, constantly-needed role to ensure the timely delivery of merchandise to retailers, customers, and others.

What Distribution Center Metrics Need Tracking?

Every movement within a distribution center can be tracked, and the decision of which metrics to track rests with management. However, the most important metrics can be categorized into the following eight areas.

On-Time Shipping

The overall goal of the distribution center is to make sure that freight makes into the correct mode of transportation at the appropriate time. This involves monitoring for the late departure of shipping containers as well as premature completion of a specific freight loading time. While finishing a specific shipment load sounds like it would benefit the company, it may actually detract from duties to other shipments, which in turn results in a cascading effect of inaccurate departures.

Accuracy in Order Fulfillment

The second most important distribution center metrics to track involves the accuracy during order picking processes. As workers are given their respective lists of items to pick, it would stand to reason that each employee should be able to complete the retrieval process quickly. However, impatience has a tendency to result in errors in judgment. Furthermore, this could lead to more than the requested number of product being included in shipment, which results in shrink of inventory. However, the alternative to this, not including an item, can anger an end-customer and permanently harm the customer-business relationship.

Monitor Warehouse Capacity

The 26^th State of Logistics Report found that many warehouses are operating at, or near, capacity. Distribution centers need to know how much additional inventory they may take on and where their current inventory lies. Many distribution centers use RFID measures to monitor inventory, but human input is still needed to assess if the center should increase, or decrease, the rate of loading times.

Identify Peaks in Warehouse Capacity

Throughout the year, warehouses experience changes in capacity due to increases and decreases in consumer spending. For example, shipping during the holiday season tends to increase as more people begin purchasing items online for gifts. However, distribution centers cannot possibly foretell how much of a specific product needs to be available unless the distribution center management has previous accounts of how much product has typically been required during similar time periods. This is where the metric of monitoring warehouse capacity and peak volume comes into play. Appropriate warehouse tracking must include monitoring of peaks in capacity.

Cycle Times

This metric actually includes three unique distribution center metrics: dock-to-load time, internal cycle time, and total cycle time.

• Total cycle time refers to the amount of time from arrival of product to the distribution center to the successful departure of shipments containing the respective product.
• Dock-to-load time refers to the amount of time typically required to load a given shipping container. Many distribution centers have the freight prepared and ready for immediate loading. However, this only occurs properly if the distribution employees benchmarks for ensuring the accurate picking of products by workers, or even robotics, prior to arrival of the shipping container.
• Internal cycle time describes the speed at which the pre-arrival completion of a shipment picking and packaging takes place.

Ultimately, each cycle allows management within the distribution center to identify and isolate inefficiencies and encourage positive shipping practices.

Annual Employee Turnover

The constant on-the-go mentality of distribution center goals results in exhaustion. Unfortunately, some employees make the decision to move on to other employment. This is a factor that affects the public perception of a distribution center. Disgruntled employees can ruin a distribution center’s reputation and cripple the existing workforce of the center. Each year, the distribution center needs to assess the workforce turnover and make changes to reduce it.

Putting Away of Incoming Product

When a distribution receives a shipment, employees have a specified interval of time to unload the product and put it away in its correct location within the distribution center. This metric allows distribution center employees to identify which types of product require the most time. Therefore, additional staff can be diverted to labor-intensive unloading of lines and enhance the overall efficiency of the center.

Percentage of Damaged Products

When a package arrives at a customer in damaged condition, the distribution center needs to know about it. This ensures the distribution center identifies if the damage occurred as a result of center staff, driver behaviors, or an issue during the unloading of the truck at its end-destination.

The use of these distribution center metrics helps distribution centers flourish. The use of these metrics are beneficial to the distribution center for improving accuracy, encouraging a positive employee morale, and ensuring superior customer service to others in the industry. Fortunately, many of these tracking measures are becoming digitized and easy-to-use by all workers in a distribution center as well.

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