Your business profits are also dependent upon how efficient your warehouses are. Running an inefficient warehouse can be a big disaster for your current and future profits. To analyze warehouse efficiency, the most important things are the metrics you are measuring or the tools you are using.
So, if you are wondering how to measure warehouse efficiency, here are some of the most common efficiency measurement ways that warehouses use nowadays:
1. Extensive Operational Audits
If you aren’t doing regular in-house audits, how would you know if your business is doing good in terms of inventory, safety, or efficiency? To correctly do audits, pay attention to these key points:
- Warehouse capacity – Differentiate between the current data and the ideal data so you can build towards it
- Warehouse layout & flow – Make a note of all problem areas that might be withholding your machines or staff
- Storage systems – Check if any of your storage systems are difficult or dangerous to access
- Customer engagement metrics – Maintain a satisfied customer base while managing what your business needs
- Are all inventory systems performing to the best of their abilities – Check for all major and minor glitches in your systems that may be causing slowdowns; regulate checkups with IT for better analysis
- Are all safety systems working flawlessly – Nothing can cause a bigger hiccup for a warehouse than operation-halting breaches in security or safety
Once your internal audit is done, work towards correcting or improving the system.
2. Create Warehouse Performance Goals
When the audits are done, call for a team-wide meeting with the necessary department heads and discuss your goals of warehouse efficiency. Once you and your managers are clear on the numbers, including the timeline, you can make official updates to your warehouse systems.
Make all the necessary organizational, staffing, and inventory tracking changes to ensure every working component in your warehouse is working efficiently. Post that, maintain the charts with transparency to create visibility for all the department heads so that everyone is on the same page at all times.
3. Create Necessary KPI Goals
You must have set KPIs (key performance indicator) goals for your warehouse staff but you have also made changes in your operational audits and there is new data right now. Therefore, this is the time to bring some more improvements to their KPIs.
Instead of focusing on new areas, customize KPIs for your entire warehouse staff. Here are a few primary departments that must be included in your list:
- Packers – Create a list for volume received per hour, cycle time for each receipt (including accuracy percentage), and cost of receiving for each line
- Pickers – Maintain detailed data of orders picked per hour, order pick per cycle, quality metrics, and cost of picking for each order line
- Shippers – Curate data for order process per hour, cycle time per order, the quality percentage per order, and cost of shipping for each order
In the entire warehouse maintaining order, these metrics can help you improve your warehouse efficiency. Before setting productivity goals, check and identify issues with the fulfillment process. At last, stay alert about stock errors, vendor issues, and upcoming events – they will help you resolve issues that pickers face when trying to fill orders.