Warehouse management has a lot to do with balancing two competing important needs: Speed and accuracy.
In your business, if you manage a warehouse, you typically as possible want your people to work as quickly without causing damage to products or injuring themselves. And at the same time, if you achieve speed at the cost of accuracy, your business will experience costly restocking and customer complaints and re-delivery procedures.
Warehouse productivity is a measurement of how well you manage this conflict, together with factors like on-time delivery and warehouse utilization.
Warehouse management
- Order Picking Accuracy (percent by order)
This metric (percent by order) shows how accurate warehouse employees pick products for orders. Order picking accuracy can drop with multi-part orders, where the employee has to pick products from multiple bins. The metric is also a measure of the quality of order picking instructions. For example, if the order says “Product X,” but the employee finds two bins, each with Product X in a different color, this creates a problem. He or she can take a guess at what color is needed, and then have the company suffer the consequences of a return. On the other hand, the employee can send the order back for confirmation, which creates delay and churn.
- Average Warehouse Capacity Used
A warehouse is a financial asset. Because it has the collection of unsold products, waiting to be sold As a result, its rate of capacity utilization is an important number for senior management. Therefore, if a company is only using 10% of its warehouse capacity, that is will be a problem. It means they are paying for the rented place and upkeep of unproductive space. This may seem like an easy-to-spot problem as for the big problems we face in warehouses, but with multiple sites in the warehouse and changing seasonal inventories, it can be difficult to measure accurately without the right software and procedures.
Measure the performance of your warehousing operations with Matix ERP software
- Peak Warehouse Capacity Used
It is also helpful to know your peak warehouse capacity utilization. The number itself can be revealing, like if it’s too low. But, unless it’s 100%, then there’s room for improvement. Peak warehouse capacity used is a target, a basis for doing better. If the number was 70% last year, then maybe this year, it could be 75 percent.
Benefits of improving warehouse accuracy:
• Improving warehouse accuracy.
• Inventory accuracy measurements.
• Bin auditing Check that empty bins are truly empty “shows the percentage of bins in a warehouse that contain stock”.
- On-time Shipments
Shipments reaching customers on-time is a critical success metric for warehouses. On-Time Shipment Readiness measures the company’s reliability in getting orders prepared for shipment, It’s important on its own because it revers if the warehouse doing its job right.
However, late shipments also create hidden costs and difficulties elsewhere in the business. Late shipments cause customer service calls and complaints.
Late shipments cause package tracking and other wastes of time.
Ultimately, late shipments can damage your brand and cause customers to defect.
- Inventory Count Accuracy by Location
Is the inventory counts accurate in each location? This is another issue that is more important than it looks. If there are fewer items in a bin than the system says there should be, that might indicate theft or unreported damage. The results of miscounted inventory include unforeseen stock-outs and fulfillment problems that negatively customer attitudes.
Example: you count all items in inventory and compare that total with what your records say you should have. Records show 92 items and you actually have 98. You are off by 6 units.
What you will do in this case? The closest solution is, you will use your mind and divide the result of your subtraction by the accurate count. But I do not promise you accurate results to find your variance.
Overall, Strong warehouse productivity metrics arise out of good management, but also by means of the Correct warehouse management software. And this is especially and particularly directed on for businesses with high rates of inventory turnover and extensive product catalogs. Software and related technologies that services warehouse management, like bar-code scanners and RFID readers contribute to tight control and measurement of warehouse operations.
We work with many distribution businesses on the implementation of Matix erp software for distribution and warehouse management. This software solution enables you to measure the five key warehouse productivity metrics described above and more, and along with many others, effective warehouse management is more than simple data.
If you want to learn more about how Matix can help your distribution business function better, let’s talk.