How Warehouse Management Leaders Measure Their Success

January 7th 2015 18:40:25 PM

Successful warehouses are not bought – they’re made. The amount of time and energy you put into making your warehouse a smooth operation will determine your company’s success, both today and in the future. Put in the necessary time, energy and effort, and you will reap the benefits of a well-run warehouse. Don’t, and you will end up with a poorly run operation taxing your company’s profits and resources.
To remain successful, warehouse management leaders need to keep a close eye on their progress. While implementing new strategies and processes is always beneficial, understanding how these new strategies and processes are impacting your company is crucial to your success. Implementation without measurement is a surefire way set yourself up for failure.

Why Warehouse Managers Need Metrics
Warehouse management leaders are obsessed with studying metrics in an effort to better their organization. Metrics can provide managers with key insight into the warehouse, helping them identify trouble before it’s too late and determine the best course of action to take. While you can measure a variety of metrics, warehouse management leaders typically group their metrics into the following four categories:

• Operational: The operational metrics serve to measure the efficiency of the warehouse operation. Some examples of metrics in this category include: the number of cases shipped and received, the number of units handled, the number of picks and put-away tasks completed, and the dollar value of the merchandise that passes through the warehouse. All of these metrics help measure the efficiency of the material handling operations within the warehouse (both labor and automation).If your operational metrics show low efficiency levels, equipment such as barcoding software and devices, conveyors, barcode label applicators, and forklifts can automate many of your processes and improve your efficiency.
• Stocking Efficiency: These metrics measure the effectiveness of the warehouse space usage. They show how your warehouse is making use of its space, show how racking and slotting needs are being fulfilled, and determine how these decisions affect the operations by affecting replenishing, picking and putaway task efficiencies. Metrics that measure these stocking efficiencies are directly reflected in the operational metrics.It’s important to measure these metrics, as a well slotted warehouse maximizes the space it’s given and simultaneously enhances the operational efficiency of an organization.
• Fulfillment: Fulfillment metrics serve to measure the ability of a warehouse to fulfill orders on time and accurately. Some examples of metrics in this category include: response time, perfect order metrics, pick and ship accuracy, on-time fulfillment, fill-rates, and order entry accuracy. These metrics measure the effectiveness of the inventory planning and replenishment systems in the warehouse.Companies dedicated to improving their fulfillment metrics are investing more time in inventory planning so they can be prepared no matter what. Inventory management systems provide companies the tools they need to accurately project inventory numbers so they can fulfill orders in a timely manner.
• Financial: The financial metrics serve to measure how well a company is doing financially (and how the other three metrics are contributing to this financial picture). Some examples of metrics in this category include: the costs of labor, fixed costs, cost of utilities, cost of operations, and the depreciation of assets. These metrics depend directly on the other categories and, as a result, will improve directly in response to improvement in the other metrics.

Sage 100 Warehouse Management: Making Metrics Measurement Easy
The above four categories can tell you a lot about your warehouse and how you are performing. By monitoring the metrics in each specific category, you can see your whole warehouse picture and develop your next steps accordingly. The metrics found within our Sage 100 warehouse management (formerly MAS 90 warehouse management and MAS 200 warehouse management) app will help guide you in making the right decisions for your company so you can becomes a leader in your industry. Give us a call today to learn more!