Three Key Metrics to Measure Warehouse Efficiency

warehouse efficiencyIf you do not measure warehouse efficiency, you’re missing an opportunity to improve your warehouse operations and save time, money, or both. It can be challenging to measure warehouse efficiency, but the resulting information is well worth the effort.

The following three areas provide a starting point for tracking and measuring how efficiently your warehouse is being managed and operated. It helps to measure efficiency over time to gather an average; if you measure only during the off-season, you’ll overestimate the effectiveness, and if you are measuring during peak season, you may under-estimate your efficiency.

Warehouse Management Systems: Overall Metrics

The starting point to measure efficiency is within the warehouse management system. These systems can break down orders into components. You can view each step of the process and estimate time and accuracy. You can also see fulfillment errors and correct these if patterns become apparent.

Productivity and Labor Metrics to Measure

Most warehouse management systems include both productivity and labor metrics. Both are great to help you improve warehouse efficiency. Some metrics to measure include:

  • Fill Rate: The number of items being picked compared to the number of items ordered
  • Order Accuracy: How many items are correctly scanned in and out of bin locations
  • Shipping Timeliness: How many orders are filled and shipped according to promised delivery dates
  • Downtime: How much time is there between items picked and is this based on bin location

What do these metrics tell you? They tell you how well your team performs during both peak- and off-peak seasons and under different workloads. They may also reflect how well organized your warehouse is for maximum efficiency.

Mistakes during scanning, lost or mistaken scans on shelf IDs, and problematic purchase orders cause accuracy errors. Excessive downtime or orders waiting too long to ship indicate problems in the shipping area. Orders incorrectly filled indicate picking errors. Each of these notes from your warehouse management system alerts you to areas within the warehouse that should be reviewed and improved.

Track Problems With Stock

It’s not always the workers who make mistakes. Sometimes, there are problems in the ordering system that lead to out-of-stock notices and other problems with warehouse inventory.

Warehouse management systems can alert you to the following:

  • Out of stock. Backordered items can cause a customer order to be delayed, which can lead to poor customer service and disgruntled customers.
  • Expired. The expiration date of products can help you rotate stock or incorporate FIFO processes to ensure few products past their expiration date.
  • Missing. Items incorrectly placed may be listed as missing when they’re just a few feet away.
  • Seasonal. Your warehouse management system can help you watch for seasonal changes that may merit ordering more or less of specific products.

Warehouse Paths for Maximum Efficiency

Lastly, as you review the information from your warehouse management system, use your sense as well as your data to find ways to improve efficiency. For example, watch how people move around the warehouse. Can frequently picked products be moved to areas nearer the shipping room? Can you organize the warehouse to shorten the steps it takes to pick, pack, and ship products?

Warehouse management is an art and a science. Fortunately, with the right warehouse management system in place, you can concentrate on the art of management and let the data guide the science. Data can lead to many improvements, including enhanced warehouse efficiency.

Sage 500 offers Sage Inventory Advisor and other warehouse management tools that can transform your business and enhance efficiency. Contact Emerald TC today about these and other resources for greater warehouse efficiency. Call 678-456-6919.