Your Guide to Warehousing and Distribution Metrics

full warehouse with products on shelves. distribution erp software

Understanding and acting on the metrics of your warehousing and distribution business is essential to your success and profitability. Only through metrics can you fully see how to minimize expenses and maximize profits. Data-driven decisions based on metrics can improve efficiency by adjusting cumbersome processes, reduce the risk of over- or under-buying products, and optimize every area of your company.

However, it’s hard to know which metrics to analyze or how to best analyze them. First, let’s look at the four main types of warehouse and distribution metrics.

The 4 Types of Warehouse and Distribution Metrics

How do you know which metrics to capture? You should aim to collect four types of data:

  1. Descriptive

Descriptive metrics show you what is really happening in your operations. You can use descriptive metrics to analyze lagging indicators as well as set a baseline for the other types of metrics. You must collect these metrics before you can collect any of the others.

  1. Diagnostic

While descriptive metrics find problems within your operations, diagnostic metrics find the root causes of those problems. Warehouse and distribution ERP software solutions that use AI and powerful analytic tools can help managers assess problem areas and determine the causes.

  1. Predictive

Descriptive and diagnostic metrics deal with the present, but predictive metrics deal with the future. Predictive metrics build off the first two metrics to predict the likelihood of some future event. Predictive metrics help you determine when equipment may be likely to fail, whether you can complete a job on time, and more.

  1. Prescriptive

Prescriptive metrics are the hardest to collect, but potentially the most useful. Using all three other types of metrics, prescriptive metrics recommend solutions to eliminate current problems and prevent similar issues in the future.

These metrics build off one another to form highly complex matrices of information.

Common Mistakes

Now that you know which metrics you need, how do you collect them? In the first place, you’ll need a powerful warehouse and distribution ERP software solution to collect these metrics. When collecting metrics, you’ll need to avoid these common mistakes:

  • Bad data: The most obvious mistake to avoid is manual mistakes in data, such as typos or corrupted data. To avoid this mistake, automate as much data collection as possible.
  • Lack of data: Manually capturing data is time- and cost-prohibitive. As mentioned above, invest in a software solution to collect all relevant data.
  • Too much data: On the other hand, not every piece of data is relevant. Spend your time analyzing only relevant data.
  • No strategic alignment: How do you tell which data are relevant? Metrics should be aligned to your company’s key performance indicators (KPIs). If metrics aren’t linked to goals, they won’t be useful to you.
  • No benchmarks: For your metrics to be useful, you must compare them to internal benchmarks, such as numbers from a previous time frame (comparing year-to-year, for example). You should also compare your metrics to external benchmarks: how are your competitors performing on certain metrics?

If you avoid these common mistakes, you’re well on your way to a truly data-driven business.

Need help gathering metrics?

If you’re ready to collect metrics and make more informed decisions, you’ll need the right software. Warehouse and distribution ERP software can be customized and extended to collect, analyze, and report on any business metrics you choose. Emerald TC can help you choose, implement, customize, and support the perfect software solution for your business. Contact us today to get started.

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