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Key Performance Metrics for Effective Warehouse Operations

To ensure a warehouse operates at peak effectiveness—including quality work, safety and productivity—certain metrics should be measured on a routine basis.

Only by measuring key performance indicators (KPI), can managers gain the information necessary to prioritize problems and improve overall warehouse operations.

In this guide, we’ll share the most important KPIs to measure and determine the value of your warehouse’s functions.

Warehouse Receiving Metrics

Your warehouse receiving process can make or break efficiency in the rest of your warehouse because inefficiencies in receiving can cause a domino effect that reverberates throughout the entire system. In other words, if you start off on the wrong foot, it’s hard to catch up. Therefore, measuring the efficiency of your receiving area is one of the most important KPIs.

Two key receiving metrics to measure are the time trucks spend at the dock and the time required to process inventory for intake. By measuring truck time at the dock, you can identify an array of potential problems, including inadequate labor, low productivity, infrastructure issues and more. The less time trucks spend at the loading dock, the more money you’ll save and the higher productivity will be.

The same applies to the time involved taking in inventory. When you have inventory onsite but not accessible, those goods cannot be packaged and shipped, which means the inventory has no value because it is unable to add income.

Warehouse Performance Metrics

Several KPIs related to internal warehouse operations should also be measured. After all, every day that inventory sits in your warehouse costs you money. Because of this, it’s important to measure the carrying costs of inventory. These costs can include capital costs, inventory risk, inventory service costs and obsolescence.  

Inventory turnover is another important performance metric worth noting. This is the length of time it takes for your warehouse to go through its entire inventory. You should compare your rate with industry averages to determine if your operations are as efficient as possible.

To ensure your warehouse is performing at its peak, you should also measure order-picking accuracy. The best warehouses operate at 99.9 percent accuracy, and the median is still an impressive 99.4 percent. If your numbers are below that, you have work to do.

Areas to Improve for Better Warehouse Operations

In addition to the warehouse receiving process and internal operation, checking other areas can also help improve efficiency and production:

  • Housekeeping
  • Material handling processes
  • Utility use
  • Order-fulfillment systems
  • Use of space
  • Worker training

In the end, no warehouse is going to be perfect. But don’t be complacent with warehouse operations. Measure KPIs with an eye toward constant improvement. Learn more about how Prologis can assist with streamlining your warehouse operations for maximum performance and efficiency.