Measuring performance isn’t something that requires a degree from business school.
Key Performance Indicators (KPI’s) are a better barometer of a business’ actual health than the bottom line on the balance sheet.
Cash flow is not everything, looking at supply chain operations and how they are performed over time can show an entirely different picture.
Once warehouse management has a baseline reading of operations, improvement – realistic improvement – is possible.
Make Good Changes
Sometimes the best changes are the ones that help warehouse managers and C-levels executives understand the nuts and bolts of warehouses and distribution centers. Walking the job can be essential to understanding workflow and where choke points and bottlenecks are.
KPI and other management tools are meaningless without a grounding in How Stuff Works. Moreover, the soft side of change is critical to managing – how the people facing the changes feel about them and the input they have is as critical to success as any new technology or procedures.
No KPI exists in a bubble. KPIs define points in the company’s processes and have to be looked at in a larger context. Setting warehouse performance KPI’s is an entirely subjective affair, these must be set internally by those who know the ins and outs of the business, including order picking, inventory turnover, and creating a balanced scorecard. Before brushing off KPI as just another bell and whistle, businesses should consider that their competition is almost certainly measuring warehouse metrics.
Now, let’s look at ordering for example, and the company’s ordering cycle for a given SKU (assuming a live inventory system that triggers a purchasing alert when stock falls under a certain number).
Once the order is triggered, the following KPI will be affected:
- ordering cycle for SKU1234
- order turnaround time
- order cost vs. value
- vendor’s fill rate
- order in-shipment damage
- check-in time
- put away time
- pick time
- outgoing order fill rate
The flow of goods through a warehouse or distribution center can bottleneck at any point, some of which will be outside anyone’s control, but two of the most vulnerable points are putaway and picking.
Eliminating the bottleneck at those two points takes something that makes them both more efficient and accurate.
Pick to light technology is an affordable solution, and using Voodoo Robotics battery-powered IoT devices allows for deployment with minimal disruption and downtime.
Improve Your KPIs
Remember that there is more to the health and viability of business than the raw cash flow. Understanding the underpinnings of warehouse and distribution center operations and KPIs is vital when preparing for success and growth. Putting the infrastructure to support growth means less disruption later, and fewer problems that can unintentionally grow with a fast-moving business. Find out what Voodoo can do with top tech for warehouse, 3PL, and distribution centers today.