![]() ![]() The supply chain is a complex web of interconnected parts that work together to move goods from producers to consumers. Why are Warehouse Key Performance Indicators Important? In this article, we’ll go over 30 different warehouse KPI metrics, grouped into the following eight categories: Expert knowledge of the product size, expert knowledge of the SKU’s and their velocities, and optimizing the facility layout.” – Michael Bertram “Every successful warehouse operation is driven by three main KPI’s. Expert knowledge of the product size, expert knowledge of the SKU’s and their velocities, and optimizing the facility layout.” Michael Bertram, Major Accounts Manager Hy-Tek Material Handling, LLC. ![]() While many believe that software alone can monitor and track KPIs, it also takes an investment of management time.No matter what kind of warehouse you run, there are key performance indicators (KPIs) that you should be tracking to measure success. Keep in mind that supply chain metrics by themselves can’t solve ongoing issues they are roadmaps and compasses, showing whether an operation is moving in the right direction.įinally, identifying the problem and its cause is just the first step. Still, tracking the performance of an operation with KPIs can be the difference between success and failure. Many outside factors can influence the efficiency of a supply chain. The number varies by industry and manufacturer-specific needs, but, as the general rule, turnover should be 30 days or less. The higher the turnover rate, the more efficiently your supply chain is built. Inventory turnover control is calculated by the number of days materials haven’t moved from warehouse storage to production. Extra inventory ties up valuable financial and real estate resources, as you want to use your space for production, not for storing extra materials and components. This can be examined by supplier, by product category or as a percentage of faulty materials versus good materials.Ħ. Incoming material quality is the amount of time or money spent repairing a product because of the quality of materials used. Find this number by dividing all generated revenue by the number of employees.ĥ. ![]() Productivity in revenue per employee shows areas with the least and greatest return on investment and can be examined on several levels: company, department and even production line. A ratio of 0.5 indicates production lines were stopped half of the time.Ĥ. The lower the number, the more efficiently your manufacturing equipment is being used. ![]() This ratio is a direct indicator of asset availability for production. Downtime in proportion to operating time is the ratio between the time production and supply chain lines are stopped and the time they operate. For many, this is the most important KPI because it speaks to customer satisfaction and can directly affect the bottom line.ģ. It also can identify possible issues in customer logistics. Even you aren’t tracking your suppliers’ ability to deliver materials on time, on-time delivery - calculated by shipments delivered on time versus late - may indicate a need to do so. Tracking this KPI helps you understand whether or not a supplier is reliable.Ģ. On-time supply is the difference between orders delivered on time and delivered late, divided by the number of total orders. Each of these can be automated to at least some extent with enterprise resource planning (ERP) or material requirements planning software:ġ. There are dozens of metrics out there, but I suggest taking a more realistic approach and focusing on just six KPIs. Issues are identified, improvements are made, and goals are more likely to be met. Supply chain professionals understand that key-performance indicators (KPIs) are vital to reaching strategic and tactical objectives. ![]()
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