SUBSCRIBE FOR FREE! Which warehousing metrics should you care about? You don’t need to boil the ocean. It’s worth narrowing your focus — really narrowing it — to a short list of operational metrics that offer the greatest warehousing insights. Here we’ll zero in on six metrics — three inbound metrics and three outbound metrics — that are a great starting point for measuring the performance of your warehouse.
WAREHOUSING VITAL SIGNS:
6 INBOUND AND OUTBOUND METRICS YOU CAN’T AFFORD TO IGNORE
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By Stephen T. Hopper, P.E.
sk yourself: On a personal level, when you have regular physical examinations (and hopefully you do), why does your physician’s staff check your vital statistics (height, weight, pulse, blood pressure, etc.)? Why do they review certain specific test results (bloodwork, urinalysis, etc.)? Why do they track these numbers over time? The answers are obvious: These statistics allow your doctor to evaluate your health objectively, so he or she can help you maintain and improve it. Be honest — you wouldn’t respect a doctor who evaluated your health without measuring these kinds of things, would you? What about your warehouse or fulfillment center? Are you capturing and tracking the right metrics in your operations? If your answer is no, then seriously, how can you evaluate the performance of your operations objectively, so you can maintain and improve it? The reality is you can’t. Number crunching can be tedious and challenging, especially if you’re the type who tends to avoid math. (You know who you are.) But if you want efficient warehousing operations that serve your customers accurately and fast — and serve your shareholders profitably — then you should be measuring and tracking certain meaningful metrics that serve as the hidden vital statistics of your warehouse.
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The Inbound Side Receiving Accuracy You need to know whether your suppliers are sending you exactly what you ordered, so you can fill customer orders accurately and quickly. Receiving accuracy measures whether the correct items, their quantities, and their conditions match what you expected, expressed as a percentage of total receipts processed. Higher percentages mean fewer headaches downstream. Why it matters: Apologies for referring to the expression, but you know what they say flows downhill, right? Receiving errors create a domino effect: incorrect inventory records, mispicks, delays, and unhappy customers. Higher receiving accuracy helps you prevent these costly downstream problems and keeps your warehousing operations running smoothly. How to calculate it: Total error-free receipts Receiving accuracy= x100 Total receipts
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Dock-to-Stock Cycle Time This statistic measures the average time it takes from the moment a shipment arrives at your dock to the moment it’s been properly put away and available for sale or use. Measured in hours, shorter times mean faster inventory availability, smoother operations, and less congestion on your docks. Why it matters: Longer dock-to-stock cycle times tie up dock doors, floor space, labor, and cash, and they delay inventory availability for your customers’ orders. Shorter dock-to-stock cycle times reduce congestion, improve inventory turns, and make customers happy because of faster fulfillment. How to calculate it: Dock-to-stock cycle time (for one receipt) =Timestamp when items are available in inventory - Timestamp when trailer or truck arrived (Determine your average dock-to-stock cycle time by simply averaging these numbers for all your receipts.) Inbound Labor Productivity Labor costs are often the largest operating expense associated with a warehouse, so tracking your labor efficiency should be a priority. This metric shows how efficiently your workforce is handling your inbound work. It’s typically measured as cases or pallets put away per labor hour. Higher productivity means lower labor costs and faster throughput. Why it matters: Inefficient labor drains profits. Even if your two previous metrics are good — you’re receiving the