KPIs for Warehouse: What You Should Measure

KPIs for Warehouse: What You Should Measure

Not all key performance indicators are valuable to every industry. Here are the best KPIs for warehouse needs.

Too often, people try to do too many things at once. They try to create and evaluate ideas simultaneously, and this just leads to frustration and poor results. The key to being more creative and productive is learning how to separate creation from evaluation.

This means coming up with lots of ideas first, then judging their worth later. It's a simple process, but it's one that few people follow.

When it comes to warehouses, the same principle applies. You need to know what you want to achieve before you can measure it. Otherwise, you'll just be wasting time and resources.

So, what should you measure when it comes to warehouse performance? Here, we'll go over some Key Performance Indicators (KPIs) that you should be measuring. First, we'll explain what a KPI is and why they're important in any industry.

What Is a KPI And Why Are They Important?

A KPI is a performance metric that helps you understand how well your business is doing. They're used to track progress and identify areas of improvement.

They are important because they give you a goal to strive for and provide feedback on your progress.

Not all KPIs are created equal, however. Some are more important than others, and it's important to choose the right ones for your business.

The best KPIs are specific, measurable, achievable, relevant, and time-bound.

What this means is that they should be focused on a particular aspect of your business, they should be able to be quantified, they should be ambitious but achievable, they should be relevant to your business, and they should have a specific time frame associated with them.

Now that we know what a KPI is and what makes a good one, let's take a look at some KPIs that you should be measuring in your warehouse.

The Best KPIs For Your Warehousing

So which KPIs should you be focusing on to have the most successful warehouse management? What is the best KPI for warehouse needs? Here are some to get comfortable with.

1. Inventory Accuracy

KPIs for Warehouse: What You Should Measure

This KPI measures how accurate your inventory records are. This is important because it directly impacts your ability to meet customer demand.

If your inventory records are inaccurate, you run the risk of either overstocking or understocking items. This can lead to wasted money and frustrated customers.

There are a few ways to measure inventory accuracy. One is to compare your physical count of inventory to your records. Another is to track the number of customer complaints related to out-of-stock items.

2. Order Picking Accuracy

This KPI measures how accurate your order pickers are in picking the correct items. This is important because it directly impacts your ability to fill orders correctly and on time.

Accurate order picking is essential for customer satisfaction and for maintaining a good reputation.

To measure order picking accuracy, compare the number of orders picked to the number of orders completed. Another way is to track the number of customer complaints related to incorrect orders.

3. Order Fulfillment Time

KPIs for Warehouse: What You Should Measure

This KPI measures how long it takes you to fulfill an order from the time it's received. This is important because it directly impacts your ability to meet customer expectations.

Customers today expect orders to be fulfilled quickly, and if you can't meet their expectations, they will take their business elsewhere.

To measure order fulfillment time, track the average time it takes to fulfill an order from start to finish. Like with accuracy, you can also track the number of customer complaints related to late orders.

4. Shipping Accuracy

This KPI measures how accurate your shipping department is in packing and shipping your freight. This is important because it directly impacts your ability to fill orders correctly and on time.

Accurate shipping is essential for customer satisfaction and for maintaining a good reputation.

One way to measure shipping accuracy is to compare the number of orders shipped to the number of orders completed. Another is to track the number of customer complaints related to incorrect orders.

5. Shipping Time

KPIs for Warehouse: What You Should Measure

This KPI measures how long it takes you to ship an order from the time it's received. This is important because it directly impacts your ability to meet customer expectations.

Customers today expect orders to be shipped quickly, and if you can't meet their expectations, they will take their business elsewhere.

There are a few ways to measure shipping time. One is to track the average time it takes to ship an order from start to finish. 

6. On-time Delivery Rate

This KPI is similar to shipping time, but a slightly different measurement. This KPI measures how often you are able to deliver orders on time. This is important because it directly impacts your reputation and customer satisfaction.

On-time delivery is essential for maintaining a good reputation and for keeping customers happy.

One way to track your on-time delivery rate is to track the number of orders delivered on time as a percentage of the total number of orders. Another is to track the number of customer complaints related to late orders, but this doesn't narrow it down quite as effectively.

7. Damaged Goods Rate

KPIs for Warehouse: What You Should Measure

This KPI measures how often you ship damaged goods. This is important because it directly impacts your reputation and customer satisfaction.

If you ship damaged goods, it reflects poorly on your business and can lead to customers taking their business elsewhere.

There are a couple of ways to measure the damaged goods rate. One is to track the number of damaged items as a percentage of the total number of items shipped. Another is to track the number of customer complaints related to damaged goods.

8. Returns Rate

This KPI measures how often you have to process returns. This is important because it directly impacts your reputation and customer satisfaction.

If you have a high rate of returns, it can be an indication that your products are not up to par or that your customers are not happy with their purchases.

Measuring the return rate is fairly straightforward. You'll just need to track the number of returns as a percentage of the total number of orders.

We Can Help You With Your Warehousing Needs

Coastal Cartage is a leading provider of warehousing, transportation, and logistics services in Southern California. Our warehousing services include storage, fulfillment, and distribution to keep your shipping transactions moving as smoothly as possible.

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