Benchmarking Warehouse Performance Starts With Data

Data is the cornerstone of getting a true snapshot of not only how well your distribution center is operating, but also the impression your company is leaving with customers.

However, in order to build toward the answers companies seek, they must start by laying that cornerstone and begin collecting data. Doing so brings a host of questions, including: What data is meaningful and what is just data? How often should we collect the information? What are acceptable numbers and what numbers are indicators of problems in need corrective actions? What do I do with this data to improve processes? All are important questions to ask and the answers may vary by company.

Below are a few important key performance indicators (KPIs) that can help companies get an idea of how their distribution centers are operating.

Shipping accuracy. Arguably one of the most important KPIs, shipping accuracy tracks that the shipment arrives at the destination exactly the way it was released, with the correct item and the correct quantity

Total damage compared to on-hand inventory. Simply, the amount of damage caused in the distribution center compared to the total on-hand inventory.

Inventory accuracy. How accurately is inventory managed? This KPI will review each inventory unit and check that it is in the correct location, has the correct count, and is the correct item compared to information in the warehouse management system.

On-time shipments. This is defined by each shipment leaving the distribution center at or before the scheduled appointment time.

Safety. Many operations will hold a standard of OSHA recordable injuries in a calendar year. While the goal of this KPI always will be zero, each company will set a standard based on past history.

Remember, while these are internal KPIs, each has an impact on how customers view your company.

What Is Contract Operations And What Value Does It Bring?

There is a difference between getting things done and getting them done efficiently. One example is running a distribution center in-house. Because the operation appears to run with no major roadblocks, many companies aren’t aware of their true costs and don’t focus the time or resources to drive out inefficiencies and unnecessary expense. This results in a distribution center that is operating sub-optimally and negatively impacting the company’s bottom-line profit. Additionally, allocating resources to an in-house distribution center only diverts attention from the company’s core competencies, priorities, and business purpose.

Turning over distribution center operations to a third party can often reduce costs, improve operational performance, and customer satisfaction, and ultimately help companies better focus on their business priorities.

Use the topics below to determine if your company could benefit from a contract operation.

• Staff recruiting and management. Is recruiting, training and managing warehouse staff an effective use of company time? Could that time be better focused on the company’s core competency.

• Upfront investment. Purchase of racking and material handling equipment is expensive. What is the lost-opportunity cost to tying those dollars up in a major capital purchase? Could they be better deployed in other areas of the business?

• Layout and design. Is your warehouse designed to perform? The efficiency of a distribution center is determined before the first loads are moved. Make the wrong decisions on layout, racking, and design, and the inefficiency will burden a company with overtime and additional personnel costs.

• Management systems. Distribution is driven by big data. Does your facility have the systems in place to collect it? Do you know what the data means and how to act on it? Without a quality warehouse management system, companies operate in a vacuum. Real-time access to this information is critical to the overall performance of the facility and, ultimately, customer satisfaction.