Warehouse KPIs are performance measurements that enable managers and executives to determine how successfully a team, project, or even an entire firm performs. As a component of a more significant strategy or a method of unifying effort toward a common goal, it is not the end but rather a means of gauging progress toward that goal. Key Performance Indicators (KPIs) can be broad in scope or narrowed to focus on a single metric or process.
Effective resource management is crucial to a company’s success in today’s dynamic business environment. As a vital part of resource management, warehouse storage requires constant vigilance. Research from the National Retail Federation reveals that companies with an inventory accuracy rate of 95% or higher experience an impressive 10% increase in their net profit margins.
In this article, we will discuss the most successful storage KPIs for warehouse management that any company can implement. Brickclay, an industry pioneer in business intelligence (BI) and warehouse storage management, walks you through the 10 KPIs that have proven most useful in optimizing your storage space.
Key Storage Performance Metrics
1. Inventory Accuracy
Maintaining an accurate inventory is vital to running a smooth storage facility. This key performance indicator assesses how well digital stocktake corresponds to the real thing. If the inventory counts are spot on, the company won’t have to worry about running out of stock or having too much of a good thing.
Formula: (Number of Accurate Inventory Counts / Total Number of Inventory Counts) x 100
A recent study found that companies with high inventory accuracy rates (above 95%) experience a 20% reduction in carrying costs and a 98% order accuracy rate.
2. Fill Rate
The percentage of orders that can be fulfilled from in-stock items without resorting to backorders is known as the “fill rate.” A high fill rate suggests well-managed storage and happy customers, whereas a low fill rate may imply insufficient supply or inefficient storage.
Formula: (Number of Orders Shipped Complete / Total Number of Orders) x 100
According to a Retail Systems Research (RSR) report, retailers with high fill rates saw a 5.9% increase in revenue compared to those with lower fill rates.
3. Order Picking Accuracy
This key performance indicator measures how well items picked for shipment correspond to the customer’s order. Improving consumer confidence and decreasing returns can be achieved by minimizing order-choosing mistakes and saving time.
Formula: (Number of Accurate Picks / Total Number of Picks) x 100
A study published in the International Journal of Engineering and Applied Sciences indicated that order picking accuracy levels above 99% significantly reduce labor costs associated with correcting picking errors.
4. Storage Space Utilization
When managed efficiently, storage space may be put to its full potential. This key performance indicator assesses how successfully businesses and individuals use warehouse space, which can help to avoid unnecessary waste and the early construction of new warehouses.
Formula: (Total Used Storage Space / Total Available Storage Space) x 100
Research conducted by the Warehousing Education and Research Council (WERC) found that optimizing storage space utilization can lead to a 10-20% reduction in warehouse operations costs.
5. Order Cycle Time
The duration between when an order is placed and when it is fulfilled is called the “order cycle time.” Customer happiness and productivity both rise when order processing times are shortened. Managing storage space efficiently can do a lot to help speed things up.
Formula: (Order Delivery Date – Order Receipt Date)
In a survey by the Council of Supply Chain Management Professionals (CSCMP), 99% of supply chain professionals agreed that reducing order cycle times is a top priority for improving customer satisfaction and operational efficiency.
6. Cost Per Unit Stored
To manage storage costs efficiently, it is essential to know how much it costs to store each item. This key performance indicator is useful for pinpointing places where expenses can be cut, such as through more efficient use of storage space.
Formula: Total Storage Costs / Total Number of Units Stored
A report by Deloitte on supply chain cost reduction strategies highlighted that understanding the cost per unit stored is essential for identifying opportunities to reduce warehousing expenses.
7. Stock Turnover Rate
The stock turnover rate measures how the stock is sold and replenished during a given time frame. Products with a high turnover rate move quickly through the warehouse, cutting down on storage fees and the risk of becoming obsolete.
Formula: Cost of Goods Sold (COGS) / Average Inventory Value
The Harvard Business Review noted that companies with higher stock turnover rates tend to have lower carrying costs and better cash flow, which can lead to increased profitability.
8. Deadstock Percentage
Deadstock refers to stock sitting around unused for a long time. Businesses can learn whether products need to be discounted, reused, or thrown out of storage by keeping tabs on the percentage of deadstock.
Formula: (Number of Deadstock Items / Total Number of Inventory Items) x 100
A recent case study found that reducing deadstock by just 10% can result in significant cost savings and increased warehouse efficiency.
9. Dock-to-Stock Time
The speed with which goods are transferred from the dock to the warehouse is quantified by the so-called dock-to-stock time. Congestion is reduced, and product availability for order fulfillment is maximized when this time is shortened.
Formula: (Time Products Spend in Receiving – Time Products Spend in Storage)
Research conducted by the Georgia Tech Supply Chain and Logistics Institute emphasized the importance of reducing dock-to-stock times to manage just-in-time inventory and minimize storage costs.
10. On-time Shipments
The percentage of orders fulfilled within the estimated time frame is what we call “on-time shipments.” This key performance indicator measures the dependability of inventory and distribution procedures and impacts customers’ overall happiness.
Formula: (Number of On-time Shipments / Total Number of Shipments) x 100
A study by Accenture on supply chain performance found that companies with a high percentage of on-time shipments (above 95%) tend to have higher customer satisfaction scores and repeat business.
Importance of Warehousing Storage and Business Intelligence
Storage key performance indicators need sophisticated data analysis and reporting tools for effective monitoring and management. This is where solutions for data warehousing and business intelligence come into play.
Tools for business intelligence, such as those offered by Brickclay, allow companies to:
- Combined information from several systems, such as stock-control software and warehouse automation gadgets.
- Make reports and dashboards to track key performance indicators in real time.
- Apply sophisticated analytics to find patterns, outliers, and growth areas.
- Use your data to guide your choices and better manage your warehouse’s stock.
Scalable Azure Warehouse Storage Solution
Companies with massive amounts of data to store will find Azure data warehouse storage a scalable and inexpensive option. With Azure’s cloud-based infrastructure, you can easily add more space for storage as your company expands, so your data warehousing storage needs will always be met.
How can Brickclay Help
Effective resource management is key to any company’s success, especially regarding warehousing. Businesses may improve their storage operations, cut costs, boost customer happiness, and stay ahead of the competition by establishing and monitoring these 10 key performance indicators (KPIs).
However, businesses need business intelligence and data warehousing management solutions like those provided by Brickclay to use these KPIs’ value fully. Making smarter, more profitable storage management decisions is much easier when you can access real-time data collection, analysis, and visualization. Adopting these strategies and technology can set you up for success in the ever-changing world of effective resource management in your roles as upper management, chief people officers, managing directors, and country managers. Contact Brickclay to help you along the way, and rest easy knowing your storage operations are optimized and prepared for the future.