Each department within an eCommerce company is essential for overall success. In a previous post, I explained the importance of KPI Metrics within a business and then later the critical duties of each department within the company.
To recap, KPI stands for key performance index and a KPI metric is a manual process whereby the person in charge of a department manually enters values into a KPI metrics sheet. KPI can also be referred to as performance metrics. For this post, I’m going to focus on the most important warehouse KPIs, specifically.
Before I dive in deeper, there are a few caveats to keep in mind. All of these warehouse metrics will vary depending on the company, the industry, and the size, and some will not make sense to track on a daily basis, but rather a weekly or monthly basis.
Let’s look at some examples of important warehouse KPIs that are easy for warehouse managers to look at on a daily basis.
- Late Orders (Picking). Counting the number of later orders should be a daily process, if not multiple times a day. As the warehouse manager you are responsible to go in and immediately deal with orders that have passed their expiration date (whatever the threshold is you’ve set) on your shelves, which then become backorders.
- Units in Receiving Queue (Receiving). Shipments are coming in from vendors in the back bay door just sitting there. It’s the receiver’s job to process the items and get them live, meaning, how quick are we listing it and getting it for sale? The goal here is to sell items before your company has to pay for it. Everyone has limited amounts of capital, and their job is to take that amount of resources they have and make the most revenue with it as possible. If they can buy stuff and sell it, if they can acquire it and sell it before they have to pay for it, that means they’re working on zero capital. If you can scale that out, it means you can actually buy unlimited product, as long as you can flip it before you go to pay for it. Overall, the major job is to be able to process it fast so that it can get on sale.
- Mis-shipments (Packing/Shipping). It’s not really feasible to track the number of mis-ships at the end of each day. Each count depends on when customer service becomes notified. A streak of recurring mis-ships could mean the packing and shipping team needs retraining. When customer complaints come in from receiving the wrong items, it’s time to enter damage control and offer them alternatives, like a discount or a different item entirely. If you choose to, SkuVault’s Quality Control feature tracks every shipment making it easy to check against the order and all the items scanned into the order.
- Cycle Count Accuracy (Quality Control). I recommend even scanning one small location per day to make sure your inventory count is accurate. Over time, you will start to see a trend from tracking all the cycle count location data. From there you can see if you’re improving or if there’s something you need to change. Again, if you choose, you can pull the audit report from SkuVault’s Cycle Counting feature to check what you should have in stock and what you actually have in stock. This way you have history on user accountability of everything that’s happening to cause the problem and how to fix it.
Again, these are ideas to use as daily warehouse KPIs. They will vary dependent upon industry and company and the amount of time to perform those duties in a given day, week, month, or year. A daily metric alone is good, but overall is an incomplete view. You have to take longer time periods to determine if your team is going in the right direction. Focus on the most significant problems and alter them if needed later on. Tighten or loosen the belt on auditing procedures to test if you need to increase KPIs in a given period or loosen the amount of times you perform them. Each department’s needs are individual