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How do you identify Warehouse Process Improvements with Performance Metrics?

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If you work in warehouse operations, you know how important it is to optimize your processes and increase your efficiency. But how do you measure your performance and identify areas for improvement? In this article, you will learn how to use performance metrics to evaluate your warehouse operations and find opportunities to enhance your productivity, quality, and customer satisfaction.

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1 What are Warehouse Performance Metrics?

Warehouse performance metrics are quantitative indicators that help you track and assess how well your warehouse operations are meeting your goals and expectations. They can cover various aspects of your warehouse processes, such as inventory management, order fulfillment, labor utilization, safety, and waste reduction. By measuring and analyzing your performance metrics, you can identify your strengths and weaknesses, benchmark your performance against industry standards, and set realistic and achievable targets for improvement.

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Mike Olsen

E-Commerce Fulfillment and Operations
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What do you pay for? What do you charge clients for? Start with the basic tasks needed to take care of your own products. What tasks MUST be done in the simplest form to receive products and store them until the and ship them back out when orders come in? Are the goods received in proper state in order to immediately ship them back out or does any work need to be done to “finish” the item to get it into the right condition to ship? These two topics must be addressed first. Does your warehouse team know what is being ordered and when? Does your warehouse team work hand in hand with purchasing? Does your warehouse team work hand in hand with the marketing department? If not, you are missing multiple opportunities.

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2 How to Choose the Right Warehouse Performance Metrics?

When selecting warehouse performance metrics, you should consider your business objectives, customer requirements, operational challenges, and industry best practices. Additionally, the metrics should be SMART: Specific, Measurable, Achievable, Relevant, and Time-bound. Examples of SMART warehouse performance metrics include inventory accuracy (the percentage of inventory records that match the actual physical inventory in your warehouse), order picking accuracy (the percentage of orders that are picked correctly without errors or damages), order cycle time (the average time it takes to process an order from receipt to delivery), labor productivity (the amount of work done by each employee or team in a given time period), and safety incidents (the number of accidents, injuries, or near-misses that occur in your warehouse).

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EVANS ONYANGO

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Initiate trainings trainings will help improve skills of the employees and makes them feel part of the company have internal promotion , whenever there's a chance promote from your staff

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3 How to Collect and Analyze Warehouse Performance Data?

Once you have selected your warehouse performance metrics, you need to collect and analyze the data that supports them. Various tools and methods can be used for this purpose, such as a warehouse management system (WMS), barcode scanners, RFID tags, and dashboards and reports. WMS is a software application that automates and integrates your warehouse operations, while barcode scanners and RFID tags are devices that read and record the information encoded in barcodes or radio waves. Dashboards and reports provide a visual display of your performance data in various formats.

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Robert Booth
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If the process of collecting data is too labor intensive (aka manually tracking), the less likely your team will be at consistently recording it. System driven data is best because it is more difficult to falsely manipulate it. If you have someone on your team that is a wiz with spreadsheet formulas, they should be able to help develop a dashboard that simple to understand. If not, invest in a WMS that provides operational dashboards as part of the package.

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4 How to Use Warehouse Performance Metrics for Improvement?

The ultimate goal of using warehouse performance metrics is to improve your warehouse operations and achieve desired outcomes. To accomplish this, you must use your performance data to identify gaps, problems, and opportunities in your warehouse processes, then implement corrective and preventive actions. For example, you could redesign the layout to maximize space utilization and reduce travel distance, implement lean principles to eliminate waste and streamline workflow, train and motivate staff for improved skills and performance, adopt new technologies or equipment for enhanced automation and efficiency, or review and update policies and procedures for compliance and quality.

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Robert Booth
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Once you have identified the key performance metrics and the method for collecting the data, set up regular performance review intervals. Log all instances of missed targets and discuss with your team in a timely manner. Everyone needs to be honest with themselves (and it helps if employees understand that the data will not be used against them). Identify exactly what caused the miss each time you encounter one. Pareto the misses to identify the biggest cause and put together a corrective action to reduce or eliminate the cause. Work to resolve the corrective actions, and repeat. You will notice tremendous gains over a relatively short period of time.

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5 How to Monitor and Evaluate Warehouse Performance Metrics?

Finally, it is important to monitor and evaluate your warehouse performance metrics regularly to ensure accuracy, reliability, and consistency. Establish a baseline and target for each metric and compare your actual performance against them. Utilize a balanced scorecard approach to measure performance from different perspectives, such as financial, operational, customer, and employee. Periodic audits and inspections should be conducted to verify data quality and integrity. Additionally, solicit feedback and suggestions from staff and customers to improve your performance metrics and processes. Doing so will allow you to measure the impact and effectiveness of your improvement actions and adjust them as needed.

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6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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Jim Huckle

Supply Chain & Logistics Director | Operations Director | Procurement Director | Transformation | End 2 End supply chain optimisation | Interim | NED | Advisory | immediately available for permanent or interim positions
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Start with high level metrics, example is warehouse labour cost as % of sales. Use this metric to track performance over a period of time. As improvements are made labour cost will reduce! Another metric is customer service level, improving this KPI will require detailed analysis of all processes in turn leading to measurable efficiency gains.

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How do you identify Warehouse Process Improvements with Performance Metrics?

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1 What are Warehouse Performance Metrics?

2 How to Choose the Right Warehouse Performance Metrics?

3 How to Collect and Analyze Warehouse Performance Data?

4 How to Use Warehouse Performance Metrics for Improvement?

5 How to Monitor and Evaluate Warehouse Performance Metrics?

6 Here’s what else to consider

Warehouse Operations

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How do you identify Warehouse Process Improvements with Performance Metrics?

1

2

3

4

5

6

1 What are Warehouse Performance Metrics?

2 How to Choose the Right Warehouse Performance Metrics?

3 How to Collect and Analyze Warehouse Performance Data?

4 How to Use Warehouse Performance Metrics for Improvement?

5 How to Monitor and Evaluate Warehouse Performance Metrics?

6 Here’s what else to consider

Warehouse Operations

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