You can’t manage what you don’t measure may be an old management adage but it rings true even today. You must agree that it would be difficult to improve on something if you have not measured it, as you would be clueless what is getting better and what isn’t.
What quantifiable measures should DCs track?
For those who are starting from ground zero, response to Warehouse Education and Research Council’s annual survey on DC Metrics can provide some guideline on what benchmarks you can consider.
Amongst the top 9 metrics rated important by respondents over the past five years were:
On-time shipping – calculation of the number of order lines shipped on or before the requested ship date versus the total number of order line
Order picking accuracy – ratio of the number of error-free orders over the total orders shipped
Cycle time – encompassing three unique DC metrics: dock-to-stock cycle time, internal cycle time and total cycle time (Total cycle time – average end to end time between order placement by the customer and order receipt by the customer. Dock-to-stock cycle time – time taken to put away goods. The cycle time begins when goods arrive from the supplier and ends when those goods are put away in the warehouse and recorded into the inventory management system. Internal cycle time – average internal time between order receipt from the customer and order shipment by the supplier)
Warehouse capacity used – average warehouse capacity used over a specific amount of time (month to month or yearly)
Percent of supplier orders received damage free – number of orders that are processed damage free as a percentage of total orders
Lines picked and shipped per man-hour – measuring the productivity of picking and shipping operations in lines per man-hour
Lines received and putaway per man-hour – measuring the productivity of receiving operations in lines processed and put-away per man-hour
Order fill rate – measuring the percent of orders filled according to customer request
Backorders as a percentage of total orders – the portion of total orders that are held and shipped late due to lack of availability of stock. They can be measured by lines or purchase order, by units or dollar value.
With data available in real time DCs with automated systems should have no difficulty in measuring any of these metrics. But it would be a challenge for those operating with manual systems. Nevertheless, you should give it a shot, possibly starting with order picking accuracy and order cycle times.
For more information, contact our sales and marketing team today. They will only be too happy to assist you.