Measuring warehouse efficiency is the best way to determine whether or not you are making the most of your resources, but many warehouse managers fail to agree on which metrics matter most. The good news is that warehouse management software can help you track a wider variety of key performance indicators and give you a better idea of how you are performing overall.

On Time Shipping

In terms of warehouse efficiency, your on time shipping rate is absolutely one of the most crucial numbers to track. Not only does it give you a relative view of the number of orders you are filling and shipping, but it also tells you how well you are living up to customer expectations. If you are regularly missing shipping windows, your customers are probably also getting their products later than expected. This has major implications for customer retention, customer satisfaction, and even referrals, not to mention the likelihood that your shipping vendors are probably being forced to wait on you, which could be costing you more as well.

Cycle Time

Cycle time can be broken down into several different categories, but your total cycle time is a good place to start if you have never measured this metric before. This will help you determine how long a particular product is in your warehouse before it leaves in an order. There is a balance to be struck between the time it takes to receive a product and place it in your inventory and the time that it sits in your warehouse before it is purchased, picked and sent out the door. Products that sit in your warehouse for too long are excess and considered wasteful, but you also want to be confident that the product can be available once an order is placed. Cycle times vary from product to product, but you should be trying to keep your cycle time as short as possible to ensure you are meeting close deadlines.

Inventory Accuracy

One of the biggest hurdles to warehouse efficiency is inaccuracies in the inventory. When you go to pick an item that is unexpectedly out of stock, it requires an investigation. When you go to pick an item that is in the wrong location, it must be tracked down. Measuring your inventory accuracy and addressing issues here can provide huge boosts to your productivity at every stage in your process and will ultimately ensure that your customers are receiving the correct items on time, every time.

Increasing warehouse efficiency is a complex process of balancing capacity with available labor and ensuring that each step is followed and tracked with meticulous detail. However, it has been proven time and again that employees will rise to the occasion if you show them which metrics matter most to the success of the company. In this case, highlighting accuracy and timing will get your employees thinking about how they can contribute to a more efficient operation.