A Warehouse Management System (WMS) promises accuracy, operational efficiency, and better revenues. However, warehouse managers often take those promises at face value, and that can cause serious problems later.
Enter the Key Performance Indicators (KPIs) for WMS implementation. What are KPIs? Key Performance Indicators are those parameters that help you track your progress post-WMS implementation.
Consider them the vigilantes that allow you to keep an eye on your warehouse’s performance, help you reveal the strengths and weaknesses of your WMS, and help you identify the improvement areas.
But with a plethora of KPIs available, navigating the data jungle can be daunting. This article delves deeper into the world of WMS KPIs, showing you how to effectively measure success and unlock the true potential of your system.
Finding the Right KPIs
Before you can use KPIs for tracking the performance of your WMS, you need to find the right ones suitable for your warehouse because there are several KPIs to choose from, and not all of them might be applicable. Picking the right ones demands a clear understanding of your specific warehouse requirements.
What is it that you’re looking for? Do you want to track order fulfillment or do you want proper insights into inventory management? Prepare a checklist and ask the right questions as that will help you align your KPI selection with your core needs.
The Key KPIs
To give you a clear overview, TLS has enlisted the key KPIs used by warehouse managers to track their WMS’s progress. Let’s take a look.
1. Inventory Management
This is listed as one of the top priorities for warehouse management because a well-maintained inventory can greatly help make profits.
- Accuracy: This one is a key metric that helps you draw a proper alignment between your physical and digital inventory. By getting accurate information on your stocks, you can minimize errors and avoid fulfillment delays.
- Turnover: This KPI will inform you of your inventory sale and replenishment. A higher turnover is an indication of good stock management.
- Shrinkage: This one represents inventory loss due to theft, damage, or errors. A higher shrinkage percentage indicates that your inventory requires robust security measures.
2. Receiving & Put-Away
- Efficiency: This WMS KPI tracks the volume of received goods processed per labor hour. Long receiving hours indicate that you need to optimize your receiving operations by utilizing technology and setting clear procedures.
- Putaway Accuracy: This one reflects the percentage of items correctly placed in storage on the first attempt. A higher percentage is a sign that your warehouse has great put-away accuracy with minimal errors.
- Dock-to-Stock Time: This is an important KPI that measures the time taken to unload and store incoming goods. Note time daily as this will help you note down items that take more time to unload and store, thus indicating a need for efficient scheduling.
3. Order Fulfillment:
- Cycle Time: The cycle time is the time between order placement and shipment. Shorter cycle times mean faster deliveries and longer cycle time means delayed shipments, the latter warning you to take action in due time.
- Picking Accuracy: This KPI gives you the percentage of orders picked without errors. A higher percentage of picking accuracy means that your warehouse workers are doing a pretty good job.
- On-Time Shipping Rate: This one shows the percentage of orders shipped on or before the promised date. A higher percentage means your order fulfillment operations are going smoothly.
4. Other Important KPIs:
A warehouse ecosystem is a total of several processes. Besides the core operations like order fulfillment, shipment accuracy, and inventory management, there are others like return processing, safety incidents, etc.
So, besides picking the major ones, you might consider selecting a couple of other KPIs from these additional ones:
- Space Utilization: As the name suggests, this KPI helps you track your space utilization. With the help of your WMS, you can know the exact amount of shelves. The insights on your space usage can help you optimize your warehouse layout as and when required and maximize your storage capacity.
- Productivity: This is another KPI that allows you to track the number of orders picked and processed per labor hour. This KPI will help you identify areas for improvement.
- Safety Incidents: This KPI can help you maintain safety standards by tracking the number of incidents or accidents occurring due to machine problems or any other reason.
- Equipment Utilization Rate: This KPI can give you the percentage of material-handling equipment used during different operations. The numbers will give you insights into equipment efficiency and help you identify potential bottlenecks.
- Rate of Order Returns: Use this KPI to learn about the percentage of returned items relative to total shipped items. Regular reports will help you identify trends and take proper action.
- Return Processing Time: This KPI can be used for the evaluation of the speed at which returned items are restocked or replaced and are shipped to customers to minimize their dissatisfaction.
Points to Remember for KPI Implementation
The process of KPI implementation is not a one-time thing. It’s an ongoing journey of information-based decisions and continuous improvement.
- Set Realistic Targets: Set achievable objectives for each KPI and align them with industry benchmarks to keep them realistic.
- Track Daily: You won’t derive anything useful out of your KPIs if you don’t monitor them daily. So track your KPIs consistently as that will help you to identify trends, and detect deviations.
- Actionable Insights: The whole point of KPI implementation is to gain actionable insights so that you can optimize processes and invest in required improvements.
Remember, KPIs are not merely numbers; they are your WMS guards that keep an eye on your core WMS functions and report to you on your warehouse’s efficiency and profitability.
By harnessing the power of KPIs, you can navigate the dynamic world of warehouse management with clarity and confidence. A good WMS along with the right set of performance indicators can help you transform chaos into a well-oiled success machine.
