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15 Warehouse Efficiency Metrics You Should Be Tracking

Do you know how efficient your warehouse is? If not, now is the time to find out. By understanding and tracking a few key metrics, you can make sure your warehouse is running as smoothly and efficiently as possible.

What is Warehouse Efficiency?

Warehouse efficiency is the term used to describe the effectiveness with which a warehouse operates. There are various factors that contribute to overall warehouse efficiency, including the layout of the facility, the organisation of inventory, and the use of automation and technology. An efficient warehouse will be able to store and retrieve goods quickly and efficiently, minimising the cost of operations.

Why Is Warehouse Efficiency Important?

Warehouse efficiency is important for a number of reasons. First, efficient warehouses help to keep costs down. By reducing the amount of time and effort needed to move inventory around, warehouses can save on labour and other operating costs. Additionally, efficient warehouses can help improve customer satisfaction by ensuring that orders are fulfilled quickly and accurately. Finally, well-run warehouses can provide a competitive advantage by allowing businesses to respond quickly to changes in demand or inventory levels. In short, warehouse efficiency is essential for businesses that want to stay ahead of the competition.

15 Essential Warehouse Efficiency Metrics to Track

1. Inventory Turnover Ratio

This metric measures how quickly your inventory turns over. To calculate it, divide your annual sales by your average inventory. A high turnover ratio means you are selling through your inventory quickly and efficiently. A low turnover ratio indicates that you may be holding on to too much inventory or not selling it fast enough.

2. order Picking Accuracy Rate

This metric measures the accuracy of your order pickers in filling orders. To calculate it, divide the number of orders filled correctly by the total number of orders filled. A high accuracy rate means your pickers are doing their jobs correctly and not making mistakes that could cost you money.

3. Order Picking Productivity Rate

This metric measures how productive your order pickers are in filling orders. To calculate it, divide the number of orders filled in a day by the number of order pickers you have. A high productivity rate means your pickers are working efficiently and filling a large number of orders each day.

4. Average Time to Ship an Order

Average time to ship an order measures how long it takes you to ship an order once it is received. To calculate it, divide the total number of days it takes to ship all orders by the total number of orders shipped. A shorter shipping time means your orders are getting out the door quickly and your customers are receiving their products in a timely manner.

5. Percentage of Orders Shipped on Timer

Percentage of orders shipped on time measures how many of your orders are shipped on time. To calculate it, divide the number of orders shipped on time by the total number of orders shipped. A high percentage of on-time shipments means your customers are receiving their products when they expect them.

6. Percentage of Products in Stock

Percentage of products in stock measures how often you have the products your customers want in stock. To calculate it, divide the number of products in stock by the total number of products you sell. A high percentage of products in stock means your customers are less likely to go to a competitor to find the product they want.

7. Average Time to Restock an Item

Average time to restock an item measures how long it takes you to restock an item once it is out of stock. To calculate it, divide the total number of days it takes to restock all items by the total number of items you sell. A shorter restocking time means your customers are less likely to have to wait for the products they want.

8. Stockout Rate

Stockout rate measures how often you run out of stock of an item. To calculate it, divide the number of times an item is out of stock by the total number of times you sell that item. A low stockout rate means your customers are more likely to find the products they want when they come to your store.

9. Return Rate

Return rate measures how often customers return products they have purchased from you. To calculate it, divide the number of returns by the total number of sales. A high return rate could indicate that your products are not of good quality or that your customers are not happy with their purchase.

10. Scrap Rate

Scrap rate measures how often you have to scrap products due to damage or defects. To calculate it, divide the number of products you have to scrap by the total number of products you sell. A high scrap rate could indicate that your products are not of good quality or that your manufacturing process is not efficient.

11. Throughput Rate

Throughput rate in warehousing measures how many products you can produce in a given period of time. To calculate it, divide the number of products produced in a day by the number of hours you have available to production. A high throughput rate means your production is efficient and you are able to produce a large number of products in a short amount of time.

12. Average time to complete an order

Average time to complete an order measures how long it takes you to complete an order from start to finish. To calculate it, divide the total number of days it takes to complete all orders by the total number of orders you have. A shorter completion time means your orders are getting out the door quickly and your customers are receiving their products in a timely manner.

13. Order Fulfillment rate

Order fulfillment rate measures how well your warehouse is able to fulfill customer orders. To calculate it, divide the number of orders fulfilled in a period of time by the total number of orders received during that same time period. A high order fulfillment rate means your warehouse is able to meet customer demand and keep them happy. A low order fulfillment rate could indicate problems with stock levels, picking accuracy, or other issues that need to be addressed.

14. Shipping Accuracy

Shipping accuracy measures how accurate your warehouse is in terms of fulfilling orders and getting them out the door on time. To calculate it, divide the number of orders that were shipped on time by the total number of orders fulfilled. A high shipping accuracy rate means your warehouse is getting orders out the door quickly and without mistakes. A low shipping accuracy rate could indicate problems with packing or shipping processes that need to be addressed.

15. Return Rate

Return rate measures how often customers are returning items they ordered from your warehouse. To calculate it, divide the number of returns in a period of time by the total number of orders received during that same time period. A high return rate could indicate issues with your inventory, such as selling out-of-date or damaged goods, or it could simply mean that your customers are not happy with what they’ve ordered.

Logistic Services

Outsourcing Your Warehousing

3PL, or third-party logistics, is a type of outsourcing that can provide many benefits for companies. It can be a more cost-effective and efficient solution than managing logistics in-house, and it can also allow companies to focus on their core competencies. In addition, 3PL providers often have access to resources and technologies that companies may not have.

 

There are many factors to consider when choosing a 3PL provider, such as their experience, reputation, and ability to meet the company’s specific needs. It’s important to partner with a provider that will be a good fit for the company and its culture.

 

Third-party logistics can be an excellent solution for many companies. It can provide significant cost savings and efficiencies and allow companies to focus on their core competencies. When choosing a 3PL provider, it’s important to consider their experience, reputation, and ability to meet the company’s specific needs.

Wrapping Up

These are just a few of the many warehouse efficiency metrics you can track to make sure your operation is running smoothly. By taking the time to measure and track these metrics, you can identify areas where improvements can be made and make changes to improve your overall efficiency.

 

To learn more about how a third party logistics provider can improve your warehouse efficiency, get in touch with the experts at One Warehousing today.