The warehouse is the hub of goods, and the centerpiece of the supply chain, as it provides an uninterrupted end-to-end movement of goods. The efficiency of a warehouse is critical for every business, as it hosts all the inventory-related activities linked directly to customer satisfaction.
The warehouse is one of the most challenging parts of the B2C or B2B2C processes, as it requires a well-organized space, with all the operations being performed uninterruptedly, and in an agreed consequence. When it meets all the delivery goals, the customers are satisfied, and the business image keeps strengthening its position in the niche, which is financially rewarding.
The impeccable performance of a warehouse comes from the continuous monitoring of its key performance indicators (KPIs), and tech solutions like SAP EWM bring automation and visibility into the warehouse. Let’s explore both.
What Are the Warehouse KPIs?
The warehouse KPIs, or key performance indicators, are quantitative and qualitative measures that estimate warehouse performance over a specific period. KPIs provide management with valuable insights that create a big picture of the warehouse’s functionality, highlighting all areas for improvement.
It is important to understand that only some of the metrics are identical, as they should be customized according to every specific warehouse.
The KPIs let the organizations understand their pitfalls and adopt appropriate measures and solutions to foster improvement and create seamless functionality.
The Main Types of Warehouse KPIs
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Order Fulfillment
Order fulfillment starts with the moment the order is placed and finishes right when the goods are delivered. The features to assess:
- Order fill rate – an expected rate of 100%, a commendable rate of 97-99%, and anything below 94-95% signals about the inefficiencies in the warehouse operations.
- Fulfillment time – depending on the geolocation and type of the goods, the fulfillment may be a matter of a few hours (for freshly-grown produce) or 1-3 days.
- Pick rate – the metric that analyzes the efficiency of the picking team. It is defined by dividing the number of picks by the total time. An average picker is supposed to pick between 120 and 175 pieces, yet the type of produce matters as well.
- On-time in full – measures the success of a delivery process. The OTIF should start with no less than 98%.
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Inventory Accuracy
Inventory accuracy reveals whether the actual inventory number is equal to the one listed in the data. The disparity can be caused by backorders, returns, and simply, in-house mistakes. Good inventory rates start at 97% and can be implemented with the help of specialized solutions.
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Daily Throughput
The warehouse throughput is the number of units that are processed during the day. It is important to check the rates within one eight-hour shift tracking the number of orders received, and the time spent on its picking, packaging, and labeling.
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Replenishment
Replenishment refers to the movement of goods within the warehouse to different locations to make the order. It is specifically important for E-commerce environments, as they need to handle multiple products in big quantities. Replenishment prevents overstock, understock, and deadstock, ensures on-time delivery, and increases the sustainability of the warehouse environment.
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Order Accuracy
Customers expect to get their orders fully formed and within the agreed terms. The accuracy should reach 99.5-100%, otherwise, the business reputation (and consequently the profit) will suffer.
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Stock Turnover
The stock turnover is related to the frequency and speed of stock being received, ordered, processed, and delivered. The measurements are always taken within a specific period of time.
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Deadstock
Deadstock is the unclaimed inventory, which is impossible to sell due to lack of demand, quality issues, expiration date, etc. Apart from causing financial damage (depending on the number of it being unsellable), it occupies the space in the warehouse.
How to Leverage Warehouse KPIs?
All the above-mentioned KPIs impact the most important part of the E-commerce world – customer satisfaction.
One of the major steps to take is continual control over the metrics, to be able to recognize negative patterns and take proactive action to improve the situation. However, all the types of control will not bring desirable effects, unless there is an IT solution, which helps to reorganize and optimize the warehouse management.
One of the most efficient tools to use is SAP EWM – Extended Warehouse Management, which is the primary choice for businesses that crave efficiency, seamless workflow, and full automation of in-house activities.
SAP EWM is one of the modules of the SAP ecosystem. It can be installed as an independent application, to cover only the warehouse activities and the efficiency of the supply channel, or else, it can be embedded into the SAP ERP system, augmenting the way the whole company is regulated.
SAP EWM introduces automation, real-time tracking of inventory, timely insights and analytics, proper warehouse spacing, carefully performed reverse logistics, etc. SAP EWM plays a crucial role in warehouse management, yet, its efficiency can only be provided by developers with a proven track of
SAP implementation projects, like LeverX, whose professionalism has been covering the global market for over 20+ years.
If you are experiencing difficulties with the warehouse management system, it is highly recommended to contact the SAP Implementation partner LeverX (the SAP Global Strategic Supplier) and address all the questions and issues to their professional consultants.
The Final Thoughts
The warehouse performance is the heartbeat of the company, it enables a high-quality connection between businesses and customers by accurately processing the raiders and sending them to the customers. The efficiency of the warehouse is the key to financially profitable business functionality and a well-appreciated image of the company among the customers.
When reorganizing the warehouse, consider SAP solutions, one of the top IT solutions recognized worldwide due to its efficiency and beneficial influence. For more information, contact LeverX.
