Top 5 Warehouse KPIs You Should Start Tracking

What is your main priority when it comes to managing your warehouse operations? Is it making sure inventory levels don’t get too low? Or is it to increase warehouse efficiency? Knowing which KPIs to monitor and be aware of can help improve warehouse productivity and your inventory to sales ratio.

Measuring and tracking performance trends allows you to identify problems. You can uncover unexpected or unknown issues to be able to better manage risk. There are some different ways to measure the performance of your warehouse.

You can evaluate past financial statements or conduct performance reviews for more information. However, KPIs can measure all of your processes and determine if they are reaching their objectives. By comparing data with past benchmarks and numbers, you can see which processes are working and which are not.

Here’s What We’ll Cover:

The Top 5 Warehouse KPIs to Start Tracking

Key Takeaways

The Top 5 Warehouse KPIs to Start Tracking

Every warehouse is going to operate a little differently than others. Depending on the type of business that you operate and the industry that you are in, some specific KPIs might provide the most value to you.

Here are the top 5 warehouse KPIs for you to start tracking to reach your business goals.

1. The Cost of Carrying Inventory

Inventory management is one of the most critical elements for a warehouse to run smoothly. The cost of inventory can impact your overall operations if it isn’t managed properly. And inventory takes up valuable warehouse space.

Some additional costs come with carrying your entire inventory, as well. Things like labor to manage and store everything, insurance, and freight costs if you do a lot of shipping or receiving. When you look into the inventory KPI, you can identify profit margins for your current inventory.

This allows you to make adjustments as needed to either carry more or less inventory depending on needs and financial forecasts. You can also avoid having inaccurate inventory.

2. Inventory Turnover Rate

Knowing how often you need to replenish inventory can show you the frequency and specific times that you sell out of inventory. Knowing exactly what’s getting sold and what’s not will let you know if you have obsolete items in stock or items that just aren’t selling. Monitoring your inventory shrinkage and inventory turnover ratio will only benefit you.

As well, inventory that isn’t moving can take up valuable storage space. And there are extra costs associated with carrying excess inventory. Plus, you aren’t making any money when inventory is just sitting idly on the shelf.

Diving into this KPI can allow you to see customer buying behaviors. You can then adjust future purchasing habits as needed depending on your turnover rate.

3. Inventory Accuracy

Do you know what physical inventory you have? Are you still holding items that became obsolete a year ago? If your inventory tracking isn’t accurate, you might experience poor customer satisfaction or extra high costs. You want to avoid customer returns and poor inventory tracking for a better customer experience.

The more detailed way to know how much actual inventory you have is to compare the items you have in stock to the items listed in your product database. But, maybe you are having trouble staying on top of accurate inventory or aren’t sure where to start. If that’s the case, you can incorporate a barcode inventory management system to help get organized.

4. Efficiency of Receiving

Is there adequate space to receive new products? Do you have enough workers to count inventory efficiently? How many trucks can pull up to your loading dock at once?

There’s no perfect recipe for making your entire process as efficient as possible. However, there are things you can do to help maximize it. Having an inefficient receiving area can cause backlogs and mistakes in inventory counting.

5. Order Picking and Packing

You might have your inventory perfectly balanced and know exactly where everything is. Yet, if your picking and packing processes aren’t operating smoothly then it won’t matter how organized your inventory is. Your customer satisfaction relies heavily on your ability to have an effective picking and packing process.

Take a look at some data or your current processes. Try and identify any areas that could get improved or changed to help streamline the process.

Key Takeaways

You know your business inside and out and understand your goals and objectives. However, underestimating the importance of KPIs can have some negative effects on your business. Identifying areas for improvement leads to better business decisions and avoids customer dissatisfaction.

The KPIs that are unique to your business can directly relate to the demand for the inventory you carry and the efficiency of your supply chain. KPIs allow you to see what’s working, what’s not, and what can be improved. Your customers will stay satisfied and continue to make purchases.

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