Monday, 27 May 2013

How to Measure the Performance of Warehouse Operations

If you have one or more warehouses, it is important to monitor and evaluate their performance. Each should be treated as if it was a business in its own and it needs to compete to show their worth. Measuring warehouse involves monitoring cycle time, performance, productivity and quality. 

Financial performance needs to be established for each of your warehouses. This should involve creating an activity based costing program. Productivity performance needs to include areas such as:
  • Labour – The ratio between the numbers of hours worked and the number of units, lines, orders or weight of     items shipped.
  • Space – Ratio of the inventory storage capacity to the square footage of the space.
  • Material handling systems
  • Warehouse management systems
The quality performance involves four key areas all revolving around accuracy. Accuracy is important as problems with wrong orders being delivered or items being wrongly stored cost time and money and can affect customer service. The four accuracy areas which need monitoring are:
  • Putaway accuracy
  • Shipping accuracy
  • Picking accuracy
  • Inventory accuracy
Finally monitoring the warehouse cycle time performance requires tracking two main areas which are dock to stock time and warehouse order cycle time.

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