Warehouse metrics every retailer should keep track of
The warehouse has become a pivotal part of omnichannel retail approaches. With customers able to make purchases 24 hours a day, seven days per week, warehouse performance and efficiency is being put to the test. How well can warehouse employees rise to the occasion and continue to pick, process and ship items as effectively as possible? And can they do other mission-critical tasks, such as unloading trucks and stocking shelves, just as efficiently?
If retailers struggle to answer that question, they may want to refocus on how they are evaluating and assessing the performance of warehouse employees. Stronger metrics can not only help bolster the performance of warehouse operations, they also give warehouse employees a better idea about what they are supposed to do, which can help them focus on important tasks and work more effectively. If one does not understand how he or she is being judged, it can be difficult to work quickly and effectively. Actually, not knowing what metrics one is supposed to be hitting can even be a highly frustrating experience, and can lead to unpleasant surprises when employees get warnings for poor performance.
From the retailer’s perspective, not establishing strong metrics hinders improvement as well. If merchants cannot identify weaknesses in their distribution center operations, they cannot put forth initiatives designed to bolster these activities in any meaningful way. Lack of metrics is detrimental to both the retail operation and the workers themselves.
So, what are some key metrics warehouses should take into account?
Orders per hour:
How many orders are warehouse employees picking and packing per hour compared to how many hours they work? This is an important general metric because it most effectively illustrates productivity. By looking at orders picked and packed per hour, retailers are better able to identify stragglers and deft workers. However, it can also lead to other issues, such as struggles during peak hours to keep up.
How many orders does each warehouse employee ship per day? Knowing this figure allows retailers to forecast more effectively, particularly for peak periods as they understand their limits more effectively.
Items per hour:
Breaking down orders per hour even further, items per hour helps retailers identify how quickly warehouse workers are picking individual items. This allows them to evaluate the transition from picking items to completing orders – if workers are picking items but the number of orders fulfilled per hour is low, that could illustrate issues in the packing process, for example.
Kit build time:
Kits allow merchants to sell items together to customers in a quick and efficient manner. However, it is up to warehouse employees to build these kits promptly and without missing a beat. Kit build time will assess how quickly employees can pull together multiple items to build a kit. This metric can be effective in evaluating the speed of constructing pre-determined kits as well as those built on the fly.
With many retailers switching toward real-time order fulfillment, warehouses will naturally have peak times and slower times. Knowing how much downtime distribution center workers have in any given day can help retailers plan around it and find other activities to do (such as timing truck deliveries or creating kits).
The invisible costs of labor and driving productivity
The aforementioned metrics are just a few that retailers can look at. The key is helping them evaluate performance more effectively. As Easy Metrics noted, many businesses suffer from what is called “invisible labor” – a term that refers to tasks and processes that are not evaluated but wind up taking a significant chunk of the work day. In fact, the news source noted that many organizations optimize only 65 percent of their total labor cost, with the rest going to these invisible, indirect activities. For example, if retailers use legacy warehouse management solutions or opt not to leverage mobile devices as a part of warehouse operations, they may be losing valuable time on a daily basis.
By establishing good metrics in advance, retailers will be better able to identify those sources of indirect labor and address them. Additionally, these metrics can be used to drive productivity through other means as well, such as hosting monthly awards for productive employees. But at the end of the day, all of these efforts start and end with understanding output, and retailers need metrics in order to do this.