To ensure supply chain success, businesses need to set specific KPIs.
As the months go on, the supply chain industry continues to search for solutions and best practices for moving forward in a world in which there is currently a lot of uncertainty and change. Essential supply chain operations, which have been keeping the country operating as normally as possible given the restrictions set forth by the COVID-19 pandemic, will need to be leaders in innovation and thoughtful action to ensure recovery and future supply chain success.
Warehouses are constantly under pressure to optimise internal processes to make this possible – or they will find themselves at risk of losing business. For smaller operations, this transition can be difficult because they often don’t have much visibility into how they are performing.
How can you achieve this visibility?
KPIs give warehouses the visibility needed to identify problems and spot trends that otherwise turn into customer complaints and missed opportunities. Measuring and monitoring crucial key performance indicators (KPIs) is critical. It’s impossible to improve or optimise operations without a baseline to work from, or a way to gauge the success of new initiatives.
What’s a KPI, Anyway?
KPI stands for Key Performance Indicator, and can be defined as a practical and objective measurement of progress, either:
- Towards a predetermined goal, or
- Against a required standard of performance
Measuring these KPIs can help warehouses quickly identify potential problems or spot trends (e.g., increasing demand for specific products) as well as highlight the value of new automation technology such as a WMS, which can not only improve performance but also makes it easier to collect performance data in the first place.
Below are the key KPIs warehouses should be reviewing to ensure supply chain success in the second half of 2020 and beyond.
Pandemic or not, maintaining safe environments and promoting best practices amongst workforces is vital to achieving a successful supply chain operation. The newly implemented measures resulting from COVID-19 – social distancing, temperature checks, enhanced cleaning, etc. – should continue and evolve with the situation for warehouses to operate optimally this year.
While typical FDA and other industry standards are already stringent, bringing in a 3PL can help companies deal with increased complexity around governmental compliance regulations. Keeping up with changing regulations may be more difficult as countries phase out restrictions at different rates.
Health & safety is a major concern for warehousing operations and failure to adopt policies and procedures early can leave employers very exposed to serious legal and financial repercussions. Technology has proven to assist warehouse staff in a number of ways by increasing efficiency and productivity. Could a WMS help with Health & Safety in your warehouse?
Reinforcing training by using a quality warehouse management system to support a defined role will be a big help to ensure each warehouse operative is only issued with work suitable for their role and appropriate to their training.
A quality warehouse management system can also be adapted to allow for workflow management. If a series of reminders or questions would be useful to a particular activity, having a quick, non-intrusive alert to remind the warehouse operative of their responsibility is a powerful tool to keep everyone on track and ultimately keep them safe.
The continued boom in e-commerce, fuelled by the ongoing pandemic, has put additional stress on supply chains that are still dealing with increasingly high customer expectations. Now more than ever, companies must be sure not to sacrifice quality just to get products out the door. Ensuring end customers’ orders arrive on time, intact, and undamaged will continue to be the most important aspects of the customer journey as the world prioritises online shopping – creating the perfect order!
Creating the “Perfect order” and monitoring the results can help you assess performance and diagnose issues impacting service, costs, and overall supply chain effectiveness. The key components of a typical perfect order KPIs are as follows:
- On time delivery: This is typically determined by calculating the percentage of sales orders that arrive on time.
- In full delivery: This KPI tracks the percentage of sales orders that are delivered completely, meaning that the customer receives the correct items, in the correct quantities.
- Damage-free delivery: This measurement is sometimes incorporated into the in full metric, but can just as easily be a stand-alone metric.
- Accurate documentation: Like the other perfect order components, this metric generally records a percentage of sales orders which were accompanied by accurate documents throughout. Documents included in the metric can vary, but usually include advance shipment notifications (ASNs), labels, and invoices.
All of the above can be ensured and the data collated with the integration of a WMS solution into your business.
Workforce Flexibility and Engagement
With rapid changes in the diversity of the workforce, global nature of work and changes in the way work is delegated and accomplished, there is an increasing need for a proactive response from businesses to work towards ensuring employee engagement and introducing flexibility into warehouse jobs.
Employee engagement strategies enable people to be the best they can at work, recognising that this can only happen if they feel respected, involved, heard, well led, and valued by those they work for and with.
Warehouses have always needed workforce flexibility, allowing them to adjust labour to meet demand. The ability to effectively flex labour has become even more important over the past few months as some warehouses have seen their volumes increase significantly while others have seen their business decline by 50% or more. An increased sensitivity to employee wellness, social distancing, and enhanced sanitation practices have added to the complexity of properly staffing operations to meet customer demand. Warehouses expect their 3PL partners to understand these constraints and make the decisions necessary to adjust staffing based on fluctuating volumes, while keeping employees safe and achieving KPI targets.
Key performance indicators (KPIs) provide an invaluable way to judge supply chain success and the efficacy of operations, determine opportunities for improvement, improve customer experiences, and better manage supply chain functions, including warehouse management. Supply chain leaders that wish to remain proactive to risks of disruption and improve operations through 2020 and beyond need to understand the top warehouse KPIs and how they can mean the difference between success and failure.
Businesses and their warehouse management teams must set focused, strategic goals to ensure the success of their operations moving into the second half of 2020. By prioritising safety, quality, and their hardworking employees, companies can ensure efficient operations and controlled costs while providing top-tier services for their customers and supply chain success.
Exploring new technology, such as Cloud WMS solutions can help them achieve these goals.
Speak to one of our team to understand how Clarus’ WMS system can cost effectively support best practice warehouse management processes, better customer service and highly efficient working for a range of warehouse operations with pay per month options and no IT infrastructure needed.
Our platform can scale from a one user, small depot system to a 100’s of user distribution centre operation. The ClarusWMS platform will cost effectively scale with your business based on demand.
ClarusWMS is a UK based supplier of warehouse management solutions with a wealth of industry experience in third party logistics, wholesale / retail distribution, online fulfillment and manufacturing warehousing.