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Posts tagged “Warehouse

Warehouse Performance Metrics

In today’s high-tech environment, warehouse managers have an overwhelming abundance of data to analyze and use to determine how to improve their warehouse operations.  Without metrics, there really is no way to know what is and isn’t working in a warehouse.  The ability to set goals for delivery times, machine utilization, warehouse capacity, customer service and quality of data and analyzing if the goals were met can make a major difference in a company’s profitability.  To best work through the data, the most important step is to decide which metrics to gather, analyze and report on.  Metrics or key performance indicators (KPIs) can be gathered to report on such items as inventory, order fulfillment and operations.

Implementing a third party logistics (3PL) solution can integrate your operations, distribution, fulfillment and trucking services to provide timely, intelligent data.  This data can be mined so you can create the KPIs necessary to make the business decisions that will help you to be on the competitive leading edge.  Measuring the metrics against your goals will help you to make more intelligent business decisions.  When you’re trying to improve operations, consider the following KPIs that you can generate to monitor and measure the performance of your warehouse.

Top KPIs

Supplier On-time Delivery. This KPI provides important information on deliveries that were on time and how many arrived late.  Best in class is ≥ 99.8 percent, median is 98.5 percent.

Internal Order Cycle Time. This KPI is measured from the time an order is placed to the moment it gets shipped.  It is used to measure the pick-pack-ship efficiency of the warehouse. The objective is to minimize the percentage. Best in class is < 3 hrs, median is 13 hrs.

Dock-To-Stock Cycle Time. This cycle time measures the time from the start of a receipt to the time that putaway is complete.  This is an important KPI to measure the performance of inbound activities.  Best in class is < 2 hrs, median is 6 hrs.

Order Picking Accuracy. Order picking is the most costly and labor intensive function in a warehouse.  This measurement is critical to monitor for the success of warehouse operations.  It is also an important factor when delivering high customer service. It is the percentage of pick lines picked without errors, and the objective is to maximize the percentage.  Best in class is ≥ 99.9 percent, median is 99.5 percent.

Lines Picked and Shipped per Hour. This KPI is also important to measure to ensure high customer service.  It is based on the number of lines picked and packed/total labor warehouse hours.  Best in class is ≥ 74.2 percent, median is 28 percent .

Order Fill Rate. This KPI percentage is based on the number of items ordered to the items shipped.  The fill rate can be calculated on numerous items, such as SKU, case or on a value basis.  The best in class for items ordered to shipped is ≥ 99.8 percent, median is 98.3 percent.

Peak Warehouse Capacity. This KPI measures the amount of warehouse capacity used during a peak season.  It is expressed as a percentage of storage space that have products in them.  Best in class is ≥ 100.0 percent, median is 95 percent, but it also depends on how the product is received.  The best in class for average warehouse capacity is ≥ 91.2 percent, median is 84.9 percent.

Annual Work Force Turnover. This KPI is calculated by taking the total number of employees who resign, plus employees terminated, and divide that total by the number of employees at the beginning of the year.  Best in class is < 1 percent, median is 5 percent.

When you embark on an initiative to report on metrics, you will want to compare your KPIs against the best in class so you can identify the underperforming measures.  This will ensure that you are in a good position to know where to improve so your company can grow and stay ahead of your competitors.

Resources:

http://www.inboundlogistics.com/cms/article/warehouse-metrics-measure-what-matters/

http://www.eiminstitute.org/library/eimi-archives/volume-1-issue-5-july-2007-edition/measuring-the-data-warehouse

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Benefits of Greening the Warehouse

Going green or lean in your warehouse by streamlining processes and introducing cost saving initiatives can bring many benefits.  To stay competitive and be on the leading edge, going green is a win-win process.  Here are some steps to take to make your warehouse more energy-efficient, resulting in a smaller carbon footprint.

Lighting

The energy and carbon reduction firm Envido has discovered that the biggest expense in a warehouse is the lighting which can be as much as 65 percent of operating costs.

Intelligent lighting (using sensors) can be incorporated into your lighting system, resulting in as much as a 10 per cent decrease in lighting power consumption.  This type of system takes the available daylight and the occupancy in the building to determine whether lighting should be turned on and how much brightness is required.

Fluorescent lighting is more energy efficient than traditional light bulbs, and if you are willing to pay the extra expense, LED lighting is the most efficient option available.  The technology for LED lighting is moving quickly, so prices may come down in the next few years.  Skylights and solar panels are another way to introduce natural lighting to keep expenses down.  Installing lights closer to the work areas will also reduce the amount of lighting required.

Heating

Programmable thermostats are much more efficient than temperature-controlled thermostats.  Being able to program when the heat should come on instead of letting the temperature decide will result in major energy savings.

Consider adding more automation to your warehouse.  Having an automated warehouse requires less square footage, resulting in less energy to heat.  An industrial fan is a great way to circulate warm air.  When warm air rises, the fan will push it back down to the work areas.  The same is true in the summer when cool air rises.

Green or Living Roof

A living roof is a truly wonderful experience for the workplace, the environment and the community where you operate your business.  Not only does it reduce operating costs, but the benefits such as attracting birds to the vegetation provides a nice space for employees on lunch breaks.  Studies have shown that a living roof can reduce energy consumption by as much as 6 per cent and reduce indoor temperature by 3.6 degree Fahrenheit in the summer.  Solar panels installed on a living roof can produce up to 16 percent more energy than a regular roof.  Building a living roof may also qualify your company for tax breaks and lower municipal fees.

Forklifts

Forklifts are an integral part of any warehouse.  Using hydrogen fuel cells for your forklifts will result in greater productivity and reduced costs.  Fuel cells have the ability to store energy as hydrogen gas and convert to electricity when needed.  Costs are reduced by no longer having the need to purchase batteries or chargers, or pay for the manpower to maintain them.

Reduce, Reuse, Recycle

The 3 Rs can sometimes be overlooked, but they are very easy to implement to create a greener warehouse.  Reducing lighting and heating as mentioned above can have major cost savings.  Reduce paper by offering electronic invoices, and send products digitally if that makes sense for your goods.  Reuse incoming boxes by using labels to re-address. Bubble and paper wrapping can be reused, and remember to recycle if these items can’t be reused.

Encourage your employees to develop a green mindset.  Offer incentives and rewards for workers who come up with innovative and green solutions for the workplace.

By everyone doing their part to take care of the planet, your company will not go unnoticed by today’s consumers who are much more environmentally conscious.

 

Sources:

http://www.sciencedirect.com/science/article/pii/S0960148111006604

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