Five Key Warehouse KPIs to Set Your Warehouse up for Long-Term Operational Success

Warehouse worker checks warehouse inventory

We all know that managing a warehouse is a complicated endeavour. The sheer volume of moving pieces within a warehouse can make the big picture difficult to keep an eye on. You have inventory moving in and out, workers performing an array of tasks, warehouse equipment designated for specific jobs, and that’s to say nothing of suppliers and clients. That’s why measuring the success of your warehouse can seem downright impossible.

But don’t worry! Key Performance Indicators, or KPIs, exist for the very purpose of making the measuring of success a manageable task. KPIs provide smaller, more targeted goals that can measured to reflect the overall success of the business.

Sure, there are endless volumes of KPIs for an endless number of industries. So which KPIs will best help you measure the success of your warehouse? While many KPIs can be helpfully applied to your warehouse, we’ve singled out five of the most significant. Continue reading to learn five key warehouse KPIs to keep you on the path to operational success.


1. Inventory accuracy

Never has there been a customer who saw that an item was in stock and was pleased to find that it wasn’t. Inventory accuracy is vital to customer satisfaction. Does your database inventory align with your physical inventory counts? Inventory discrepancies are tantamount to misplaced money; paying for items you don’t have or don’t need. If discrepancies are the norm in your warehouse, increasing the frequency of your cycle counts, or investing in more efficient inventory technology solutions - such as barcode systems - could reduce the amount of money lost to inaccurate counts.


2. Inventory turnover

You don’t want to spend money and precious warehouse storage space on items that you won’t sell. Inventory turnover is a KPI that tracks the frequency with which items that are stocked in your warehouse are moved. The less time an item spends on your warehouse shelves, the more it justifies its place. Obsolete or unpopular items that don’t sell are not only a sunk cost but also an ongoing expense (due to carrying costs and lost storage space), that diminishes the efficiency of your warehouse. Maintaining a database that tracks inventory turnover will help you identify expendable inventory items and devote more space to more popular stock.


3. Pick and pack costs

Purchasing your warehouse stock is obviously not the only expense you incur from your inventory. The labour necessary to move inventory into and out of your warehouse are what is known as your picking and packing costs. Picking and packing KPIs track the labour costs of stocking inventory by measuring stats such as items picked per hour, cycle times per order, labelling and relabelling costs, and costs per line item.

4. Receiving efficiency

Nothing goes out of your warehouse until it has come in. This might seem obvious but tracking your receiving efficiency KPIs can improve the value of your warehouse items through the rest of their conversion cycle. This can be accomplished by tracking the volume received per hour by worker, the accuracy of receipts, and space required to receive items (number of bay doors, floor space, etc).

5. Cost of Carrying

Your warehouse is striving to stock as much variety as possible while still affording priority space to the most popular items. Naturally, some items will sit on the shelves longer than others, even though we may use inventory turnover KPIs to try to minimise this. Determining the cost of your inventory’s shelf-life, or carrying cost KPIs, means measuring the costs you incur keeping an item on the shelf, from insurance fees, inventory service, labour, warehouse safety systems, and taxes.


Get the most out of your warehouse


Getting the most out of your warehouse doesn’t have to mean putting the most into it. Smart focus on relevant KPIs and savvy investment in high valuable warehouse equipment can get your warehouse operating at its full potential with little extra effort. Contact Dexters Warehouse Equipment today to maximise your warehouse performance.