20 Warehouse Metrics that Matter Most
So, what’s the best way to gauge and track the efficiency of your storage facilities? Here are 20 warehouse success metrics worth keeping an eye on.
- Inventory Accuracy (%) – A measurement of how up-to-date your inventory records are. It’s often tracked in two parts: by location and by quantity. Employees should be able to find products in the exact place and quantity listed in warehouse records. Inaccurate inventory leads to problems with overstock/understock and hampers efficiency, as more time is wasted searching for the product.
- Inventory Turnover (Days/Months) – How long it takes for your entire inventory to be sold. This varies by industry, but businesses typically want regular inventory turnover as it indicates a good rate of sales and healthy product movement.
- Days on Hand (Days) – This metric measures how long, on average, products tend to sit in the warehouse. The longer a product sits, the more money it costs you to store it. Tracking this over time will help you better understand seasonal demands for certain types of products so you can avoid overstocking in the future.
- Backorder Rate – Also used to assess order fulfillment difficulty, this metric tells you how often you have products on backorder — and for how long. Occasional backorders when interest in certain products spikes are normal, but regularly having products on backorder isn’t good for business.
- Space Utilization (%) – Every warehouse has a finite amount of space. This metric reports how efficiently that space is being used by comparing the number of bins and pallets occupied with stock to empty storage space.
- Average Warehouse Capacity Used (%) – This number takes several space utilization snapshots and averages them, giving insight into how much warehouse capacity was in use over a certain period of time.
- Peak Warehouse Capacity Used (%) – How much of the warehouse capacity was in use during peak season. Looking at warehouse operations when demand is highest can help companies spot areas for improvement.
- Order Accuracy / Order Picking Accuracy (%) – A measurement of how many orders have the correct product selected, packaged and delivered. Customers want to receive the products they ordered (shocking, we know). Incorrectly picked products cause huge downstream disruptions, throwing off your inventory accuracy and increasing labor costs as returns are processed and orders corrected.
- Pick Performance / Pick Rate – A sister metric to Order Picking Accuracy, this measures speed over accuracy by tracking how many lines or quantities are picked by one employee in an hour’s time. Ideally, you want to have both a high pick rate and a high percentage of accuracy to achieve peak performance.
- Return Rate – Returns are an inevitable part of the shipping business, but you want to keep this rate as low as possible. Regularly tracking rates of return can help you spot product trends and address problems before they get out of hand.
- Docking Time (Hours) – Every minute a truck spends in your loading bay is a minute that another truck isn’t. Freight has to actually leave your warehouse in order to profit your business, which means the faster trucks can be loaded and unloaded, the better. This can also be a good indicator of when it’s time to hire more help to get trucks in and out of the warehouse fast.
- Dock-to-Stock Time (Hours) – This metric tracks the lifecycle of unloading goods. The timer starts when products arrive at the dock and ends only once they’re properly stored away in the correct warehouse location and added to the inventory. Fast dock-to-stock times naturally shorten docking times and ensure product is moving into the warehouse at a healthy rate.
- Fill Rate / Demand Satisfaction Rate – A measurement of many orders are met or filled utilizing stock from within the warehouse. Ensuring you can fill as many orders as possible with the stock on hand is a great indicator of a well-managed warehouse.
- Customer Order Cycle Time (Hours/Days) – How long it takes to complete an order, from when the customer placed it online to when the package is delivered to their doorstep. These days quick shipping is in constant demand, so the shorter the customer order cycle time, the better.
- On-Time Ready to Ship – A component of the customer order cycle, this metric specifically tracks the percentage of orders that are picked, packaged, labeled and ready to be picked up by a carrier on time. One missed pickup can delay a package’s arrival and even push it outside the delivery window, so it’s important to make sure internal shipping preparations are happening in a timely manner.
- On-Time Delivery Rate (%) – A measurement of how many orders are successfully delivered within the agreed-upon time frame when the customer placed the order. This directly impacts customer satisfaction, as customers are less likely to order from you again when an order arrives later than expected.
- Orders Shipped Complete (%) – A percentage of how many orders are shipped in their entirety vs. those that were shipped missing a unit. Another metric used to track overall accuracy, this figure should be as high as possible. A low percentage of orders shipped complete indicates increased labor costs and a problem with inventory or picking accuracy.
- Overtime Hours vs. Total Hours – A comparison between the overtime hours worked and total hours worked within a certain period of time. Too many overtime hours is often a sign of a labor shortage. Being aware of how these two compare can help you determine when to hire some additional hands.
- Cash-to-Cash Time / Cash Conversion – The amount of time it takes for money to be sent to suppliers and received from customers. This will vary depending on the season, industry, or even based on the type of product, but in general a shorter cycle is best.
- Supply Chain Cycle Time – This is one of the most important metrics for gauging the health of your supply chain. It measures how long it would take for you to fulfill an order if you had no inventory to draw from. A shorter time here is a great indication of a well-managed supply chain.
Looking for a shipping partner to help manage your warehouse inventory and accelerate delivery times? First Call is ready and willing to help! Get a hassle-free warehouse quote from a warehouse specialist and find out how First Call uses advanced Warehouse and Transportation Management Systems to ensure nothing falls through the cracks.
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More Resources on Warehousing and Distributions Solutions:
- Article: The Basics of 3PL Warehousing Services
- Article: A Guide to Warehouse Spaces
- Article: Optimize Your Supply Chain with Decentralized Warehousing
- Article: 20 Essential Supply Chain KPIs for Your Business to Track
- Article: How to Optimize Inventory and Warehouse Management
- Article: Why All Ecommerce Businesses Need Reverse Logistics Management
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