In a previous post on Fulfillment Operations, I discussed the processes core to most Warehouse Operations. In this post, I discuss – generally – the metrics associated with those processes.
Previously, we discussed the major process paths common to most Distribution Centers such as: Purchasing, Receiving, Inventory Management, Order Management or Order Fulfillment, and Shipping. As with most business processes, there are metrics associated with those process paths.
Here are just some:
| Metric | Definition |
|---|---|
| Gross Margin | Revenue Minus Cost of Goods Sold |
| Demand Forecast Accuracy | Average Time from Receipt of Product to Payment |
| Days Sales Outstanding | Average Collection period from invoice to cash receipt |
| Labor Productivity | Total Units Handled / Total Labor Hours |
| Cost/Pick | Line items pulled per month/compensation & benefits |
| Payroll to Net Sales | Compensation & Benefits/Revenue |
| Cost of Goods Sold | LIFO, FIFO, or Average |
| Total Cost of Procurement | Total impact on Cash Flow, COGS, Terms |
| Supplier Quality | % Defects = Lines Rejected/Lines Received |
| Lead Time | Order-to-Receiving Time |
| Transportation Cost | [Inbound Freight Costs/Sales] + [Outbound Freight Costs/Sales] + [Liquidate Costs/Sales] |
| Receiving Accuracy | % of Orders Received Accurately (count @ receiving, cycle count) |
| Supplier on-time | Purchase Order Receipt (PO) date-to-first receipt |
| Inventory Turns | # times inventory gets soled and reordered within 12 months or 12 month rolling COGS (LIFO, FIFO, or Average) / Average Inventory |
| Inventory Accuracy | Actual versus Total – by Cycle Count |
| Inventory On-Hand | # of Days Inventory Carried |
| Warehouse Utilization (Pack Factor) | # of Bin Space Utilized / Total Available |
| Perfect Order | An order that is complete, accurate, on time by order by line item |
| On-time Delivery | First Customer Shipment to Expected Customer Date |
| Adjustment Loss | Over a rolling time period less X days, reconcile “missing inventory” with “found inventory” for both virtual items and physical items |
The list above is by no means an exhaustive list of Distribution Center metrics, but gives us a sense of the metrics associated with the process paths core to any Warehouse Operation.
In the next post, we’ll discuss the success as it relates to the directional trajectory of the metrics.
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This post was written by Pete Abilla | ||||
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{ 1 comment… read it below or add one }
Nice Information thanks for sharing. The best metric to use is business return on investment. The second best metric is data usage. he third best data warehouse metric category.