In a recent conversation with a manufacturing company interested in introducing a Warehouse Management System (WMS), it became apparent that they had a very different understanding of what the metric OTIF, On Time In Full, means. The discussion also highlighted that in their enthusiasm to reach a common definition internally, they had excluded the audience group for whom this metric is most important – the customer.

When defining key performance indicator (KPI) metrics, it is so important to be using the same parameters as your customers and suppliers. There is no point in having performance measurements that are not aligned with the way that you are measured, either internally or externally. Reaching a consensus about measurement indicators requires a more collaborative approach, working in partnership with your key partners when you are establishing these measures. A supply chain is as the name implies, a chain. Every link in the chain needs to be performing and communicating effectively, because a chain is only as strong as its weakest link.

Using a WMS system will help you to closely monitor your KPIs and performance levels, and also hold suppliers to account where appropriate. Ultimately, whether you are a manufacturer, a supplier of raw materials, a retailer or a distributor, you are only ever as good as your last delivery.

What are the top warehouse and distribution centre (DC) metrics?

Here are some of the top metrics in place in warehouses currently.

#1 Putting customers first

Metrics that directly relate to ensuring customer satisfaction are often the most highly monitored, demonstrating how important it is to focus on what your customers want. Some of the measures that many warehouses benchmark their performance against include the four key components of a perfect order: delivering orders on-time, shipping them damage-free, complete and with the correct documentation.

Typically companies with higher perfect order rates carry less inventory, experience shorter cash-to-cash cycle times, and have far fewer stockouts. Conversely imperfect orders lead to increased shipping labour costs, the need to provide replacement products, and lower revenue due to lost sales and customers.

Interestingly, being able to attain the perfect order index measure is only possible if the warehouse has full visibility of available stock and operational performance in real-time. This requires a level of automation that can be attained by implementing a best of breed WMS solution. Using a WMS provides an instant overview of when orders were shipped against delivery targets and the immediate stock availability tracking functionality ensures that orders are either shipped complete, or customers are at least notified of any expected delays from the outset.

In a highly competitive e-commerce environment, where margins are ultra-thin and customers are swayed easily and free to shop around for alternatives, service is absolutely everything. The customer is always king and any systems that can enable them to feel that way routinely when they buy from your company will help ensure your brand keeps its share of wallet and stays front of mind.

For more information about using a WMS to track key metrics in your warehouse, contact Indigo Software.