Top 24 Warehouse KPIs You Must Be Tracking

Warehouse management encompasses its own world of complex tasks, and that’s why today there
are dozens of warehouse technologies designed specifically to make these tasks easier and more
efficient.

However, there is one aspect that, if ignored, can render all that implementation of technological
advancement futile—performance measurement. Round-the-clock performance measurement is
essential to achieving consistent and predictable productivity levels.

This article will provide you with some of the top warehouse KPIs (Key Performance Indicators) that
every warehouse manager should be tracking.

And that is the very essence of lean warehouse management as well. Tracking performance lets you
not only monitor the efficiency of warehouse processes, but also take corrective measures to
increase productivity and asset utilization. The result is continuous operational improvement and
increased customer satisfaction.

Here are the top 24 warehouse key performance indicators as they relate to standard warehouse
and distribution center processes:

Receiving

Metrics that measure receiving performance are among the most critical warehouse KPIs.
Warehouse operations begin with this process, and any inefficiencies here will snowball through all
the subsequent processes.

Warehouse KPI metrics that correspond to the receiving process are:

1. Cost of Receiving Per Receiving Line:

The expense that the warehouse incurs on the receiving process of each receiving line. This includes
handling costs as well.

2. Receiving Productivity:
Determined in terms of labor by measuring the volume of goods received per warehouse clerk per
hour.

3. Receiving Accuracy:
Percentage of accurate receipts, i.e. the proportion of correctly received orders against purchase
orders.

4. Dock Door Utilization:

Percentage of how many of the total dock doors were utilized.
5. Receiving Cycle Time:
The time taken to process each receipt.

Top Warehouse Receiving KPIs

These warehouse KPIs help managers identify any lapses in receiving and avoid a chain reaction of
inefficiencies down the process line.

Catching inefficiencies, such as a long receiving cycle caused by busy dock doors, can reduce
deficiencies as early as in the receiving stage.

Putaway

Once goods are received, the process of putaway begins with placing each item at a designated
location selected for most convenient retrieval.

Effective putaway ensures a smooth picking process, thus significantly reducing lead time.

Here are some of the important warehouse KPIs that you must track to measure the efficiency of
the putaway process:

6. Putaway Cost Per Line:

Expenses incurred for putting away stock per line, including labor, handling, and equipment costs.

7. Putaway Productivity:
Volume of stock put away per warehouse clerk per hour.

8. Putaway Accuracy:
Percentage of number of items put away accurately at the designated location.

9. Labor and Equipment Utilization:

Percentage of the labor and material handling equipment utilized during the put-away process.

10. Putaway Cycle Time:

Total time taken during the entire process of each put-away task.

Top Warehouse Put-Away KPIs

Evaluating the putaway through these key performance indicators gives you a clear picture of
potential inefficiencies in the process. Recognizing snags such as inaccuracies or paucity of labor will
help you to optimize and streamline the process.
Storage

Whether your warehouse is dependent on storing goods manually or uses AS/RS (Automated
Storage and Retrieval System), you still need to measure efficiency. Here are some important KPIs
to measure storage efficiency:

11. Carrying Cost of Inventory:

The cost of storage over a particular span of time, including the cost of inventory, capital costs,
service costs, damage costs, and costs of obsolescence. The longer the stock stays in storage, the
higher the cost to the warehouse.

12. Storage Productivity:

Volume of inventory stored per square foot.

13. Space Utilization:

Percentage of space occupied by inventory out of the total space available for storage.

14. Inventory Turnover:

The number of times the entire inventory passes through during a period of time.

15. Inventory to Sales Ratio:

Measure of stock levels against sales. This helps managers identify monthly increases in inventory
against falling sales.

Top Warehouse Storage KPIs

These storage & inventory management KPIs are of immense value when it comes to maximizing
storage utilization and reducing cost of inventory. For example, a low inventory turnover spurs you
to track down a reason and helps you improve inventory management.

Pick & Pack

The process of picking & packing directly impacts lead time. Greater accuracy in picking means
shorter lead time.

Picking in the right order decreases the rate of order return and increases customer satisfaction.

16. Picking and Packing Cost:

The cost incurred per order line, including handling, labeling, relabeling, and packing.

17. Picking Productivity:

The number of order lines picked per hour.
18. Picking Accuracy:
The percentage of orders picked and packed without error.

19. Labor and Equipment Utilization:

The percentage of labor & pick/pack equipment out of the total labor and equipment utilized during
the process.

20. Picking Cycle Time:

Time taken to pick each order.

Top Warehouse Pick & Pack KPIs

A study by WERC shows that best-in-class picking accuracy can reach as high as 99.9%.

Distribution

As the roles and responsibilities of warehouses expand with the growth of always-on supply chain,
the added function of distribution exerts additional pressure on warehouse management. Here are
some KPIs relevant to distribution:

21. Order Lead Time:

The average time taken by an order to reach the customer once the order has been placed. This is
one of the most crucial KPIs for warehouses and distribution centers.

22. Perfect Order Rate:

Number of orders the warehouse delivered without error. It indicates the success rate of the
warehouse/distribution center.

23. Back Order Rate:

The rate at which orders are coming in for items that are out of stock. There are situations wherein
unexpected spike in demand causes this. However, if this rate is consistently high, it is an indication
that there are lapses in planning and forecasting.

Another study by WERC shows that best-in-class perfect order rate can reach as high as 99.3% or
more.

These distribution KPIs will help you diagnose underlying problems.

For example, a high back order rate indicates that a warehouse or distribution center isn’t stocking
the appropriate inventory volumes. In this case, the problem lies in understanding consumer
behavior and better forecasting demand so as to properly set inventory levels.
Reverse Logistics

In most cases, the always-on warehouse is exposed to returns and reverse logistics. As a result,
proper KPIs are also necessary to measure the efficiency and effectiveness of this process.

Here is a KPI that warehouses should not ignore if they are exposed to this process:

24. Rate of Return:

The rate at which goods, once sold, are being returned. This is most effectively used when
segmented by reason for return.

This is one of the top warehouse KPIs that can help the warehouse/operations manager diagnose
the exact reasons for rising warehousing costs and customer dissatisfaction, as it lets you dig into
the reasons for returns.

Identifying, implementing, and tracking warehouse key performance indicators on a consistent basis
is the first step towards increasing warehouse productivity, efficiency, and customer satisfaction.
This will yield consistent positive results and operational predictability.

Remember, even the most diligent of efforts towards warehouse digitalization can be wasted if you
can’t measure warehouse operations.