Warehouse efficiency – This is a very important parameter to determine long-term profit and production goals.
1 – Effectiveness of Receiving goods in the warehouse
- The cost of unloading – the cost of labor and handling and equipment
- Efficiency of processing the received goods— calculated in terms of labor costs by measuring the amount of inventory per employee per hour
- Acceptance accuracy – % of errors during receiving goods in terms of quantity and quality
- Utilization of labor and equipment – % of labor and material handling equipment
- Cycle time – total time spent from the moment of unloading to the placement of goods.
2. Inventory maintenance costs
The longer the product is stored in the warehouse, the more it costs the business.
Total maintenance costs —the sum of all expenses of the company for storing inventory for a certain period of time (Cost of goods, Costs of storage, Equipment and IT, Consumables, Taxes)
3. Inventory turnover
- Cost of inventory — the cost of storage over a period of time, cost of handling in storage, maintenance costs, damage, and shelf life.
- Ratio Stock/Sales — this measurement allows you to determine the monthly increase in inventory against the declining sales.
- Number of returns
— An indicator that gives an understanding of customer satisfaction. The key to using this metric effectively is segmenting by return reason.
- Order Lead time.
– the average time between a customer’s order and receiving the product. The less time you need to complete an order, the happier Customers and Business.
Source-Designing and Managing Supply Chain by Sinchi-Levi and Kaminsky and Shankar
