Wasp Barcode Technologies: The Barcode Solution People
Is Your Business Tracking these 6 KPIs?
Key Performance Indicators (KPIs) are benchmarks that help identify growth areas within your business. In other words, they’re basically the gages that tell you how your operations are functioning. Have you taken time to narrow down the KPIs that are important to your business?
If you haven't, there is really no accurate way to measure your business performance.
This is a real problem if you want your business to grow.
To help you get started, here are some important KPIs to note across industries. However, metrics do vary between businesses, so be sure to carefully choose the unique ones that will have a
measurable impact on your company’s success. Once you gather enough warehouse data points, it is easy to establish some realistic standards.
1. INVENTORY ACCURACY
Depending on your industry, inventory can include finished goods, raw materials, and works-in process (WIP). Keeping close track of all the items that come and go from your warehouse is important to keep our operations running and thriving. If you carry the costs of too much inventory sitting on warehouse shelves, money is wasted on storage and spoilage costs as well as insurance. Conversely, too little inventory puts you at risk of lost sales when popular items aren’t available when ordered. When you own a small business you must
keep inventory levels correct to avoid those problems.
Medical-supply company Orthopedic Solutions put up with years of inconsistent manual inventory tracking before
they decided to invest in a reliable tracking system.
Many times medical facilities
label products because the FDA requires them to. Not much care is taken in the process, resulting in poor label quality that’s hard to read and scan. After using Wasp’s reliable software system and scanner, the company is now experiencing enhanced medical tracking, easily detected data, money saved due to better tracking, and less headaches.
2. SEASONALITY
Even if you don’t run a seasonal business, it’s likely you’ll have ebbs and flows in your business during certain holidays or will experience more customer orders of items used in either the summer or winter months, for example.
“Business owners should
look at two to five years of trends to truly understand when they can expect slow or busy times,” Sabrina Parsons, CEO, Palo Alto Software wrote in
INC. “They should then plan accordingly. Maybe they need to hire more employees during certain seasons or reduce inventory in anticipation of lower demand.”
3. CUSTOMER SATISFACTION
Good customer service should be one of your top priorities, which makes it a critical KPI to track. Knowing your customers’ behavior over time will help you make better purchasing decisions because you’ll know what’s popular and what’s not and when you should keep certain items in stock. In addition, the more accurately your workers pick, pack, and ship items, the more satisfied your clientele will be.
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Further, there are three valuable metrics that bring in new customers and establish loyal ones:
4. CUSTOMER ORDER CYCLE TIME
How quickly do your customers receive their items? Do packages get shipped immediately and accurately? Or have customer complaints become the norm in this department? Without customers, you don’t have a business. When a customer gets their item on time or even early, it will clearly increase their satisfaction level; and it encourages them to come back and shop with you again. Here’s how customer order cycle time is figured: delivery date minus the purchase order creation date.
- Order status and tracking accuracy is another critical goal of every business. Mistakes are unavoidable, however it’s vital to track how much ordering errors happen and keep them at bay. To keep tabs on these mishaps, the use of real-time inventory tracking metrics can help. Your goal is to fulfill orders right the first time, and improve customer service overall.
- Item Fill Rate is the “rate at which the order is met as compared to the total order or demand,” or simply the ratio between what’s ordered and what your company could actually deliver. So you should shoot for higher numbers because that demonstrates good inventory performance.
5. CYCLE TIME
The cycle time begins when a customer request is made, and it ends when the item is ready for delivery. You can account for cycle times in any type of order, such as customer orders, manufacturer orders, and purchase orders. As aforementioned, when orders are quickly processed for delivery, the happier your customers will be. You can start by tracking more general cycle times, and from there analyze smaller cycle time metrics for more specific data.
6. INVENTORY TURNOVER
How quickly are you replacing inventory
in your warehouse?
High inventory turnovers should be your goal because it means you’re selling a lot of product and making better use of your assets. Of course, your business is making more money when items are flying off the shelves. An
inventory tracking system will significantly increase profitability through keeping accurate inventory metrics.
7. WAREHOUSE EFFICIENCY
Efficiency can be measured through a number of aspects of your operations, including:
- Employee productivity: When your workers use manual processes to run your warehouse, overall efficiency takes a big hit. Do these problems sound familiar?
- Warehouse employees lose or misplace items.
- Customer service reps make ordering mistakes.
Each of these issues cause
unwanted slow-downs in your supply chain. When you implement inventory control, these problems can be avoided.
- Supply Chain Cycle Time: If you had no items in your warehouse, how long would it take to fill a customer request? By adding the longest times for each stage of this cycle, you will know this crucial metric that paints a picture of the overall state of the supply chain. Stages that show the longest lead times are areas of concern.
- Perfect Order Measurement tells you which links in the supply chain cause the most problems, so you can fix them in a timely manner.
To achieve long-term financial success, tracking key inventory KPIs is vital. The real-time data you’ll have on-hand will help you delve deeper into the normal, healthy fluctuations in operations and zero in on potential problem areas. If you can spot issues quickly, you can fix them before they kill your business.
Once you set a standard, consider benchmarking the warehouse cost structure and productivity per person, other distributors, or even against industry survey results such as the annual research survey conducted by
Georgia Southern University and other major reports. Even more important is to measure progress within your own warehouse targets. This is very useful because performance depends on a variety of unique factors such as processes, specific customer expectations, and automated materials handling infrastructure.
You’ll have the ability to track the metrics important to your unique business, making the right changes to your business operations before it’s too late.
What KPIs should your business track to improve efficiency and allow the business to grow successfully?
