Warehouse Benchmarks and The Price of Keeping Up
So, what are warehousing benchmarks? What do these benchmarks measure? We’re here to tell you!
Benchmark measures are standards in establishing goals for performance improvements in one specific activity, area, process, or product. Essentially, every aspect of a business is measured in these standards. If you have a business, it’s important that you become familiar with this kind of terminology, and that you understand how to use benchmark measures.
Here are some ways that benchmark measures are used within a company.
Effective management of inventory reduces back ordering of product, customer dissatisfaction, and drives operating costs higher. Using cycle counts to validate stock is crucial and looking over inventory results will help you maintain higher accuracy levels.
Receiving Accuracy and Cycle Times
Performing audits against physical and systemic put away is a driver that allows the warehouse team to gauge the ability to have inventory available for orders. This is critical in right-sizing the inventory on hand (and the cost to carry) while experiencing minimal back-ordering on the fulfillment side.
Order Picking Accuracy
Accurate order selection drives down picking cycle times. It allows for more orders to be picked in a given timeframe and keeps labor costs under control. This can help reduce the rate of returns (restocking incorrectly shipped orders) and increase customer satisfaction ratings.
Turnover and Carrying Cost of Inventory
Measuring turnover of inventory allows the effective management of buying inventory and the sales demand associated with it. A good warehouse management system (WMS) will allow for visibility and forecasting that assists in managing this. This leads to effectively managing the carrying costs of the inventory – making sure that the appropriate amount of goods are flowing through the warehouse/distribution center. Not too much being carried, nor too little.
If you still have some questions about benchmarks, don’t worry! Here are some FAQs for you!
What are nonstandard benchmarks clients/customers should be aware of, but they might not be?
Many people see data as high-lighting negatives or areas ripe for improvement. Equally as important, data can also show positives that can be a huge factor in building a positive culture while setting and reaching goals. This can help reduce turnover rates and related training costs.
How do organizations typically organize these data points?
Having a good WMS is the key to being able to generate reports that allow for the identification of trends and areas in need of continuous improvement. By sharing and reporting out the data, you can effectively measure and manage it – the good and the bad. Managed right, benchmarking and raising the performance standard can be great for morale and culture within your team.
How does this software save your clients money?
The WMS software is the driver behind continuous improvement and optimization. But, if you can’t measure it, you can’t effectively manage it. If you can continue to improve on things like accuracy and cycle times, you ultimately change your processes, drive cost savings, and overall customer satisfaction. In this business, customer satisfaction should be your number one priority. Happy clients mean that your business is successful and that more customers will be drawn towards your services. If you can save your clients money, they will be even happier.
Why is it important to look at these data points in a warehouse system?
The data points tell a story of what is working and what can be working better. As mentioned previously, if you continue to improve your processes, everyone wins. From the workers on the floor to the customers – everyone has a greater level of satisfaction. Improvement can be made daily, as there are always new processes being created. You could be doing something one way today, and tomorrow you could discover a better way for both you and your company. Don’t be afraid to embrace improvement.
How does collecting these data points help create an intelligent warehousing system?
Data drives all decisions. If you aren’t satisfied, and you’re always striving to be better and to improve, an intelligent warehousing system will ultimately be the fruit of the labor. Without data, we wouldn’t have accurate numbers for sales, for stocking, or for any future inventory. You must keep track of your data to manage a successful business.
Keep in mind that the key point in supply chain management is that there is no room for complacency. The minute you stop looking to be better than you are today is the minute that you begin to lose ground in this “best in class” competition. You must always be on your toes, and you must be onto the next thing before someone else is. In this business, competition drives the motivation for personal growth.
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