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How To Cut Cost By Using Logistics KPIs in Warehousing

If your company deals in physical goods you most likely have a logistics department. Your logistics sector could use a buff to its productivity and efficiency. Any increase in efficiency of this department results in a direct improvement in your profit margin. Having logistics KPIs is one of the best ways to track performance in this sector. Both your transport section and warehousing operation could use KPI monitoring to improve performance. You should take the time to define the right KPIs for a far more robust operation. Here are some of the best logistics KPIs to monitor, regardless of your company’s niche.

Logistics KPIs in Warehousing | Perfect Order | Delivery On Time

Percentage of Mislabeled Products              

This is a part of your warehousing operation. Obviously, when you offer delivery to your customers, you package and ship the products from your warehouses. It is the responsibility of your employees, within the warehouse, to pack and label the right product for the right customer. Of course, humans will be humans and errors will be made. You can use a Perfect Order KPI to track how often the wrong product reaches a customer. You can then work on improving this percentage so your overall customer satisfaction increase, as well as your profits.

Number of Orders that Have Delayed Shipping

Shipping is probably one of the most time-constrained operations in a logistics department. It is important that your orders leave the warehouse on time. Shipping carriers usually pick up products for delivery at a certain time every day. If your warehouse isn’t packaging and readying the product for shipping by the pickup time, it won’t be shipped on that day. This can result in a delay of a few days before your customer gets the product. One way to eliminate or reduce delays is by setting KPIs that measure how often a product fails to ship on the same day it is supposed to.

Number of Orders that Aren’t Delivered on Time

Sometimes, the delay in shipping isn’t on your end. If you use an external carrier to deliver your products to your customers, you have to set Delivery On Time KPIs to measure their performance too. If your warehouse is sending products out on time, but there are still delays in the final delivery, you’re in trouble. Take the time to measure how many of your customers get their item by the promised date of delivery. It’s important that final delivery occurs on this estimated date at least 98% of the time. If the number is lower than this, you need to review the efficiency of your chosen shipping carrier. It may be time to choose a new one entirely.

Cost of Storing Items in Warehouse

When an item is produced, it is brought to your warehouse for storage. At this point, it is added to the inventory and kept until: a) the item is bought by a customer and shipped, or b) the item’s shelf life runs out and it is discarded. There is a cost associated with storing an item in your warehouse, one that mounts over time. You have to set a KPI to compare the cost of storing an item in your inventory with the income from selling it. This information can be used to optimize the shelf life of your items and control the flow of items into your warehouse.

These are just a few of the logistics KPIs you should have in your operations. Always count the costs of storage and delivery, especially in terms of the weight of your items. Make sure your orders are shipped and delivered on time and to the right people. With these Warehousing KPIs in place, you ensure all these happen the way you want them to.

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