Without feedback, improvement isn’t possible. Improvement requires comparing your current performance against previous performances. This in turn requires that you define what you mean by “performance.” For warehouse management, making your customers happy by consistently fulfilling their orders on time with the right products, in the right quantities, and undamaged is a good way of measuring your performance.
However, it’s best not to base it on customer complaints because by then, the damage is already done. In addition, some customers will remain silent about certain things such as shipments that arrived late. These less vocal but dissatisfied customers simply take their business elsewhere. Basing your performance on customer complaints is reactive. A proactive performance measure is based on in-house metrics that you can closely monitor so that it never gets to the point where customers are lost.
For example, “the perfect order” measure computes the error free rate of each part of order your fulfilment. The different parts might be the order entry accuracy rate, the product type accuracy rate, the product quantity accuracy rate, the on-time delivery rate, the undamaged delivery rate, and the invoice accuracy rate.
Each rate is calculated as the number of error-free instances (such as the number of correct product sent) divided by the total number of instances (such as the total number of product sent). The perfect order measure is then the product of these individual rates.
If you notice that your perfect order measure has dropped since the last month, a quick check of its individual component rates tells you where to focus your remedy efforts. On the other hand, if your overall performance is acceptable but you notice one of its components is noticeably lower than the others, then you know where to most effectively focus your improvement efforts.
You can also set up measures of the performances of each aspect of your warehouse operations by similarly breaking them down into smaller components. For example, it’s a good idea to set up a performance measure of your warehouse picking and packing since it’s an important component of your order fulfilment process.
Of course, computing these performance measures requires accurate data. Warehouse management software provides this data and can compute and display the various performance measures graphically. If this interests you, please contact us.
