Key performance indicators – KPI’s – are frequently used in general business to evaluate the success of everything from a specific department to an entire enterprise. They focus on strengths and weaknesses. Many warehousing KPI’s tend to be focused on external performance, such as on-time shipments that directly impact customers. This is a good measure, but the need to go deeper and measure the factors that drive those success rates is critical. What are some KPI’s for warehousing operations?

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One of America’s groundbreaking marketers, John Wanamaker, once famously said “half the money I spend on advertising is wasted; the trouble is I don’t know which half.”

Those who run warehouses, factories and other industrial facilities are hopefully not quite as in the dark about our expenses as Wanamaker was when it came to his ad budget, but there is definitely room for improvement when it comes to understanding hidden costs and fruitful expenditures.

For most of us, the coin of the warehouse is time and how it is expended.

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Merging two formerly separate industrial operations can be more difficult, expensive, and time consuming than creating an entirely new plant. After all, even in the best of scenarios, it’s almost always easier to start with a blank slate. But in these days of consolidations and cost cutting, this can happen to almost any company.  Planning and open communications is the key in general, but there are specific issues you should be aware of.

What are some pitfalls, and how can you avoid them?

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The warehouse. The office.

Sometimes it’s as if one doesn’t exist to the other. As one of our customers told us, “it’s like we have two companies here, and one doesn’t know what the other is up to.”

But when you’re trying to operate better, it’s impossible to separate the two functions. Decisions can be made in one area that can impact the other severely, so communication and cooperation are vital. Too bad it doesn’t always work that way. How can you improve it?

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Whether you’re operating a dedicated distribution center or the order fulfillment or stock warehouse of a manufacturing operation, most industrial facilities deal with storage and warehousing to some degree. In the not-so-distant past, warehousing was treated mostly as a cost center – a necessary evil that had to exist so that the more profitable parts of an enterprise could operate. Thankfully, more enlightened thought has prevailed recently.

Order fulfillment and storage are not just places you can save money – they can earn money. If the gremlins don’t get you.

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In many operations, things like conveyors or pipe runs or other machinery interrupt the flow of a work floor, and the obvious way to get around it is to erect a crossover. This is commonly done in larger scale conveyor systems with longer lines, but we also do them for other areas where going around the obstacle could take significant time, or where access is limited by other factors. The question is, what type of crossover best fits your needs?

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If you’re paying someone to store a pallet for you, what’s reasonable?

Are you overpaying for convenience or location? It’s not easy to compare 3PL vs. 3PL, or even your own warehouse so you know for sure if you are getting value for your money. But there are some basic assumptions you can make to help you understand what you’re dealing with, the costs the 3PL may experience, and reasonable costs for your storage projects.

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At Modex 2012, Hytrol Conveyor’s Boyce Bonham sat down with DCVelocity to discuss distribution center sustainability. We’ve linked the video below, which is worth a few moments of your time. How do initiatives to work greener, smarter, and better affect warehouses and distribution operations? Not surprisingly, these initiatives often save money, at least over the long term.

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Comparison is natural – and necessary

Everyone likes to see how they’re doing vs. their industry peers.  This isn’t just a natural urge to compare yourself, it’s a vital part of doing business.

Benchmarking, at the heart of it, is comparing your performance to others like you. You look at your business processes and outcomes, and how they stack up to the performance metrics of industry leaders, your peers, and the best from similar operations. In warehousing, it is particularly important to understand where you are, and where you could be with reconfigurations, tweaks, and innovations that others are using to improve their numbers.  What do you specifically measure? Typically this can include quality, cost, and time. Specifically, it can get much more complex.

At the end it helps you understand the success of your peers and how you can reproduce that success.

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In warehouse & manufacturing operations, things get broken. They break in a number of ways, and it’s expensive. You’ve probably seen product broken or damaged in amazing and improbable ways  if you’ve been in this business for any length of time. We had a client once buy a bunch of mismatched, used industrial shelving (not from us), only to see it collapse and dump thousands of tiny aircraft components on the floor. It had to be swept up and discarded since it was all mixed up and visually impossible to sort.

Those are extraordinary examples, but everyday inventory damage that cost “only” a few hundred or thousand dollars can savage your bottom line.

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