How to Measure Warehouse Performance

Warehouse Performance, Cost, and Value Measures

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In our RightChain™ methodology, a warehouse is accountable to the same competitive indicators a business is held to. Businesses compete on the basis of financial, productivity, utilization, quality, and cycle time performance. They are also accountable to serve their employees with a great place to work, their customers with excellent customer service, and their shareholders with excellent returns relative to risk. It is critical to hold the warehouse accountable to these business performance measures, since even private warehouses are in effect in business competition with third-party warehousers who are in the sole and literal business of warehousing. If a private warehousing enterprise is not competitive with potential third-party providers, then the private operator should reconsider its justification for being in the warehousing business. The flip side, though rare, is that if a private operator is a world-class warehouse operator, then the opportunity is available to turn their warehousing operations into profit-generating third-party operations for their industry and/or other industries. As an example, one of our telecommunications clients has become so dominant in their logistics practices, that they are creating a third-party logistidcs subsidiary to serve their industry. 1. Principles of Performance Measurement RightChain™Metrics is our proprietary performance measurement model. The model is based upon seven key principles of performance measurement. I will explain those briefly, and then we will apply them to warehousing. 1. Servant Leadership . The heart of the RightChain™ methodology is service. Our model encourages serving employees with a great place to work, serving customers with excellent customer service, and serving shareholders with excellent financial performance and high returns relative to their risk. Accordingly, RightChain™ Metrics work in three facings – employee facing metrics, customer facing metrics, and shareholder facing metrics. Employee facing metrics include safety and turnover. Customer facing metrics include accuracy, cycle times, and on-time performance. Shareholder facing metrics include cost, productivity, and utilization.

World Class Warehousing™