How to Measure Warehouse Performance

Warehouse Performance, Cost & Value Measures

3

2. Span the Flow . In a supply chain, the flow of material, information, and money connects suppliers and customers through production, purchasing, inbound transportation, warehousing, outbound transportation, and customer delivery. In warehousing, the flow of material and information moves from receiving, to putaway, to storage, to picking, to shipping. That flow of connected activities organizes the columns of metrics in our RightChain™ Warehousing Scoreboard. 3. Red, Yellow, Green . We recently completed a warehouse performance and practices assessment for an element of the United States Army. They were pleased with the all the aspects of the assessment except one – RYG. To be honest, I didn’t know what they meant by the acronym; so I asked. They explained that “RYG” means “red-yellow-green”; a critical aspect of the presentation of their indicators. When I pressed further, they explained that in battle they may be trying to understand an assessment with little to no sleep, little to no food, and with bullets flying around. In trying to make good, quick decisions under those circumstances it is helpful to know if things are simply and clearly OK (green), in trouble (red), or somewhere in between (yellow). 4. For Better or Worse . Another very helpful feature in the presentation of metrics is the portrayal of the direction of the performance - getting better, getting worse, or remaining constant. 5. Down and down we go . Metrics should be available for all levels of granularity of warehouse activity including all the warehouses in a supply chain, a specific warehouse in a supply chain, a specific activity in a specific warehouse, a specific operator in a specific activity in a specific warehouse; all filtered by time horizon, location, and channel of business. 6. Practice makes perfect . Like sports teams, warehouses perform the way they practice; it’s that simple. Accordingly, our RightChain™ Warehousing Scoreboard reports a practice score for each warehouse activity. 7. Sum the whole . The performance indicators either add or multiply across the activities to indicate the overall performance of the warehouse.

© Dr. Ed Frazelle, Author, World Class Warehousing | ALL RIGHTS RESERVED