Tag Archives: Warehouse KPIs

IMPACT OF INDUSTRY 4.0 ON SUPPLY CHAINS AND ITS BENEFITS

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Industry 4.0 is fast transforming how businesses manage their key functions.  Digitalization aided by disruptive new technologies such as IoT, AI, big data & analytics,  machine learning, automation and robotics, cloud computing, blockchain, 3D printing, etc. and  the explosive growth of smart devices is leaving no segment of the business untouched.  

Supply chain management, more complex than ever before, stands to benefit tremendously  from going digital. Studies suggest that an interconnected, digital supply chain can lower  operational costs by more than 30 percent, reduce lost sales opportunities by more than 60  percent, and even reduce inventory requirements by more than 70 percent, all while making  companies faster, more agile, granular, accurate, and efficient.  

While transitioning to a digitized, automated and fully interconnected supply chain requires  significant efforts and long-term investments, the pay-offs are huge. Bringing supply chains  online can help enterprises reach the next level of operational effectiveness and realize  significant cost reductions. Here we discuss how digitalization makes the supply chain more  efficient: 

5 Key Benefits and the Impact of Industry 4.0 on Supply Chain

  1. 1. Greater Transparency and Accuracy 

Global supply chains can involve thousands of suppliers operating within the supply chain  ecosystem of a company. In such cases, ensuring end-to-end transparency and real-time asset  tracking is crucial, any gaps in supply chain risk management can lead to supply chain  disruptions, lost sales, and unnecessary costs. Going digital enables companies to track the  entire supply chain in real time, such as finding out the exact location of goods (on order, in  transit, or in a warehouse). Advanced solutions easily track inventory by combining updates  from supply chain partners with IoT data. This improves order accuracy and ETAs (minimizing  out-of-stock situations), enhances lot and batch control, optimizes inventory, and lowers  associated costs. 

  1. 2. Increased Interconnectedness and Collaboration 

A fully integrated, digital supply chain management software enables information to flow  seamlessly between suppliers, manufactures, and customers, taking collaboration to the next  level. Being a shared platform, it breaks silos and transforms planning into a continuous  process. It enables greater trust and support, and joint planning solutions, especially in cases of  non-competitive relationships. Stakeholders can choose to carry out supply chain-related  activities together to not only save costs, but to share best practices and learn from each other.  

An interconnected platform also lowers lead times through better communication, as suppliers  can provide warnings early, increasing a company’s responsiveness to risk. Another vital  feature of such closed-loop planning is that pricing decisions are integrated with demand and  supply planning; prices can be changed as per the expected demand, stock levels, and  replenishment capacity. This boosts revenues and optimizes inventory. 

  1. 3. Improved Warehouse Management 

Digitalization can significantly improve warehouse management capabilities, especially with  regard to supply chain inventory and transportation logistics. For example, sensors can track  goods in real time, and accurately predict how long it will take for a consignment to arrive. Such  real-time tracking ensures on-time pickup and delivery. RFID technology can predict the exact  location of a product, even its exact position inside a truck. Such preciseness helps managers  provide location-based instructions to workers, saving time. Labour hours consumed per order  are also reduced. Thanks to tracking devices, companies can avoid last-minute shocks such as  inadequate quantity or non-compliance. Machine-to-machine communication also optimizes the  number of carriers per shipment, reducing transportation costs. Inventory storage per square  foot is also optimized through accurate demand prediction. This way, plant managers can easily  control the flow of inventory globally.

  1. 4. “Intelligent” Supply Chain 

“Thinking” supply chains can “learn” to recognize risks and change their supply chain  parameters to mitigate such risks. They continuously evolve and learn to handle many  exceptions without the need for any human involvement, except in case of any unforeseen risks,  when human intervention is required to determine the next course of action. 

  1. 5. Greater Agility 

Advanced supply chain solutions integrate data from suppliers, service providers, etc. in a  “supply chain cloud”, ensuring that all stakeholders take decisions based on the same facts.  Such end-to-end, real-time visibility will enable companies to respond more swiftly to disruptions  in real time and minimize risk. Also, the emergence of “Supply Chain as a Service” will increase  agility significantly.  

Clearly, companies have a lot to gain from improving their supply chain management in Industry  4.0, and those that are reluctant to do so run the risk of becoming uncompetitive.

 

Article by:- Akash Chowkampally

10 steps to choosing a warehouse management system

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Choosing the right warehouse management system can often be as simple as taking a few considerations into account:

Step 1. Understand your current systems

If you are already using software to manage your warehouse operations or part of your warehouse operations, then you should start by looking at it in detail. What functions does it have that you like? What functions does it not have that you want?

You will also need to know what integrations you require from your warehouse management system. For example, you may require it to integrate it with your shipping carriers or sales channels.

Step 2. Decide if your picking process requires a WMS

If you are running a very small ecommerce operation, like a side-hustle, a WMS is unlikely to be necessary. But, if you are moving any reasonable number of products or you have any ambitions to scale you will need a more sophisticated solution.

Step 3. Understand what you are looking for in a warehouse management system

This is where you make your checklist of ‘must-haves’ and ‘like-to-haves’. You can then compare this list against your options.

Step 4. Decide on your budget

Of course, good warehouse management systems will cost money. So you will need to know how much money you can commit from your cash flow to purchasing one.

Step 5. Create a shortlist

There will be a few different options you can choose from. The easiest way to decide which ones to shortlist is simply to create a list or spreadsheet listing prices and features.

Once you have created a shortlist you can then go and use free trials or book demos with those you think are right for you.

Step 6. Check it integrates with your entire fulfillment process

Warehouse management is only part of the puzzle of ecommerce. Your WMS should also connect with your inventory management system and shipping carriers.

Step 7. Check it gives you the reports your need

A good warehouse management system will give you reports that can make definite improvements to your business. It should provide these reports in an easily accessible way.

It’s also good if the WMS provides demand forecasting as this will help prevent under and overstocking in the future.

Step 8.  Check it works with your ecommerce tech-stack

You probably use a range of platforms, marketplaces, sales channels and shipping carriers. You need to check that your warehouse management system either has a native integration, seamless workaround or open API to do this.

This is where you can make use of a free trial. As it’s hard to know if a system works for you without testing it out.

Step 9. Is it easy for pickers to use and understand?

A good WMS will be easy for your pickers and warehouse team to understand and use. While there will always be a training period with any new software, you should look for an intuitive interface and easy-to-understand processes. This will make it easier for your team to pick up the new system and cut down on training time for new hires.

Step 10. Does it come with support?

Your business will be unique, therefore it’s important that any service you purchase comes with support. This support will be able to help you through any issues that arise with the product.

 

 

Article by:- Akshay Patel

Top 24 Warehouse KPIs

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TOP 24 WAREHOUSE KPIS

Receiving

Among the most critical warehouse KPIs are the metrics that measure receiving performance. Warehouse operations begin with this process, and any inefficiencies here will snowball through all the subsequent processes.

Warehouse KPI metrics that correspond to the receiving process are:

1. Cost of Receiving Per Receiving Line:

The expense that the warehouse incurs on the receiving process of each receiving line. This includes handling costs as well.

2. Receiving Productivity:

Determined in terms of labour by measuring the volume of goods received per warehouse clerk per hour.

3. Receiving Accuracy:

Percentage of accurate receipts, i.e., the proportion of correctly received orders against purchase orders.

4. Dock Door Utilization:

Percentage of how many of the total dock doors were utilized.

5. Receiving Cycle Time:

The time taken to process each receipt.

These warehouse KPIs help managers identify any lapses in receiving and avoid a chain reaction of inefficiencies down the process line.

Catching inefficiencies, such as a long receiving cycle caused by busy dock doors, can reduce deficiencies as early as in the receiving stage.

Putaway

Once goods are received, the process of putaway begins with placing each item at a designated location selected for most convenient retrieval.

Effective putaway ensures a smooth picking process, thus significantly reducing lead time.

Here are some of the important warehouse KPIs that you must track to measure the efficiency of the putaway process:

6. Putaway Cost Per Line:

Expenses incurred for putting away stock per line, including labor, handling, and equipment costs.

7. Putaway Productivity:

Volume of stock put away per warehouse clerk per hour.

8. Putaway Accuracy:

Percentage of number of items put away accurately at the designated location.

9. Labor and Equipment Utilization:

Percentage of the labor and material handling equipment utilized during the put-away process.

10. Putaway Cycle Time:

Total time taken during the entire process of each put-away task.

Evaluating the putaway through these warehouse KPIs gives you a clear picture of potential inefficiencies in the process. Recognizing snags such as inaccuracies or scarcity of labor will help you to optimize and streamline the process.

Storage

Whether your warehouse is dependent on storing goods manually or uses AS/RS (Automated Storage and Retrieval System), you still need to measure efficiency. Here are some important warehouse KPIs to measure storage efficiency:

11. Carrying Cost of Inventory: 

The cost of storage over a particular span of time, including the cost of inventory, capital costs, service costs, damage costs, and costs of obsolescence. The longer the stock stays in storage, the higher the cost to the warehouse.

12. Storage Productivity:

Volume of inventory stored per square foot.

13. Space Utilization:

Percentage of space occupied by inventory out of the total space available for storage.

14. Inventory Turnover:

The number of times the entire inventory passes through during a period of time.

15. Inventory to Sales Ratio:

Measure of stock levels against sales. This helps managers identify monthly increases in inventory against falling sales.

These storage & inventory management KPIs are of immense value when it comes to maximizing storage utilization and reducing cost of inventory. For example, a low inventory turnover spurs you to track down a reason and helps you improve inventory management.

Pick & Pack

The process of picking & packing directly impacts lead time. Greater accuracy in picking means shorter lead time.

Picking in the right order decreases the rate of order return and increases customer satisfaction.

16. Picking and Packing Cost:

The cost incurred per order line, including handling, labeling, relabeling, and packing.

17. Picking Productivity:

The number of order lines picked per hour.

18. Picking Accuracy: 

The percentage of orders picked and packed without error.

19. Labor and Equipment Utilization:

The percentage of labor & pick/pack equipment out of the total labor and equipment utilized during the process.

20. Picking Cycle Time:

Time taken to pick each order.

Distribution

As the roles and responsibilities of warehouses expand with the growth of always-on supply chain, the added function of distribution exerts additional pressure on warehouse management. Here are some warehouse KPIs relevant to distribution:

21. Order Lead Time:

The average time taken by an order to reach the customer once the order has been placed. This is one of the most crucial KPIs for warehouses and distribution centers.

22. Perfect Order Rate:

Number of orders the warehouse delivered without error. It indicates the success rate of the warehouse/distribution center.

23. Back Order Rate:

The rate at which orders are coming in for items that are out of stock. There are situations wherein unexpected spike in demand causes this. However, if this rate is consistently high, it is an indication that there are lapses in planning and forecasting.

These distribution KPIs will help you diagnose underlying problems.

For example, a high back-order rate indicates that a warehouse or distribution center isn’t stocking the appropriate inventory volumes. In this case, the problem lies in understanding consumer behavior and better forecasting demand so as to properly set inventory levels.

Reverse Logistics

The returns and reverse logistics is another crucial process where warehouse KPIs need to be measured. In most cases, the always-on warehouse is exposed to this process, and it’s essential to measure its efficiency and effectiveness.

Here is a warehouse KPI that should not be ignored if you are exposed to this process:

24. Rate of Return: 

The rate at which goods, once sold, are being returned. This is most effectively used when segmented by reason for return.

This is one of the top warehouse KPIs that can help the warehouse/operations manager diagnose the exact reasons for rising warehousing costs and customer dissatisfaction, as it lets you dig into the reasons for returns.