Top 10 Distribution KPIs
Capacity
The utilization of your warehouse capacity is important to know. This metric could be based on available cubic feet storage, number of pallet locations or available CUSTOMER EXPERIENCE pick facings. If your company is using only 50% of its warehouse capacity, it may be wasting money. And,
On-Time Delivery (OTD)
if more than 85% of your capacity is utilized, you're This is the primary measurement of the efficiency of probably unable to operate efficiently (or safely). your processes, and it is simply measured as a ratio of Identifying the utilization sweet spot – where your the number of units delivered divided by the total units warehouse, people and processes operate most shipped. The definition of "on time" can vary depending efficiently – is key. Your ERP will help you make that on the customer and the industry, and whether shipping calculation and help you understand and accommodate was handled in-house or by an outside provider. If partial seasonal and temporary variability. deliveries are common, On-Time Delivery In-Full is a useful drill-down metric.
Safety
No one should argue with the need to minimize, monitor
Customer Complaints
and measure incidents, accidents, lost time and lost Assuming that customer satisfaction is one of the leading productivity in your warehouse and fleet. Not only should goals for your business, this is the metric to look at first. we be concerned about the health of our employees, but A caveat: The root causes of customer complaints can be there are significant costs associated with poor safety. many: picking inaccuracies, mis-ships, shipping damage, slow Return Merchandise Authorizations (RMAs) and credits, and more. So, It's smart to measure Complaints and these more granular metrics as well, and use any increases FINANCIAL as the trigger to scrutinize the underlying processes.
Revenue Per Employee (RPE)
Simple to calculate and easy to break down by function,
Total Order Cycle Time (TOCT)
RPE is a valuable indicator of productivity. Caution: RPE TOCT has become an important KPI as business customers is highly variable by industry sector. Industry analyst have come to expect Amazon-like delivery timeframes. data show that, in 2021, RPE for the distribution industry With TOCT, we are measuring the time it takes to fulfill a as a whole ranges from roughly $1.8 million to $600,000, customer's order, but a similar metric for fulfilling your own with the average being around $800,000. But it would purchase orders with your suppliers is also important. You be more insightful and accurate to set a benchmark should not only monitor for any increases in TOCT but also using your own data, and then utilize percent change or benchmark it against competitors. increase/decrease as your metric.
Asset Utilization
WAREHOUSE OPERATIONS Most people think about assets such as equipment, but you also should evaluate things such as receivables and
Throughput (Cases/Per Man-Hour)
inventory. In a low-margin business such as distribution, As a high-level metric for warehouse efficiency, Throughput how effectively you use all your assets can be the offers insight into how effectively your warehouse difference between being profitable and not. operation is utilizing its manpower in handling receiving, replenishment, order fulfillment and shipping processes.
Profitability
Your warehouse staff is one of your most critical assets and There are many different ways to measure profitability it's important to make sure you are using it effectively.
- and no matter which you choose, you should look at it for the entire organization, by product or product
Inventory Accuracy
family, by facility, by customer and by customer group. A growing number of distributors are applying advanced What metrics are the most edifying? Gross Profit Margin analytics to help them balance inventory levels with service makes it easy to see profitability trends over time. Net levels. To make that work, you need to know exactly how Profit Margin reveals exactly how much profit your much inventory you have in stock. In fact, without at least company makes after expenses. EBITA (earnings before a 98%-accurate cycle count inventory metric, you're highly interest, taxes and amortization) provides an accurate likely to have issues like stock-outs, long order cycle times, view of your company's overall financial performance. high back-order rates, lost sales and, eventually, poor customer satisfaction scores.
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