Throughout the supply chain, the use of metrics to track and understand processes provides an invaluable resource for ensuring increased production and customer satisfaction. Additionally, the use of metrics fosters positive relationships with coworkers and adherence to rulesets and best practices for the respective third-party logistics provider (3PL). Many of the following distribution center metrics to track closely mirror those found within transportation and manufacturing, but this listing will focus on those involved in distribution centers. Distribution centers have a tendency to become like the lost cousin when compared to other aspects of the supply chain, but they play a valuable, constantly-needed role to ensure the timely delivery of the merchandise to retailers, customers, and others.
What Distribution Center Metrics Need Tracking?
Every movement within a distribution center can be tracked, and the decision of which metrics to track rests with management. However, the most important metrics can be categorized into the following eight areas.
The overall goal of the distribution center is to make sure that freight makes into the correct mode of transportation at the appropriate time. This involves monitoring for the late departure of shipping containers as well as premature completion of a specific freight loading time. While finishing a specific shipment load sounds like it would benefit the company, it may actually detract from duties to other shipments, which in turn results in a cascading effect of inaccurate departures.
Accuracy in Order Fulfillment
The second most important distribution center metrics to track involves the accuracy during order picking processes. As workers are given their respective lists of items to pick, it would stand to reason that each employee should be able to complete the retrieval process quickly. However, impatience has a tendency to result in errors in judgment. Furthermore, this could lead to more than the requested number of products being included in the shipment, which results in a shrink of inventory. However, the alternative to this, not including an item, can anger an end-customer and permanently harm the customer-business relationship.
Monitor Warehouse Capacity
The 26th State of Logistics Report found that many warehouses are operating at, or near, capacity. Distribution centers need to know how much additional inventory they may take on and where their current inventory lies. Many distribution centers use RFID measures to monitor inventory, but human input is still needed to assess if the center should increase, or decrease, the rate of loading times.
Identify Peaks in Warehouse Capacity
Throughout the year, warehouses experience changes in capacity due to increases and decreases in consumer spending. For example, shipping during the holiday season tends to increase as more people begin purchasing items online for gifts. However, distribution centers cannot possibly foretell how much of a specific product needs to be available unless the distribution center management has previous accounts of how much product has typically been required during similar time periods. This is where the metric of monitoring warehouse capacity and peak-volume comes into play. Appropriate warehouse tracking must include monitoring of peaks in capacity.
This metric actually includes three unique distribution center metrics: dock-to-load time, internal cycle time, and total cycle time.
- Total cycle time refers to the amount of time from arrival of product to the distribution center to the successful departure of shipments containing the respective product.
- Dock-to-load time refers to the amount of time typically required to load a given shipping container. Many distribution centers have the freight prepared and ready for immediate loading. However, this only occurs properly if the distribution employees benchmarks for ensuring the accurate picking of products by workers, or even robotics, prior to the arrival of the shipping container.
- Internal cycle time describes the speed at which the pre-arrival completion of a shipment picking and packaging takes place.
Ultimately, each cycle allows management within the distribution center to identify and isolate inefficiencies and encourage positive shipping practices.
Annual Employee Turnover
The constant on-the-go mentality of distribution center goals results in exhaustion. Unfortunately, some employees make the decision to move on to other employment. This is a factor that affects the public perception of a distribution center. Disgruntled employees can ruin a distribution center’s reputation and cripple the existing workforce of the center. Each year, the distribution center needs to assess the workforce turnover and make changes to reduce it.
Putting Away of Incoming Product
When a distribution receives a shipment, employees have a specified interval of time to unload the product and put it away in its correct location within the distribution center. This metric allows distribution center employees to identify which types of products require the most time. Therefore, additional staff can be diverted to labor-intensive unloading of lines and enhance the overall efficiency of the center.
Percentage of Damaged Products
When a package arrives at a customer in damaged condition, the distribution center needs to know about it. This ensures the distribution center identifies if the damage occurred as a result of center staff, driver behaviors, or an issue during the unloading of the truck at its end-destination.
The use of these distribution center metrics helps distribution centers flourish. The use of these metrics is beneficial to the distribution center for improving accuracy, encouraging positive employee morale, and ensuring superior customer service to others in the industry. Fortunately, many of these tracking measures are becoming digitized and easy-to-use by all workers in a distribution center as well.