In today’s competitive business environment, having associates and managers that are not only focused on their own departmental goals—but also the overarching goals of the entire company—can really pay off. That’s why it’s important to share key performance indicators (KPIs) broadly.
When it comes to fulfillment operations, the KPI scorecard should not be kept in a “black box,” out of the view of the people who actually do the work.
Let’s take an example. Does your fulfillment staff know the real cost of a fulfillment error? Do you?
In an article for Multi-Channel Merchant, fulfillment consultant Curt Barry cited one client example where the calculated cost of an error by the fulfillment team cost $43.23 per error. Once you know this number for your company, the math to determine the financial impact on the organization is pretty simple.
(ANNUAL ORDER VOLUME * ERROR RATE PERCENT) * COST OF ERROR
KPI metrics (shipping accuracy, on time delivery, etc) appear as tiny numbers on a busy spreadsheet. And too often that’s where it ends. No attempt is made to make the numbers more real for the associates who do the work – in terms of the added work created (customer service time, fulfillment labor time, returns processing, re-shipment, etc) and the extra labor and shipping costs.
For associates, mistakes that make up numbers on a spreadsheet they don’t see won’t get their attention.
Mistakes that materially impact the profitability of the company or the client begin to have more relevance.
We talk more about KPI management in fulfillment in our recent blog post: New Year Resolution: Improve KPI Management for Fulfillment Ops.
Getting Your KPIs Out into the Open
KPI’s provide a framework for success that requires buy-in across the entire organization. This is critical because individuals and single departments don’t attain corporate goals—multiple individuals across numerous departments do.
While it’s easier to limit fulfillment KPI scorecard visibility only to managers, there are clear benefits to keeping all associates in the loop. Sharing KPIs throughout the organization:
- Lets you align your entire workforce to the overall strategy
- Ensures that everyone is focused on key business objectives
- Helps translate high-level strategic goals into clear objectives for every business unit and every employee
- Creates a clear line-of-sight – from top down and bottom up – so individuals understand how their day-to-day actions contribute to the firm’s overall success
- Allows employees to develop goals that link to the organization's objectives
- Enhances understanding of strategy
- Generates commitment
- Instills personal accountability
Your KPI Scorecard
To avoid the KPI “black box” syndrome, involve associates in KPI development and then show them how those benchmarks contribute to the company’s overall profitability, progress, and customer satisfaction.
Consider workshops and/or brown-bag lunch meetings once a quarter to keep key employees informed on the most recent warehouse KPIs and show how their respective roles help the company achieve those critical benchmarks.
Investing to demystify the KPI black box can pay huge dividends in terms of associate engagement and operational performance.
