If your company used just a few KPIs to measure your 3PL warehouse performance, which would you choose – and why?
It’s a hugely important question, because when it comes to setting these criteria, many companies are guilty of metrics overkill.
That’s just one of several common 3PL warehouse KPI mistakes addressed in Amware’s newest eBook, KPIs for Warehouse Fulfillment Operations.
Although it’s tempting to stuff a KPI program full of metrics, it’s rarely a good idea, because monitoring too many metrics out of the gate could deflect your 3PL’s attention away from the actual execution of fulfillment tasks. It could also prove to be too work-intensive for your staff to review and analyze.
To ensure your warehouse KPIs don’t get lost in the crowd, it’s best to focus on a handful of the strategic fulfillment metrics that matter most to your company and its customers – and if you’re not sure what those metrics should be, here are four that may make sense:
- Receiving efficiency (dock to stock time). As long as product is sitting in a DC’s receiving area instead of in racks or bins, it’s not readily available to be picked, packed and shipped out in a timely fashion, which could create bottlenecks further down the line. How long should your 3PL take to receive, process and put incoming product away once it has arrived at the fulfillment center?
- Inventory accuracy. What’s the acceptable variance between the inventory that your systems and records say you have at your fulfillment center versus the physical inventory you actually have? Too much of a variance suggests problems with everything from receiving accuracy to order fulfillment accuracy, resulting in excess costs and unhappy customers
- Shipping accuracy. In a perfect world, customers would get a perfect delivery every time. In the real world, errors occasionally happen, even to the best of companies. What percentage of mistakes – deliveries to the wrong address, deliveries that are damaged, wrong item or wrong count – is your company really willing to accept? (And what number of unhappy customers does this percentage actually represent?)
- On-time shipping. What percentage of orders do you expect your fulfillment center to ship by your designated cut-off time?
Bear in mind that you can always add more warehouse KPIs to this list as your 3PL program and relationship mature.
And if you’re still not able to whittle the list down, don’t be afraid to ask your 3PL to help. After all, if you were weighing the pros and cons of two different medical procedures, wouldn’t you ask your doctors what they’d choose for themselves? It’s really no different. Your 3PL eats, sleeps and breathes fulfillment services in a way that your company doesn’t. As a result, it can provide you with suggestions about the performance metrics that are truly mission-critical versus those that are just window dressing.
When choosing 3PL warehouse KPIs, your 3PL can provide a helpful reality check on the quality and service levels that are actually impactful and achievable based on your company’s volumes, timeline and budget.
For more helpful hints, check out our quick read eBook .
