In our most recent blog, we addressed the importance of keeping it simple when establishing fulfillment KPIs.
This week we’d like to share another secret that’s just as important: Keeping it real.
Although it should go without saying that good fulfillment warehouse KPIs require reliable, real-world inputs, there are a number of circumstances that can easily prevent these inputs from happening. These include:
Little to no previous fulfillment history. As companies are getting established, tangible information about things like average order pick rates, inventory accuracy and shipping velocity can be elusive simply because it’s early in the game.- Significant growth. Sometimes a company’s fulfillment particulars have changed so drastically or quickly (perhaps, for example, volumes have suddenly doubled or tripled) that the old inputs no longer apply.
- Changing requirements. When one KPI – such as an acceptable shipping window – changes, it often impacts several others. Companies often forget to factor in this cause-and-effect.
- Lack of formal benchmarking. Many young companies simply haven’t had the opportunity to put a formal information gathering program in place, at least not when it comes to their fulfillment performance. While the data might exist, it hasn’t necessarily been captured.
- Heightened expectations. When companies decide to work with an outside provider, it’s natural for them to expect that provider to bring significant performance improvements to the table. However it’s also not uncommon for some of them to create a new set of standards so high even a team of Supermen wouldn’t be able to achieve them.
So what should your company do if any of these situations applies to you?
- Resist the urge to bluff. While it may be tempting to simply massage performance numbers, pull them out of thin air – or to “borrow” them from the Internet – it’s also counterproductive, because having faulty numbers is worse than having no numbers at all.
- Don’t be afraid to come clean. It’s better to let your 3PL know that your data is outdated or incomplete rather than having the 3PL piece together a metrics dashboard based on poor inputs.
- Consider looking for guidance from your 3PL. It’s quite likely that it can provide you with some workable numbers based on its own experience. Or, you may mutually conclude that it’s a smart idea to take a few months to work together before deciding exactly what your KPIs should be.
- Don’t panic. If you’ve already established KPIs but now feel some are off-base, remember that the “I” in KPI doesn’t stand for “indelible” or “infallible.” Metrics management is an iterative process.
At the end of the day, a good KPI program is a dynamic work in progress that’s meant to keep you, your staff, and your service providers aligned. Closely tracked KPIs provide early warning about areas of activity that need to be corrected. They should also challenge and inspire all players to bring their A-game to every aspect of the operation. As such, it’s never a bad idea to reexamine and adapt KPIs as needed.
For more information about effective KPI practices, we encourage you to download our new eBook, KPIs for Warehouse Fulfillment Operations.
