The top warehouse key performance indicators impact the efficiency of both inbound and outbound warehouse operations. For instance, the cost of carrying inventory tells you how much you will spend (as a percentage) to hold and store your inventory annually. When you need to reduce your cost of carrying inventory, it’s important to reduce your inventory by eliminating obsolete, slow-moving, or dead stock inventory.  

In part one of this blog series of the top warehouse KPIs to know, we addressed 11 warehouse key performance indicators in the categories of internal operations and staffing. In part two of the series, we pick up where we left off and discuss 9 additional KPIs including the original categories and further incorporating supplier and customer-based KPIs in the mix.  

If you’re a supply chain leader or warehouse manager, read on to learn about the next 9 top warehouse KPIs to know to improve operations, reduce costs, and improve customer satisfaction below.  

1. Internal Operations—Inventory Carrying Costs: Calculating inventory carrying costs is perhaps the most important metric of all. It is calculated by dividing the total carrying costs by overall inventory costs. Of course, having the technologies and capabilities in place to track inventory carrying costs is crucial. 
2. Suppliers—Backorder Rate: The backorder rate is an equally important metric and warehouse key performance indicator for supply chain management. Calculate the backorder rate by dividing the total number of items on backorder by the total number of items that arrived successfully. 
3. Suppliers—Supplier Quality Index: Different suppliers offer products of varying quality. Track the rate of returns for products ordered that originated from different carriers or suppliers. By separating the returns rates, as well as considering the success of put-away and dock management efficiency, warehouse leaders can better determine which suppliers have higher performance. 
4. Suppliers—Lead Time: While the lead time may not seem like an important metric to track, insights into supplier lead-times help supply chain leaders better plan replenishment. In addition, lead-time analytics also reduce the risk of out of stocks, and depending on your facility, lead-time analysis may help build the business case for cross-docking or drop shipping. 
5. Suppliers—Value Added Services: Tracking value-added services, including auditing and accounting practices provided by suppliers, can go a long way in promoting inventory management, as well as improving supply-chain scalability. Track the use of these services, as well as their ROI, including both indirect and direct benefits. 
6. Suppliers—Attitude of Suppliers: The attitude of suppliers also impacts efficiency on the dock schedule and willingness to continue working with that supplier. This is a highly subjective measure, so compile the above-listed supplier warehouse key performance indicators, averaging them together, to create a one-stop view of a supplier’s efficiency or deficits. 
7. Staffing —Workforce Utilization: Workforce utilization must be your next top metric to track. This is the total number of workers that have fulfilled their duties accurately and efficiently divided by the total number of workers employed by a given facility. As workforce utilization increases, companies have less wiggle room with working with internal staff resources. As a result, staff augmentation may be necessary. 
8. Customers—Loyalty: Customer loyalty is best expressed as customer retention (repeat order) rates. Measure this warehouse key performance indicator by dividing the total number of repeat customers by the total number of customers for a given period. A higher result means your brand loyalty is increasing. 
9. Customers—Competition Pressure: The final in the lineup of warehouse key performance indicators is also subjective. Competition pressure describes the changes made in your organization as a result of a competitor’s new service or product. It may include a lower customer retention rate, decreased order volumes, increased services offered by competitors and more. As a result, it is best to define the variables that affect competition in your organization, consider their weight, and devise an “average-like,” prioritized list of competitors.  

Start Defining Your Warehouse Key Performance Indicators Now 

There is not a set rule that requires all warehouses and distribution centers to track the same key performance indicators. However, the common warehouse key performance indicators have a proven record of establishing both transparency and better management practices. Start tracking the full lineup of key performance indicators, including those listed here, to achieve a successful 2020 now. Also, contact Veridian online to learn more about what other specific metrics and technologies might help your company grow faster and more effectively.