Part Four of The Importance of Measuring and Utilizing KPIs in Warehousing

This article is part four of our six-part KIPs in Warehousing series. Click here to read part one: The Importance of Measuring and Utilizing KPIs in Warehousing

Storage & Inventory:

A messy warehouse is an inefficient warehouse. Further, the longer inventory stays in the warehouse, the more it costs a business. For this reason, tracking storage efficiency and inventory is essential to optimising your warehouse.

Some example KPIs here would be:

1.      Carrying Cost of Inventory

The longer inventory sits in the warehouse, the more it costs. Measure the cost of storage over a span of time – this includes everything it costs to hold stock over this timeframe, including the cost of inventory, capital costs, storage costs, equipment & software, materials, etc.

2.      Inventory Turnover

The number of times per year your warehouse goes through its entire inventory. You should compare this rate with industry averages to see how your warehouse is performing.

3.      Inventory to Sales Ratio

The ratio of sales to stock. This can help you to identify increases in stock against falling decreases in sales.

4.      Storage Productivity

The volume of inventory stored per square foot.

5.      Space Utilization

Percentage of space occupied by inventory out of the total space available for storage.

Tips for improving storage & inventory efficiency

• Use a good inventory control system with detailed and accurate
• Adopt a digital barcode system with the use of a barcode scanner to easily track inventory
• Maintaining a lean inventory means that you only keep around what you actually need and nothing
• Utilize cycle counts where inventory is routinely counted one or more times in a given cycle