10 Warehouse KPIs that impact freight management

Adam RobinsonFreight Market Blog

The modern supply chain rests on a mountain of shipping data. However, the applications of real-time freight data remain disparate and lack value. It’s only challenging to get a handle on the volume. And where do companies start to leverage top KPIs in supply chain settings and enforce policies, such as the inbound routing guide? As reported by Brian Barry of Multichannel Merchant, it is simple:

“Don’t try to write and enforce the ideal policy in one step. Typically, these include meeting EDI and electronic document standards; use routing guides, which even small companies should have; labeling inbound cartons and pallets with product SKUs and purchase order numbers; and purchase order terms and conditions.” 

Let’s give you the top 10 warehouse KPIs to track that will inevitably impact freight management.

1. On-time deliveries

Tracking the total number of on-time deliveries remains the most vital and universal of all warehouse KPIs. Since on-time delivery accounts for both inbound and outbound freight, it has a natural effect on the full supply chain.

2. Lead time

Average lead time also plays a role in the effective management and application of warehouse KPIs. Knowing the lead time helps warehouse managers understand when to restock inventory, allocate drivers, source more capacity, and take other necessary steps. It’s also an effective way to measure freight shipper reaction to trucking capacity.

3. Fill rate

The fill rate is a full measure of the volume of orders shipped over a given duration. It provides immense insight into the overall productivity of the operation.

4. Ease of doing business

As the world has grown accustomed to managing by exception across each freight market, warehouse operators need to track the ease of doing business. This subjective aspect of warehouse KPIs does have an objective component – compiling information from the often-mentioned KPIs to create a bird’s-eye view of the ease of warehouse management and performance improvement.

5. Compliance with routing guides

Holding carriers accountable with a routing guide is another opportunity to apply warehouse KPIs. And the same functions can be used to improve relationships with asset-based freight brokers and other intermediaries. As compliance moves further away from 100%, it shows lower performance among trading partners.

6. Growth potential

Tracking the growth potential within the warehouse is another vital concern for modern supply chain leaders. Growth potential should consider the current fill rates, on-time delivery percentages, and perfect order rates. Meanwhile, it can be used in conjunction with compliance KPIs to guide future freight bidding negotiations.

7. Return rate

E-commerce carries an immensely higher rate of returns than traditional brick-and-mortar shopping. However, tracking the returns rate is an essential step to understanding what is happening to catalyze unnecessary returns and keep excess returns in check.

8. Hassle or cost to serve

Another of the leading warehouse KPIs is the direct opposite of the ease of doing business; it is the hassle or cost to serve. This KPI is a measure of all costs associated with order fulfillment versus profitability. In a sense, it is a rudimentary function of profit and loss statements, providing insight into the warehouse’s overall performance as well as the performance of team members, trading partners and more. It all leads to a better way to gauge the health of your business model.

9. Average dwell time

Since warehouses are often impacted by the uncertainty of driver conditions during a capacity crunch or peak, tracking dwell time becomes much more than just avoiding unnecessary costs. Higher dwell time rates will inevitably lead to truckers abandoning the notion of picking up loads at your dock. As a result, finding available capacity becomes more problematic. Yet, applying data to understand average wait times, recognize the most lucrative moves, and better allocate your inventory within the supply chain network will go a long way in helping to reduce dwell times.

10. Workforce utilization

The final warehouse KPI in our top 10 list involves workforce optimization and utilization. Workforce utilization is a direct measure of the available workforce compared to the workforce in use. It is derived by simple division and helps the company account for possible issues, such as a higher-than-average callout rate due to illness.

Gain an advantage in freight management: track the right warehouse KPIs to plan transportation

The full list of warehouse KPIs shows the real issue – throughput in the warehouse. Tracking the total volume of inbound and outbound freight, not to mention its contingent factors through these metrics, adds value by enabling proactive transportation management. Companies also need to leverage the warehouse data in conjunction with comprehensive transportation data – inside and outside of their companies. An advanced, data-driven, and near-real-time analytics engine like FreightWaves SONAR makes that possible. Request a SONAR demo today.