Have the supply chain disruptions caused by the pandemic made you think a bit more about warehouse key performance indicators than usual? Even in “normal” circumstances, consistent review of order fulfillment KPIs improves your ability to make well-informed business decisions and react to changing circumstances.
Ultimately, evaluating warehouse KPIs is about finding opportunities and setting goals. Without first determining where improvements can be made by reviewing KPIs, you can’t identify goals for the future.
What opportunities does your business have to improve cost-efficiencies, reduce supply chain friction, and earn customer loyalty through fulfillment warehouse KPI evaluations? Read on to learn more about important categories of fulfillment KPIs, how to evaluate key indicators, and how to pursue opportunities for improvement.
IDENTIFY IMPORTANT FULFILLMENT KPIS
Fulfillment warehouses are incredibly intricate operations, and performance in one facet of the operation has cascading effects on other areas. Identifying where supply chain friction originates from can help you capitalize on opportunities to improve. To identify friction points, regularly review these fulfillment KPI categories.
Inbound metrics indicate the efficiency of order coming into the fulfillment warehouse. These metrics often help you identify areas of supply chain friction—less-than-efficient processes that are impacting the overall performance of your supply chain.
Important inbound metrics
- Dock-to-stock cycle time
- Inbound accuracy
- Percentage of damage-free supplier orders
Outbound metrics indicate the efficiency of orders processed and sent out by the fulfillment warehouse. Another efficiency metric, performance in this area is also commonly affected by supply chain friction.
Inefficiencies in this area are most apparent to the customer, making these metrics high-impact for customer satisfaction. Finding opportunities for efficiency here helps your company improve satisfaction and earn customer loyalty.
Important outbound metrics
- On-time shipments
- Total order cycle time
- Backorders as a percentage of total orders
- Order-picking accuracy
Financial metrics are directly tied to the costs of executing the fulfillment of your products. This is where the overall performance of each facet of your fulfillment operations have their effect on revenue. Keeping a close eye on fluctuations in these metrics can help identify opportunities to improve in other areas.
Important financial metrics
- Inventory on-hand
- Inventory accuracy
- Inventory turns
HOW TO MEASURE FULFILLMENT KPIS
A successful approach to measuring fulfillment KPIs starts with consistency. Timeliness, communication, and consistent access to data is at the heart of a frictionless fulfillment operation. Make use of real-time data and communicate with your fulfillment partners on a regular basis to find ways to improve cost-efficiencies and earn customer loyalty.
Do you have the tools to visualize and synthesize data points that are critical to your fulfillment operation? Modern warehouse management software and solutions, including real-time dashboards and graphs, make finding new efficiencies simpler. Not pleased with your current access to easily digestible data? Consider reviewing your warehousing technology options. 3PL support in this area may be a high-ROI business opportunity.
So let’s say you weren’t entirely pleased with every metric when you reviewed your performance. The good news is that you now have a new opportunity to improve efficiency, reduce costs, and earn customer loyalty.
Let’s review a common scenario that causes friction in fulfillment operations—affecting your performance metrics and customer satisfaction.
Backorders as a percentage of orders
A particularly common friction point throughout the pandemic, backorder friction is defined by holding back part or all of an order due to lack of stock. While certain recent events have made backordered stock an inevitability, flexibility and expertise in order fulfillment processes can ensure your customers receive their order as quickly as possible.
Improperly managed backorders have the potential to send ripple effects through your fulfillment operation, significantly reducing efficiency. To prevent and respond to backorder friction, consider the following steps:
- Communicate demand fluctuations due to sales or other factors to both the supplier and fulfillment provider to ensure adequate on-hand inventory and staffing
- Review your fulfillment partner’s cross-docking capabilities and internal order cycle time
- If needed, clearly communicate with your customer to make certain they aren’t disappointed by wait times for backordered stock
Coordinate with 3PL fulfillment partners
3PL fulfillment partners like FIDELITONE can offer deep insights into order fulfillment processes. FIDELITONE puts technology and employee expertise to work to ensure that clients receive actionable data and insights.
Casey Drawe, FIDELITONE’s Regional Director of Operations, says that measuring fulfillment KPIs is about always pursuing better outcomes for the client.
“The reporting we provide to clients through the Partner Portal, in day-to-day communications, and quarterly reports, is our roadmap to new opportunities,” says Casey. “We’re always using data and insights to improve performance for our clients.”
FIDELITONE works with clients to craft right-fit order fulfillment solutions for ecommerce, B2B, D2C, and omnichannel fulfillment. Part of making a right-fit solution is making a strategy for communication and metrics reporting.
Service level agreements
Mutual understanding of the service level agreement is vital to measuring the success of a 3PL fulfillment partnership. Clearly communicated expectations make it easier to identify areas in need of improvement, and FIDELITONE is always working towards more efficient processes to meet your desired service levels.
FIDELITONE clients have access to real-time warehouse data through the partner portal. This warehouse data allows them to synthesize information from multiple sources, like suppliers and demand forecasts, to ensure that the product on-hand is sufficient at all times.
FIDELITONE’s client service representatives and account managers work with clients to ensure that day-to-day communication and data inform fulfillment operations. Through consistent communication of warehouse metrics and demand forecasting, FIDELITONE can help clients avoid the peaks and valleys of inefficient order fulfillment processes.
Offering a flexible array of high-impact KPI reporting tools, FIDELITONE’s expertise in measuring fulfillment KPIs helps clients find new opportunities for improvement.
FIDELITONE’s high-impact reporting:
- Real-time dashboards and graphs
- Weekly fulfillment KPI scorecards
- Quarterly, semi-annual, or annual business reviews
- Knowledgeable and responsive client service representatives
FIDELITONE: ALWAYS IMPROVING
As a customer-centric order fulfillment service provider, FIDELITONE understands that every stumbling block between the customer and their order affects customer satisfaction. Our order fulfillment experts are always looking for ways to improve operational efficiency on behalf of the client.
Need help honing your order fulfillment processes? Contact us online or call 800.475.0917 and ask about how we can help you hit your order fulfillment benchmarks.