Warehouse Management Metrics
Warehouse metrics: Warehouses are used for storing products for a certain period of time. It involves a great amount of costing and management skills since a corporation’s inventory depends on its capacity.
Here are some of the most important metrics for warehouse management which act as a great tool for measuring a business’s success:
Inventory Turnover
At first, let’s focus on what inventory turnover is. Inventory turnover is the number of times a corporation buys its inventory over a financial period.
This is an amazing metric for measuring the proper utilization of a business since it shows whether the warehouse costing and the inventory selling costs are feasible or not. The greater the inventory turnover, the better it is for a business.
Therefore, if an organization is able to sell its inventory over the forecasted time period, it is a good sign.
Inventory to Sales Ratio
For a business, more sales should mean more profit if other externalities are not being taken into consideration. However, sales and inventory have an inversely proportional relationship which at times can turn out to be complex.
If inventory decreases, it means sales are increasing and vice versa. This indicates that the profitability percentage of business is improving.
The effect it will have on the warehouse metrics is that it will give the warehouse manager an idea of how much to stock over a specified period of time.
Order Packing Accuracy
The order packing accuracy basically deals with how a product is sealed in such a manner that it does not get hampered or damaged while it is being shipped.
A warehouse will perform satisfactorily if only they pack the correct products in a proper manner for the designated buyer. If they are successful in doing so, they will be able to get rid of inventory very soon which will, in turn, reduce the warehouse management cost.
Back Order Rate
This business metric is the waiting period a customer has to endure if there is not enough stock available for a particular product. These situations often tarnish the brand image and the organization can lose customer loyalty.
Hence, if the warehouse is filled properly with an adequate level of products, this can disruption can be avoided and this will only be possible if the warehouse is controlled and maintained regularly.
Days on Hand
Days on hand is the number of days a business requires to completely clear out its stock. This is a great indicator of how well the business can sell its products to the customers.
It also measures the time period by which it is possible to do so. In such cases, the warehouse management metric should definitely not allow the stock to remain for a longer period of time since it’s cost-ineffective and will slow down the business. The fewer days on hand, the better it is for a firm.
In conclusion: warehouse management metrics are great for measuring the success of a business in both the long run and short run. Hence, it is better to productively use the warehouse since it has a lot of benefits.
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Warehouse Management Metrics Reporting Tools And Strategies
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