A warehouse can be measured in a thousand ways. These are the warehouse KPIs that tell you whether the operation is going well, with the formula for each one, and how to measure them without endless spreadsheets. We do not give “good” or “bad” values: they depend on your product and your building, and what works is comparing yourself with yourself from one week to the next.
The five basic KPIs of a warehouse
1. Inventory accuracy. What share of what the system says matches what is on the shelf. Formula: bins counted that match ÷ bins counted × 100. It comes from the counts, so it only exists if you count regularly.
2. Picking errors. Orders that left with the wrong item, size or quantity. Formula: orders with an error ÷ orders shipped × 100. If you want more detail, do it by lines: lines with an error ÷ lines picked × 100. Errors come to light through complaints and returns, and through what is caught at the table when verifying.
3. Orders on time. The ones that left before their carrier's cut-off time on the day they were due. Formula: orders shipped on time ÷ orders that were due to leave × 100.
4. Productivity. How much is picked per hour of work. Formula: lines picked ÷ hours spent picking. It can also be calculated in orders per hour or units per hour, but choose one and do not change it.
5. Cost per order. What it costs to pick and ship each order. Formula: (staff cost + packaging and consumables + cost of the space and the equipment) ÷ orders shipped, over the same period. Transport is usually tracked separately.
Inbound KPIs
- →Dock-to-shelf time: the time the goods are put away minus the time the truck arrived. While they sit on the dock, they cannot be sold.
- →Inbound deliveries with differences: deliveries with shortages, overages or damage ÷ deliveries received × 100. Useful for talking to suppliers.
- →Unannounced inbound deliveries: the ones that arrive without anyone knowing they were coming ÷ total deliveries × 100.
Storage KPIs
- →Occupancy: bins occupied ÷ total bins × 100. With a very full building the work gets worse, because there is nowhere to put away or to replenish.
- →Stock turnover: units that left in the period ÷ average stock in the period. It tells you how many times the warehouse “empties and fills up”.
- →Days of cover: current stock ÷ average daily outflow. How many days you can last without receiving anything.
- →Stock with no movement: SKUs with no outbound in a time frame you set ÷ SKUs with stock × 100. It is the product that takes up a bin and does not sell.
Returns KPIs
- →Return rate: orders returned ÷ orders shipped × 100. Split them by reason: the ones caused by a warehouse error are the ones you can fix yourself.
- →Processing time: from the moment the parcel arrives until the item goes back into stock or is written off.
Summary of formulas
| KPI | How it is calculated | Where the data comes from |
|---|---|---|
| Inventory accuracy | Bins that match ÷ bins counted × 100 | Counts |
| Picking errors | Orders with an error ÷ orders shipped × 100 | Complaints, returns and verification |
| Orders on time | Shipped on time ÷ those due to leave × 100 | Dispatch time and cut-off time |
| Productivity | Lines picked ÷ hours of picking | PDA scans and shift hours |
| Cost per order | Costs for the period ÷ orders shipped | Payroll, purchases and orders |
| Dock to shelf | Put-away time − arrival time | Receiving and put-away |
| Occupancy | Bins occupied ÷ total bins × 100 | Stock by bin |
| Turnover | Outbound in the period ÷ average stock | Stock movements |
How to measure them
The key is for the numbers to come out by themselves from what is recorded while working: every scan, every count and every shipment. If measuring means writing things down by hand, nobody does it and nobody believes the numbers.
Start with a few. With the five basic ones and one or two for inbound you already know where to look. And put the definition in writing: what counts as an error, what counts as “on time”, which hours go into productivity. A KPI that is calculated differently every month is no use for comparing.
Watch out for
- →Measuring people instead of tasks: problems get hidden and collaboration is lost. On top of that, individual tracking has data protection implications.
- →Looking only at the average: the problems are in the peak hours and in specific zones.
- →Rewarding speed alone: lines per hour go up and so do errors. Productivity and errors are always looked at together.
- →Calculating inventory accuracy with counts from months ago.
- →Having twenty KPIs that nobody looks at. Better five that are reviewed every week.
How often to look at them
- →Every day: what is left to pick, whether each carrier's cut-off will be met, and the pace.
- →Every week: picking errors, inventory accuracy, inbound deliveries with differences.
- →Every month: cost per order, occupancy, turnover and stock with no movement.
Ubika shows what is left to pick, whether each carrier's cut-off time will be met and the pace in orders per hour, from what is recorded on the PDA. To get the inventory accuracy number you need to count regularly: we explain it in cycle counting. And if what you want to bring down is errors, see how to reduce picking errors. More about the software in warehouse management software.
Frequently asked questions
Keep reading
- Location labels with barcodes: how to make them and where to put them
- What is a warehouse management system (WMS) and when do you need one
- How much does a warehouse management system (WMS) cost
- Picking with a PDA: what it is, how it works step by step and which terminal you need
What Ubika does: warehouse management software · software for 3PLs · WMS for e-commerce