Management gurus have a saying “if you can’t measure it, you can’t manage it”.
This is especially true in fulfillment services.
Everyone tracks and measures Key Performance Indicators (KPIs) that are outlined in customer contracts, such as inventory accuracy, order accuracy, order turnaround times and others, but these are merely the basic measures that customers will be looking at to ensure acceptable performance. There are many other metrics that needed to be tracked and measured to ensure the success of your ecommerce fulfillment operations.
To identify the KPIs most indicative of success, first look at core processes, such as operations like the pick line, packing stations and replenishment. Each of these discrete tasks has key measurements that can pinpoint success. For the picking operation, indicators may include units picked per minute or lines picked per minute. Measuring and understanding this productivity point allows managers to know what the optimal performance is on a pick line and therefore allows them to better plan for peak season volume. The same is true of the packing operations. Understanding the optimum performance level in orders or units packed per a measure of time not only allows managers to plan for peak volumes, but provides the information needed to adjust staffing on a daily basis to maximize labor utilization.
Once KPIs have been identified, it is critical to identify the source data that will be used for measuring purposes. Data can come from many points in the operation, so identifying the proper point to extra certain will determine the ease and completeness of the data extraction. Once tracking begins, regular reporting periods should be established so that the KPI report is provided to managers in a form and frequency that allows them to act upon it. There is no management value in a KPI that is too infrequent and not formatted in a manner that allows for immediate action.
One easy way to test a fulfillment company’s true knowledge of their operations is to ask for the KPIs they track and report, and the frequency with which it is provided to managers. Those looking only at contract KPIs are not viewing their operations broadly enough to manage for optimum efficiency.
To paraphrase the old saying “you're not managing what you aren’t measuring”.
For more information on KPIs in ecommerce order fulfillment, contact us today!