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The success of your warehouse strategy is entirely contingent on how proactively you and your third-party logistics (3PL) provider identify key performance indicators (KPI), and how well you measure the information you’re given. If you’re not learning from your mistakes and actively looking to find new ways to improve transportation costs, customer satisfaction, and other valuable aspects of supply chain management, then you’re putting your entire company at a disadvantage. The services you utilize need to align with your long-term strategic goals so that you never have to worry about whether or not you made the right decision. Here are the main KPI categories that your warehouse needs to plan, implement, and measure for optimal performance.

Customer Metrics

This is who your product is ultimately going to, so make sure that you’re accounting for the myriad of factors that go into whether they receive their product on time. Specific KPI’s for customer metrics include:

  • On-time shipping
  • Total order cycle time
  • Internal order cycle time
  • Perfect order percentage

Inbound Metrics

Make sure that you’re taking note of what’s coming into your warehouse—if you don’t account for what’s coming in, it’s impossible to be accurate about what’s leaving. Specific KPI’s for inbound metrics include:

  • Dock-to-stock cycle
  • Inbound orders received
  • Lines received

Outbound Metrics

At the end of the day, it’s all about ensuring a quick turnaround from receiving your products to shipping them off to where their designated destination. This is where contract packaging services come in to play for your warehouse. Specific KPI’s for outbound metrics include:

  • Order fill-rate
  • Orders picked per hour
  • Lines picked per hour
  • Line fill-rate
  • Outbound order fulfillment

Financial Metrics

Taking stock of pertinent financial metrics can make all the difference when it comes to determining your long-term strategy. You always want to make sure that you’re cutting lesser-valued services and streamlining your operations where you can. Specific KPI’s for financial metrics include:

  • Distribution costs (as a sales percentage and per unit shipped)
  • Inventory days of supply

How do you know where you’re going if you don’t know where to start?

The first step toward streamlining your warehouse operations is diagnosing where you need to make specific changes. Whether that results in your warehouse implementing cross-docking , pick-and-pack, kitting services, or trying to comprehensively reform your entire process is up to you—all that matters is that you’re identifying weak spots in your supply chain so that you can fortify and improve your processes rather than fall further and further behind. No matter what new service you implement, always measure its success. Track pertinent information, and you’ll be in the best position possible for long-term success.