Essential KPIs To Track Warehouse Management Efficiency

Posted By : Anirudh Bhardwaj | June 9, 2021

Developing a warehouse management system is imperative to seamlessly run a host of warehouse operations and inventory-related activities. Businesses must follow a proactive approach to efficiently manage their hardware and software resources. For instance, once you have a fully-integrated warehouse management software in place, it requires continuous enhancements, improvements, and performance optimizations. These improvements must be made in accordance with the most crucial key performance indicators (KPIs) for warehouse management. 

That said, there has to be an effective strategy to track the performance of your warehouse management processes. It helps you pin down critical flaws, loopholes, and areas of improvement by analyzing the system performance in accordance with the key performance indicators (KPIs).

Essential KPIs To Track Warehouse Management Software Performance

At Oodles, we also provide post-development support for software maintenance to ensure that your WMS software performs seamlessly across devices. Our technical team continuously monitors your system’s performance and functionality in adherence to the most crucial business KPIs. We conduct routine system checkups and QA drives to fix bugs, glitches, and improve software efficacy. 

In this post, we highlight the most crucial business KPIs to track and analyze the performance of warehouse management processes.


Also, Read 3PL Warehouse Management Solutions: Top Benefits For Enterprises


Business KPIs For Effective Warehouse Management

Traditional warehouse management methodologies involved minimal use of software tools as the main focus was on manual processing. With the advent of ERP and the fourth industrial revolution, we have made tremendous progress in the field of warehouse management and planning. 

Warehouse management software development services have enabled enterprises to achieve higher levels of productivity by enabling automation at every level. However, to sustain the cut-throat market competition, it is essential to stay on the ball with the latest technology updates. That said, measuring software performance through the following business KPIs would help you target the right areas for system improvement. 


Also, Read The Importance of Data Analytics In Supply Chain Management


Perfect Order Rate

It is an important business KPI that measures the extent to which your warehouse fulfills customer orders without any discrepancies. For effective warehouse management solutions, the perfect order rate should always be higher. To achieve a higher POR, enterprises must provide on-time delivery of ordered items and customers must get the deliverables in a good condition. We calculate the perfect order rate using this simple formula: (Orders completed without discrepancies) / (Total number of orders). 

To achieve higher POR, businesses must follow a proactive approach to identify problems as they arise and fix them on priority. Furthermore, it is advisable to follow industry guidelines and best practices to enhance warehouse management efficiency. 


Inventory Tracking Accuracy

For effective warehouse management, the number of physical inventory items must correspond with the number listed in the WMS databases. However, due to the ever-increasing influx of inventory items, there might be significant variations in the former and the latter. While it is practically impossible to rule out these differences once and for all, enterprises must take stringent measures to mitigate them. In other words, the inventory accuracy must be as high as possible to avert unexpected backorders and deliver maximum customer satisfaction. 


Backorder Rate

The backorder rate is a state in order fulfillment cycle during which an enterprise is unable to process a given number of orders through standard inventory processes. Backorder instances are quite common in the manufacturing industry that normally happens due to a sudden spike in demand for a particular product. However, a continuously increasing backorder rate indicates that there is something gravely wrong with your warehouse management strategy. 

The following formula helps you calculate the backorder rate at any time during the order fulfillment cycle: (Unfulfilled orders at the time of purchase) / (Total number of orders). The best way to mitigate the backorder rate is to start using business intelligence tools for accurate sales forecasting and improved decision-making. 


Inventory Turnover

Understandably, having a higher turnover rate is the key to drive maximum revenue growth and the same applies to inventory turnover as well. It is a critical business KPI that measures your distribution efforts with respect to the overall inventory that is acquired. By gauging their inventory turnover, businesses can take essential steps to ramp up their distribution efforts. 

The modern-day warehouse management software solutions are designed to provide real-time insights into inventory movements. Furthermore, these data-driven software applications incorporate predictive analytics algorithms to devise effective distribution strategies to enhance inventory turnover. 


Employee and Manager Satisfaction Score

Efficient teamwork is the essence of a successful business strategy that focuses on enhancing productivity through nurturing good leadership qualities. Thus, evaluating the manager satisfaction score is conducive to measuring the effectiveness of teamwork and collaborative effort of an organization. A good manager satisfaction score indicates that the organization is more likely to achieve its production goals. Besides, it is also critical to take employee satisfaction score into account as it directly impacts workforce productivity. 

To achieve higher employee and manager satisfaction scores, it is advisable to use data-driven workforce management and business process management tools. 


You may also be interested in reading Developing ERP Software For Warehouse Management


The Bottom Line

These were some of the most crucial KPIs that enable enterprises to measure and evaluate the performance of their WMS systems. Based on these KPIs, businesses can take important steps to optimize their software performance and improve warehouse management services efficiency. It is also advisable to keep close tabs on the latest technology trends and upgrade your warehouse management software whenever required. It helps you keep pace with the latest technology updates and edge ahead of your competitors. 


We, at Oodles ERP, provide end-to-end warehouse management software development services to solve complex business problems using tech-driven methodologies. Our development team begins with a 360-degree assessment and evaluation of your existing business model and its software requirements. Accordingly, we formulate effective execution strategies to deliver maximum value in the form of streamlined operations, improved performance, scalability, and data security. We use open-source software platforms like Odoo, ERPNext, and Apache OFBiz to develop enterprise-grade business applications for varying industry-specific needs of our customers. To learn more about our warehouse management software development services, write to us at [email protected].

Tags: warehouse management services, warehouse management software, warehouse management solutions
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