Using KPIs to Choose a Public Warehouse

As a business owner, executive, or manager, you’re probably using all sorts of key performance indicators (KPIs) to measure the effectiveness of various aspects of your business. That same method can be used when selecting a public warehouse. By using KPIs to choose a third party logistics provider, or 3PL for short, you’ll have solid criteria for determining which 3PL is best for your business.

KPIs for Measuring 3PL Effectiveness

When evaluating public warehousing, distribution and other logistics services, there are several areas in which KPIs can help you benchmark effectiveness in comparing different facilities. The best KPIs to use are:

- *Productivity –* This KPI measures the efficiency of the facility in terms of receiving goods and adding them into your inventory. In looking at the productivity of a public warehouse, evaluate the quickness of the receiving line (determined by dividing the number of items received to man-hours spent); the use of an automated warehouse management system for quickly defining storage locations; the accuracy of putting stock in inventory; the strategy used for staging goods; and the ability in interpreting shipping manifests in determining what items gets shipped immediately and what gets placed in inventory.
- *Cycle time –* This KPI measures how much time and labor are spent on cycling your goods. It is determined by dividing the total amount of time spent by the number of items put into inventory. When evaluating cycle time, also take into consideration order fulfillment; the quickness and accuracy of picking and packing an order; the use of an automated shipping and routing computer and gravity conveyor system; and how long it takes to prepare orders for shipping or distribution. Since cycle time reflects how long your inventory sits in a warehouse before orders are fulfilled, ideally, you want to look for a short cycle time because that means the public warehouse is operating most efficiently.
- *Quality –* The quality KPI evaluates the condition of the storage systems utilized by the public warehouse, as well as the performance of its staff. It measures the number of items that are correctly warehoused versus the total number of goods in the warehouse. When determining quality, look at the type of racking systems, lift trucks and the density of property (inventory stored by square foot) in providing easy access to stored goods, as well as the quality of order fulfillment and shipped orders.
- *Services –* The services KPI looks at the breadth of logistics-related services provided by the public warehousing and distribution facility. When evaluating 3PL services, look beyond warehousing and distribution to value-added services, such as processing and packing services, including customized services; import and export services; and foreign trade zone certification.
- *Cost –* The cost KPI allows you to compare costs based on the extent of services the 3PL is providing your business. If it is solely warehousing of goods, the storage cost per item KPI is used by dividing the average monthly cost by average stock per month. If public warehouse rental is done on a per square foot basis, the KPI calculation is determined by how much inventory you are able to store in a square foot space. This will tell you how effectively you are using your rented public warehouse space. Price also should take other factors into consideration, including the facility’s infrastructure, security systems, camera monitoring and recording capabilities, climate-control system and sanitation policies. Keep in mind that the lowest priced warehouse facility might not be the most effective or efficient, costing your business more money in the long run.

What KPIs Report About 3PLs

Key performance indicators will allow you to determine which public warehouse ranks highest in:

- Inventory count accuracy;
- Error/success rate of orders;
- On time shipping;
- Report availability and accuracy;
- Response time to your requests.

With this information, you can make an informed and verified choice about a public warehouse by comparing industry metrics used by all public warehousing facilities. By tracking the performance of a 3PL, you have a good indication of how successful your business will be using the logistics provider.

Top Rated KPI Public Warehouse Performance

With our state-of-the-art facility, advanced technology and wide array of logistics services, Brendamour Warehousing, Distribution & Services ranks among the best in performance, quality of work and affordable costs.

With Brendamour Warehousing, you can be certain your inventory count is always on the mark, and orders are accurately filled, shipped and received by your end customer on time. We’re always at the ready to assist you and our real-time reporting ensures accurate and prompt information at your fingertips whenever you need it.

Contact Brendamour for all your warehousing, distribution and logistics services. As your distribution partner, we’ll work hard for your business to ensure its KPIs are always on the mark.