Keeping tabs on your warehouse KPIs is a key part of furniture warehouse management.
Not only do metrics help you keep track of where your inventory is going, but they can also provide crucial insight into how your business is performing.
This is just part of why automated inventory management software, like Workhorse, is essential for businesses that want to stay on top.
Let’s dive straight in and look at the key metrics that every furniture warehouse manager needs to be tracking.
15 metrics you should be monitoring in your furniture warehouse
Inventory turnover measures how many times your warehouse goes through its entire stock per year. A high turnover rate means you’re doing something right!
For a business to stay successful, products need to flow in and out readily, without any hitches. You also need to make sure you have room for new product lines, which will be a lot of space when working in the furniture business.
Automated warehouse management systems can help you track this with little to no effort. And analytics can help you figure out weak points in your inventory before it’s too late.
The backorder rate represents how hard it is for you to fill customer orders.
In the furniture sector, this metric will look a lot higher when compared to other industries. That’s okay, though, because the furniture business often relies on last-minute manufacturing.
A temporary rise in your backorder rate isn’t a bad thing. In fact, it tends to mean you’re seeing an unprecedented uptick in sales. However, if you have a backorder rate that continues to grow or stays at a steady but high speed, you know there’s something you need to address.
Inventory to sales ratio
Inventory to sales is an efficiency ratio used to determine the rate at which the company is liquidating its inventory. It simply measures the amount of inventory you are carrying compared to the number of fulfilled sales orders. This helps you manage your inventory better and avoid rising backorder rates.
Your inventory to sales ratio will often change depending on varying factors such as the economy. Retail furniture operations’ general rule of thumb is around a 15% inventory to sales ratio.
Inventory accuracy/fill rate
Inventory accuracy is essential for your business and your customers, especially when it can mean the difference between a new bed and sleeping on the floor. Fill rate is another metric you can use to measure accuracy. Fill rate shows how many orders were successfully fulfilled on the first attempt.
Low accuracy rates can mean a customer can purchase an item, only to be told that you won’t be able to fulfil their order due to an incorrect stock listing.
Nobody wants to have to turn away customers based on clerical errors. Larger businesses use automated systems to avoid these issues, and with Workhorse, your small business can too! Contact us today to find out more!
Order picking accuracy
Accuracy is a crucial metric for your customers. Just like inventory accuracy, you should monitor order picking accuracy closely.
This is a crucial metric for businesses wanting to maintain high customer satisfaction and retention rates. Customers who receive inaccurate orders may not return for their next purchase.
Inaccuracy also affects the workload in your warehouse, as you now need to deal with a return, restocking, and a whole new order to process and fulfil. In the furniture industry, returning stock isn’t a case of the customer taking the package back to the post office and you posting out a new product. We’re talking about full scale, costly logistics to move large and heavy objects.
Truck time at the dock
Every piece of inventory that comes into a warehouse must also go out if you’re looking to turn a profit. Trucks should spend the least amount of time at the dock as possible to help your inventory flow smoothly. If a truck spends too much time at the dock, it can be an early indicator of potential staffing issues, low inventory, poor infrastructure, or other logistical issues.
Cost per line item shipped
The cost per line item shipped examines the microeconomics of your logistics operation. This metric measures how much it costs to handle and ship one item out of your warehouse. It’s a good bit of data to have on hand because shipping one item can show how well your people, computer systems, and warehouse processes are working. Any increases in metrics need a closer look so you can keep costs and prices down.
Revenue per employee
Tracking labour costs is essential because they are often the highest non-inventory cost for a warehouse. Each employee will generate revenue through activities that keep the other KPIs where they need to be. If revenue drops too low, take a look at your overall warehouse efficiency to see where you can improve your margins.
Time to receiving and pick location
How long do you need to intake inventory? This metric measures how quickly and efficiently your staff unloads furniture and gets products to their places in the warehouse. This ties into your truck time in the dock and days on hand.
Obviously, shipping something large like a sofa will take more time than shipping something smaller like a lamp. It’s important to keep this in mind when looking at this particular metric and compare it to competitors that are shipping similar products.
Perfect order management
Perfect order management indicates which links in your order management chain are broken, including procurement, production, transportation, labour, or any stage of the warehouse process.
Supply chain cycle time
This metric measures what would happen if you had no inventory on hand. Then you determine how long it takes you to fill an order. When this time is shorter, you have better supply chain management.
The demand forecast is hard to predict, but analytics software helps. When you have accurate demand forecasts, you can prevent bumps in the road regarding pricing, capacity, and whether to expand your operations.
Carrying cost of inventory
This KPI represents profit. The carrying cost of inventory measures how much it costs to store inventory over time. Carrying cost factors in energy costs, labour, downtime, shipping, freight, and insurance.
On-time shipping rate
On-time shipping rates lead to happy customers who are more likely to order more items from you in the future. You probably have a great relationship with your transportation firm when this number is high.
Cash to cash cycle time
The cash to cash cycle time measures the days between paying for something coming into your warehouse before it gets shipped out. When this time is lower, your materials spend less time in the warehouse.
There’s not enough time in the day
That’s what we said when we came up with Workhorse. We know how tedious it can be to track metrics, so we decided to make a solution that could keep track instead!
Workhorse automates your entire furniture warehouse management process and offers in-depth analytics, letting you spend less time looking at spreadsheets and more time growing your business.
Get in touch today to learn how Workhorse can help your furniture business keep track of important metrics.