Important Key Figures in Warehousing – Not Just in Times of Crisis

Warehouse logistics is characterized by a variety of key figures. It is difficult to keep track and focus on the right numbers. A mistake at the beginning of a project can carry through to the end like a red thread and can cause significant additional costs. Thomas Lührs shows in his report which of these key figures really matter.

By Thomas Lührs

(Hamburg) When looking into logistics textbooks, one is almost overwhelmed by the key figures that need to be determined. The question quickly arises: Which key figures are important?

Experience shows that there are two paths that logisticians can follow. Either they focus on the wrong key figures from an operational perspective, or they try to cover the entire bouquet of key figures.

From an operational perspective, the key figures should be chosen from three groups: Orders, Deliveries, and Inventory. Key figures should be selected that directly influence each other.

It is also important to consider the key figures from the customer’s perspective. The customer is the one who drives the company with their orders. Additionally, it is crucial for the customer whether the item they want to purchase (online or in-store) is available, meaning it is deliverable.

Deliverability also implies delivery speed. A customer clicks on purchase in the online shop when the delivery time is short. Therefore, the item must be available in stock. However, the item must also be picked and shipped within a certain time frame, which relates back to the order structure and turnover frequency.

The Five Most Important Key Figures

From the aforementioned groups and requirements, five important key figures emerge:

1. Deliverability
2. Inventory
3. Turnover Frequency
4. Order Structure
5. Order Fluctuations

Deliverability and inventory are the most important among the wide variety of key figures in warehouse logistics.

Deliverability primarily shows the material liquidity of a company. It is essential to find a balance between available inventory and incoming orders to ensure consistent readiness for delivery.

Inventory in trading companies includes the stock of goods, while in manufacturing companies, it includes the stock of raw materials, semi-finished products, and finished goods. For inventory, products already in transit within the logistics chain must also be considered. The optimal inventory affects delivery readiness on one hand and costs on the other. Therefore, it is important to use the appropriate tools from ERP systems to avoid conflicts.

Turnover frequency provides insights into how often the inventory is turned over or sold within a period. The more frequent the turnover, the more efficient the use of capital for procuring inventory.

The order structure reveals the description of the orders. This is determined by data such as the number of items and weight and influences the type of picking.

The order structure includes measurable key figures such as the number of orders, items per order, articles per item, as well as express and standard orders. The order structure also determines the rhythm of overall logistics and derives from ordering behavior. This also indicates the quantities in which orders must come in and go out.

The Consequences of Choosing the Wrong Key Figures

What would be considered wrong key figures, as mentioned above? These are, for example, key figures that deal with inventory value, inventory costs, or item values. From a controlling perspective, these are certainly interesting and important key figures, but from an operational viewpoint focused on the customer, they are not significant. If one organizes their inventory solely based on costs and values, there is a risk of becoming unable to deliver and losing customers.

Other key figures, such as delivery accuracy (Perfect Order Rate), number of shipments, phantom inventory, or overstocking, are either included in the aforementioned key figures or can be derived relatively easily from them and used for more detailed considerations at a later time.

It is important that a company determines key figures at all and uses them for daily operations. To avoid getting lost in details and not seeing the forest for the trees, it is advisable to focus on a initially small number of key figures. This list can certainly be expanded to include more key figures to gain a bit more depth. The aforementioned key figures at least provide guidance for a targeted and customer-oriented view into the warehouse and the processes.

Thomas Lührs has been active in logistics as a project manager and project leader for 23 years and has built core competencies in the field of intralogistics through his work. With the internet platform www.how-logistics.de he has transferred classical on-site consulting into the online realm.