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How do you measure / target your warehouse productivity?

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  • How do you measure / target your warehouse productivity?

    I'm posting this to generate genuine debate.

    I've spent 30+ years in warehousing, the last 15 years in management positions with some of the UK's best known companies (in-house or 3PL services). I'm absolutely amazed and confounded by the way in which the vast majority (talking 85%+) of non-food warehouses measure their performance / productivity levels and then go on to use these same values to plan workload and staff requirements. These operations will use one, or both, of the following:

    UPH / CPH (Units per Hour / Cases per Hour).

    A simple calculation Units Handled divided by Hours Worked provides a basic guide to productivity. This is usually tracked over time and used to calculate the resource needed to complete the daily workload (eg: the average UPH for the picking operation is 100 units per picker per hour, the operation needs to pick 100,000 units in 12 hours, to complete this they will convince themselves that they need 84 staff picking).

    CPU / CPC (Cost per Unit / Cost per Case)

    Essentially the same as UPH / CPH but using cost rather than time. The calculation total cost of picking divided by number of units picked provides an average cost per unit despatched. The aim will be to drive the cost part of the calculation down so that the average unit costs less to despatch than previously.

    These are both nonsense measures for the following reasons:

    1. Both are retrospective measures - by the time the calculation can be completed accurately the day is over and the result is known.
    2. Both measures have built-in inefficiencies - both the Units per hour achieved previously and the Cost per Unit that results are influenced by the work rate of individuals. If, previously, 10 man hours were spent talking about last nights Football / Baseball etc. then the management team are, effectively, building this wasted time into every subsequent day.
    3. Neither measure reflects what could have been - there is an inherent acceptance that the operation is as productive as it can be at this point in time. This is very rarely true.
    4. There is no account taken of difficulty - I could pick 100 units from 2 locations, Joe could pick 100 units from 50 locations, a single UPH measurement would expect us both to take exactly the same time, despite Joe having to travel to an additional 48 areas of the warehouse.

    To my mind there is one, and only one, accurate way to measure and plan warehouse performance - by using Time Study data along with a monitoring system to capture who did what, when and at what level the individual performed. This allows the management team the opportunity to compare individuals workers, teams or entire shifts to determine objectively who is performing at an appropriate and acceptable level and who isn't, action plans can then be agreed to address any under-performance. This also allows managers to identify and correct any under-performance before it has an effect on the days output.

    There is, of course, a cost to introducing and maintaining a Time Study based system, along with problems of integration and designing a monitoring system, but these are fairly minimal once you consider that an unmeasured warehouse is, on average, 10% - 15% more inefficient than one using Time Study data (figures taken from the UK Institute of Industrial Engineers).

    How do you measure your warehouse productivity and then plan your staff requirements?
    Increase your warehouse efficiency. Worldwide application: www.sanvean.co.uk

  • #2
    Re: How do you measure / target your warehouse productivity?

    Productivity of any business is directly proportional to its employees. productivity is based on how much it cost to perform an operation. The standard labor measurement combined with the number of operations performed in the warehouse on any shift or series of shifts can result in an accurate picture of the performance of the warehouse.
    Storage Dorset ,Packing and Removal Services London

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    • #3
      Re: How do you measure / target your warehouse productivity?

      Well, In today’s world of constantly looking for ways to improve the company’s bottom line, many Operations are being asked to reduce costs or better yet, increase productivity and efficiency and lower cost at the same time. This is great ideas and practices that we have identified from inventory assessments and warehouse assessments that we have conducted. Cool share !

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      • #4
        Re: How do you measure / target your warehouse productivity?

        Unit per hour measurement would give us the utilization of the manpower but not the warehouse productivity. The word productivity means different depending on the use. In case of warehouse the productivity should be measured on how many real order processed. Throughput measurement is a good option. The objective of any warehouse is to store the materials properly and deliver it safely on time at the minimum cost. Again time study will give only the efficiency not the effectiveness. We need to include the materials condition & storage, accuracy of the pick-up and on time delivery too in the calculation.

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        • #5
          Re: How do you measure / target your warehouse productivity?

          very nice information abt warehouse productivity

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          • #6
            Re: How do you measure / target your warehouse productivity?

            Thanks for the replies so far.

            Alan - not sure I agree with your point regarding cost. To my mind (although I'm open to being proven wrong) cost is a direct result of productivity - the lower the productivity the higher the cost to serve. Equally I'm unsure that the productivity level achieved is proportional to the employees, I see these as 2 unrelated data sets (although the number of direct and indirect employees WILL have an effect on the Cost per Unit of course).

            CGN - Very good point made as regards condition, accuracy etc, but aren't these a separate measure to pure productivity (which in this instance I would define as the output of the warehouse - generally a figure averaged across the number of employees directly involved in the activity being measured). Including accuracy, condition etc would be a separate measurement, perhaps termed as 'Effectiveness'?

            In both cases I think that the point I'm making, though not directly, is that a measure based purely on actual output divided by number of staff makes no reference what-so-ever to 'What should have been', i.e. the measurement shows what was actually achieved rather than what could have been achieved HAD ALL STAFF OPERATED AT THE MAXIMUM EFFICIENCY POSSIBLE. As the maximum efficiency should be every warehouses utopia a measurement which makes no reference to this is lacking a fundamental piece of data. In this respect I believe that my second point in the original post "both the Units per hour achieved previously and the Cost per Unit that results are influenced by the work rate of individuals. If, previously, 10 man hours were spent talking about last nights Football / Baseball etc. then the management team are, effectively, building this wasted time into every subsequent day" needs to be defended by any warehouse using a UPH and subsequent CPU measure to define how effective the operation is.
            Increase your warehouse efficiency. Worldwide application: www.sanvean.co.uk

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            • #7
              Re: How do you measure / target your warehouse productivity?

              Effectiveness must come first in all of your considerations about productivity. Effectiveness is doing the right things. You must make sure that all your objectives serve your goals, which in turn serve your purpose. Objectives are short-term achievements, goals are long-term achievements, and your purpose is serving customers in ways that satisfy their needs and desires. Start by looking at whether you are doing the right things, and whether you are asking employees to do the right things...

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              • #8
                Re: How do you measure / target your warehouse productivity?

                In any business, it is very important to increase their productivity by using new technologies & new things. First of all, you should have to maintain your office environment for it. Make a good plan for this as well involve every employee in your planning phase.
                Office moves

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                • #9
                  Re: How do you measure / target your warehouse productivity?

                  Except above-mentioned criteria, is there another criteria to evaluate warehouse productivity? Thanks.

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                  • #10
                    Re: How do you measure / target your warehouse productivity?

                    Originally posted by Supply Brain
                    I'd be looking at things they can understand and see like the number of time stock is moved before it hits it's final consumption point? Assuming less times the better. Relevant in resupply or warehouses where stock is moved from location to location for whatever reason?

                    I'd be mapping material flow and seeing if this could be improved?
                    This is an excellent exercise to go through and I would recommend this to most companies to undertake. The results once you have mapped all Satellite holdings of stock, the results can be very eye opening once you realise just how much stock you have in the Network then you can start to address is.

                    SJ

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                    I am proud to work for Europe's leading Single Price Retailer

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                    Himsworth Consultancy

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                    • #11
                      Re: How do you measure / target your warehouse productivity?

                      Agreed. I'd also be making sure that shop floor staff are briefed on a couple of key performance indicators daily - number of failed orders and inventory stock loss would be an essential for me.
                      Increase your warehouse efficiency. Worldwide application: www.sanvean.co.uk

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                      • #12
                        Re: How do you measure / target your warehouse productivity?

                        I always used cost/case

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                        • #13
                          Re: How do you measure / target your warehouse productivity?

                          One key measure for me. Cost per case throughput..........

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                          • #14
                            Originally posted by sadamsmith13 View Post
                            Re: How do you measure / target your warehouse productivity?

                            very nice information abt warehouse productivity
                            Indeed. I've implemented some tips in our company and they worked out great.
                            Thanks for sharing!
                            __________________________________________________
                            Dumitru from https://www.cargolution.com/en/logistics/storage/

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