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[Music] hi my name's gwen richards i'm a supply chain consultant and trainer with a prize consulting limited welcome to this short informative video from our how to logistics online series in this episode we introduce the concept of performance measurement within warehousing when introducing a performance measurement system into the company we need to choose some specific key performance indicators or kpis and these kpis need to be smart and what we mean by that is that they need to be specific i.e clear and concise for example how many lines am i picking per hour that's a clear and concise kpi the kpis need to be measurable either in monetary terms volume time or units so again how many lines am i picking per hour then we have lines being the units and our being time the kpis need to be achievable i.e the kpi can be met with effort there is no point in choosing a kpi which is totally unachievable that is going to demoralize the team so therefore the kpi needs to be set at a level where with some additional effort that target can be met by the staff the kpi has to be relevant it has to drive the business forward there is no point in choosing a kpi which has no effect on the business going forward the kpi also has to be time based so deadlines need to be set and also committed to so s for specific m for measurable a for achievable r for relevant and t for time based these also have to be aligned across departments there is no point in having a kpi in one department and achieving that kpi if it's going to have a detrimental effect on the kpis within a different department we can also add e and r to smart making them smarter that is to both evaluate and review the kpi there's a hierarchy of measurements so a team leader level you're looking at individual efficiency then at shift management level we're looking at efficiency by area so it could be our goods in area our pick area then we have our operations manager who's thinking about the total shift efficiency they report into the general manager who's thinking about maybe the cost per pallet per case picked and dispatched and then the general manager will report into the directors and as a business they're looking at profit and loss so every measure that we do has an effect all the way up to the upper line to the profitability of the company itself a number of companies use the balanced scorecard produced by kaplan and norton with regards to their performance measurement within the company this looks at four areas from a customer perspective a financial perspective a process or operational perspective and a people innovation and environment perspective so in terms of measuring performance we need to think about how we're doing against historical data so how were we doing compared to yesterday or last week or last month or this time last year maybe we're measuring against budget maybe we're measuring against engineered standards so what's the expected rate per hour picked for example yeah that's actually being produced by a time and motion study maybe we're going to measure against external standards and benchmarking what are other companies doing what are they achieving in terms of good practice in performance monitoring data has to be accurate we need to validate that data as well we need to target the correct measures yeah there's no points as i mentioned earlier of measuring things that we don't have the ability to change significantly or that aren't actually driving the business forward user ownership regular meetings with staff to discuss how they're doing the ability to change when business activity changes we need to be able to change kpis if they're no longer relevant timeliness setting deadlines making sure that we don't over complicate things these kpis need to be cost effective we need to share the results with people within the warehouse so we can put you know the information up on notice boards for example and our customers who come to visit can see them as well have team targets maybe individual targets and achievements as well and we could potentially introduce bonus schemes based on the performance of the staff these can be internal and external team and individual a key performance indicator which is being measured in a number of companies today is called the perfect order this perfect order is made up of deliveries which are on time in full damage free with all the correct paperwork so for example on time is a delivery where the customer has stipulated a particular time and that delivery has been made on time in this example the delivery on time is at 98 in full is where whatever the customer has ordered has been delivered in full in this example it's a 97 success rate damage free i.e full quality of product delivered to the customer and here we have a figure of 99.5 and then correct paperwork being invoices delivery documentation customs documentation for example and here we're at 91 now even though all of the kpis are above 90 the perfect order index is down at 86.1 percent because we have to multiply each of those percentages against each other and by doing that we end up with a perfect order score of 86.1 percent this is a list of specific key performance indicators produced by the warehousing education resource council based on a survey that they carry out each year we can see at the beginning we have the perfect order index and we can see that we have the lowest 20 percent of responses typical responses the top 20 percent of responses which are deemed best in class and then we have our median figure so with our perfect order index our lowest 20 of responses had a perfect order index of under 77.18 percent whereas best in class is above or equal to 98.55 percent we also have other metrics such as the internal order cycle time on time ready to ship from the warehouse average warehouse capacity workforce turnover dock to stock time i.e from the time a vehicle delivering arrives at the warehouse to the time that the product actually appears on the system and we can also measure our supplier performances as well other key performance indicators especially in terms of people are things like safety absence reporting so here we've got things like the total injury frequency rate days lost ratio from yeah sickness or injury lost time injury frequency rate and the near miss ratio as well thanks for watching i hope you enjoyed the content if you want more information on a prize consulting our online courses books training and consultancy services please visit our website at .appriseconsulting.co.uk you