Process and System Efficiency: You Can’t Improve What You Don’t Measure

Katie Hokanson | 26 April 2023

We hear it all the time: “We need to improve; we need to get better!” My question: “But, do we? What does the data show us?”

One of the best ways we can identify areas for improvement and make informed decisions, is to use a data-driven approach looking at our KPIs (Key Performance Indicators).

KPIs are quantifiable metrics used to measure the success of a particular process or system. They are typically tied to specific objectives and goals and are used to track progress over time. KPIs are an essential tool for businesses to measure the effectiveness of their operations, identify areas of improvement and make informed decisions. This includes the material handling and automation industry.

Who needs to be focusing on KPIs?

KPIs are important at every level – from team members to executives. They can measure individual, team, department, platform and organizational performance. When everyone engages in creating and tracking KPIs, every person in the organization can see how their daily efforts contribute to the overall success of the organization.

How do we create great KPIs?

A great KPI is one that is easily understood by everyone and can tell you immediately whether you are winning or losing. KPIs can be used to track progress toward specific goals and helps the organization focus on areas of opportunity vs. what someone may feel needs to be an area of focus. KPIs should be SMART:

• Specific – Be clear and detailed about what success looks like.
• Measurable – Identify key data that can be tracked and evaluated.
• Achievable – Ensure that your target is something that is within capabilities.
• Relevant – Confirm that your goal fits with your business parameters.
• Time-bound – Set a deadline.

What types of KPIs are beneficial to the material handling industry?

In material handling integration, there are several KPIs that businesses can use to evaluate the efficiency of their operations. Let us look at five frequently used KPIs:             

1. Inventory Accuracy: This KPI measures how accurately inventory levels are tracked and managed. It is important in material handling integration as it ensures that products or materials are available when needed and that overstocking or stockouts are avoided.
2. Order Picking Accuracy: This KPI measures how accurately orders are picked and shipped to customers. It is crucial for businesses to ensure that orders are fulfilled accurately, as errors can lead to customer dissatisfaction and increased costs due to returns and re-shipments.
3. Cycle Time: This KPI measures the time it takes to complete a process or task. In material handling integration, cycle time can be used to evaluate the efficiency of various processes such as receiving, put-away, picking and shipping.
4. Capacity Utilization: This KPI measures the percentage of available capacity that is being used. In material handling integration, it can be used to evaluate the efficiency of warehouse space, equipment and labor.
5. Order Lead Time: This KPI measures the time it takes to fulfill an order, from receipt to shipment. It is important for businesses to minimize lead time to increase customer satisfaction and reduce costs.

Data-Driven Decisions for Improved Operations

Author: Katie Hokanson