By Chris Hagle
July 26th | 2 min read

The Crucial Role of Operational Alignment: Insights from Chris Hagle

In today’s fast-paced supply chain landscape, streamlined warehouse management is crucial for businesses aiming to stay competitive.

However, optimizing warehouse operations can be complex, especially when dealing with large inventories and high daily volumes of goods. That’s where operational alignment comes in. By aligning warehouse operations with overall business objectives, companies can achieve a seamless flow of goods, reduce waste, enhance responsiveness, and drive profitability. In this blog post, Chris Hagle explores operational alignment by examining four key performance indicators: safety, quality, service, and productivity.

The only 4 KPI’s you need to successfully run a warehouse. 

Operating a warehouse is a complex undertaking. Managing multiple aspects simultaneously is key to guaranteeing timely and accurate orders for customers. However, companies often overlook crucial metrics and find themselves in a constant state of firefighting. By implementing simplified processes, your team can achieve and surpass these fundamental KPIs.

1. Safety –  Prioritizing Employee Wellness Management:

   Ensuring safety in your distribution center is crucial for preventing accidents, complying with laws, increasing productivity, reducing financial loss, and promoting employee wellbeing. Continuously training, inspecting, and updating safety procedures is essential. Track safety through the Total Recordable Incident Rate (TRIR), which measures incidents, injuries, or illnesses occurring in the workplace over a set period (usually expressed as a rate per 100 employees). Monitoring TRIR allows organizations to identify trends and areas for improvement. A high TRIR may indicate necessary enhancements in safety policies, preventive measures, and training.

2. Quality – Delivering the Right Product :

   Maintaining a quality warehouse environment goes beyond defect-free products. It encompasses efficiency, customer satisfaction, compliance, brand reputation, and overall business success. According to a 2018 survey by Loqate, 70% of customers considered accuracy the most critical aspect of their delivery. In other words, customers would prefer to wait longer for the correct item rather than receive an incorrect item sooner. This customer preference aligns with the fundamental principle of customer satisfaction – meeting or exceeding expectations. Quality can be measured through picking accuracy, calculated as the total orders minus incorrect item returns, divided by total orders, and expressed as a percentage.

3. Service – Right Time :

   Service, otherwise known as on-time shipments, is crucial for businesses to maintain a competitive edge, enhance company reputation, manage cash flow, and retain customers. It’s worth noting that rapid shipping has become increasingly prevalent in the e-commerce industry, driven in part by industry leaders like Amazon. Amazon Prime’s two-day shipping, and in some areas, same-day or one-day shipping, has set a high standard for e-commerce businesses. Consequently, many companies have been striving to enhance their shipping speed to meet customer expectations. Simplifying processes enables quick order fulfillment while effectively scaling labor during peak seasons without disrupting customer satisfaction. Order cycle time, which measures the average time taken to ship an order from placement, excluding shipping time, is a common metric used to evaluate service efficiency.

4. Productivity – Cost Management :

   Productivity refers to the efficient conversion of inputs, such as labor, into outputs, such as services. Higher productivity allows for increased output using the same resources or the same output with fewer resources. Improving productivity is a vital strategy for companies to reduce costs and improve competitiveness. It is crucial, however, to ensure that productivity improvements are sustainable and do not compromise employee well-being or service quality. The key lies in working smarter, not just harder. Warehouse managers can track cost per unit/case as a vital metric by dividing the total warehouse labor expense by the number of units/cases shipped from the facility.

Warehouse management must establish operational alignment to stay competitive in today’s dynamic supply chain environment. By effectively managing and monitoring the four vital KPI categories – safety, quality, service, and productivity – businesses can identify inefficiencies and adapt to changing market demands. The insights shared in Chris Hagle’s “Pallets of Wisdom” blog serve as a valuable guide for supply chain and operations leaders striving to set and achieve essential warehouse management KPIs. By placing a strong emphasis on operational alignment, businesses can quickly respond to market shifts, optimize inventory management, and maximize profitability.

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