Four Keys to Tracking KPIs That Deliver Customer Service Improvements

If you’re a distribution center (DC) operator, maintaining the highest possible customer service levels is the most important metric among all other key performance indicators (KPIs). Although fulfilling this promise requires seamless execution across a complex range of DC systems and processes, the goals are relatively simple: deliver the right products to the right customers, on time, in the correct quantity and at a competitive price.

To ensure these critical customer service objectives are being met, improve productivity, and protect profits, e-commerce fulfillment operations must monitor, track and analyze a wide variety of KPIs. In a recent On The Move webinar, we examined technologies and strategies for leveraging the data needed to drive optimum DC performance.

1. Understand the true costs of picking errors.

Among the KPIs that most impact customer service levels, order picking accuracy is at the top of the list. In recent Honeywell research, companies reported an average of 132 mis-picks per week, which amounted to $400k in annual losses. Mis-picks can have a domino effect of negative operational impacts that cut into profit margins and potentially distract from daily order targets:

• Returns processing and inventory restocking
• Re-picking and re-packaging corrected orders
• Re-shipping costs

It’s even more difficult to gauge the long-term impacts of disappointing customers, as many never forget a poor customer service experience.

2. Know what to measure and monitor.

If it is true that you can’t manage what you don’t measure, then selecting the KPIs that drive up customer service levels is the first step. Fulfillment activities typically fall into four main categories:

• Reliability of on-time delivery, order filling rates and accuracy levels
• Flexibility of order cycle times
• Costs of sales, productivity and labor hours
• Utilization of assets such as material handling equipment (MHE), shuttles, conveyors, etc.

From an order fulfillment monitoring standpoint, we have found through multiple customer engagements that real-time monitoring is essential for meeting KPIs. We recommend monitoring the following key areas of focus:

• Order fulfillment and inventory levels according to current business objectives
• Troubleshooting offline locations, un-allocatable inventory and order cancellation causes
• Performance of key fulfillment assets (shuttles, pick zones, pickers)
• Component performance or availability (label printers, scanners, sorters, etc.)

3. Prioritize data collection and analysis.

Data is the key to providing visibility to all aspects of DC productivity, uncovering hidden costs, and effectively tracking KPIs. Since there is an abundance of data within a DC’s technology ecosystem, this process starts by aggregating information within your warehouse management and execution software as well as machine control systems. Then, it’s a question of what to do with that data. For deep insights into DC performance, we recommend transforming it into dashboards that help to provide end-to-end visibility and apply machine- learning algorithms that ensure key processes are running at optimum efficiency. 

4. Simulate to establish baseline performance.

For greenfield operations or significant upgrades to existing DC automation, it can be difficult to establish a baseline with which to monitor and measure performance. It’s simply not efficient, productive or wise to wait until live runtime to see how the system and its software will operate — and then be forced to troubleshoot unexpected issues as they arise. To ensure that you can deliver the KPIs needed to meet customer service levels, we recommend running a powerful simulation and/or emulation to run through a variety of operational scenarios and greatly improve the commissioning process.

To learn more about the tools, technologies and best practices for tracking the KPIs that drive up customer service levels in your DC, please view this webinar.

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