Receiving Efficiency KPI for Warehouse
Supply chains follow an extensive process. Each step links to and impacts the next one. If done wrong, it can create a domino effect and disrupt the entire chain. This makes the first step the most essential of all, and that is – receiving.
Receiving is made up of several micro-tasks such as delivering, unloading, and storing goods. The downstream stages depend on how accurate and efficient its workings were. That being so, errors at this stage can result in stock control issues and high operation costs. It can also make it harder to trace the real problem in later stages of the supply chain process.
As a result, accurate data entry, product check, and correct storage are critical steps of receiving. One wrong move can cause a disaster you may fail to fix later on.
What is Receiving Efficiency?
Receiving Efficiency is a Key Performance Indicator (KPI) that can help you track how well the receiving area is doing. Changes in the value can act as an alarm to draw your focus to any inept practices and trace their root cause.
The metric is measured by:
Receiving Efficiency = Volume of Inventory Received / No. of Working Hours
KPIs are not only great tools to keep an eye for errors, but also to track progress with time. A great use of metrics is to set milestones. Often termed as benchmarking, you can use them to constantly improve the process with the aim to gain a higher value at the KPI. The standard value for the metric will vary based on the type of industry your company falls into and the items you store.
Irrespective of the industry and storage, some common mistakes keep this value low for many. To find errors in the process, let us break down receiving to its micro stages and get a glimpse of what can go wrong.
Micro-Stages of Receiving
1. Pre-Receiving Tasks
Before taking in stock, there are an array of conditions that need to be set. You must set and convey these details well ahead of time. The carrier should be aware of the rules to follow or have the necessary documents in hand when they reach the dock.
Warehouse managers need to share the details of:
2) Cargo – Pallets or Loose
3) No. of Packages per Pallet
4) Products per Carton
5) Package Size & Weight
Staying organized is a key factor to efficiency during this stage.
Your staff in the receiving section at the loading deck unloads goods upon the arrival of the vehicle. Before unloading, they must:
1) Check Seals
2) Record Temperature (in some cases)
3) Validate the Booking Reference
4) Assign a Bay
It is critical to avoid traffic at this stage. Many docks can go unused due to the chaos while also facing time delays.
After the team unloads stock, they need to verify the quality and the number of goods as they arrive. The most crucial task of this stage is to keep note of any goods that deviate in quantity or quality.
Workers must check each of the following:
2) SKU (or Product Code)
3) Condition of Goods
Ideally, your staff should keep and check every point in the WRO. Each person on the team needs to have access to the list and follow the guide for an error-free process.
On top of that, manual counting and checking can end up taking hours. Humans are prone to errors due to fatigue or a lack of focus. As a result, the most common mistake at this stage is having gaps or filling in the wrong data.
4. Prepare for Storage
The final step is to send items into storage. The method to stack and store varies based on the type of goods and the industry they belong to. Based on the stock, you can store items on either of the three: a pallet, a bin, or a shelf.
When the former stages run correctly, the process runs smooth from here onwards. As the receiving process ends, the staff must store all data in your WMS to keep track of it along the supply chain.
Common Problems in Receiving
Errors are a result of an inefficient process, which lead to a rise in the cost and time taken. To improve receiving efficiency, we need to identify flaws or spare processes to draw up practical solutions to the cause.
Your receiving area could be facing the problem of:
1) Incomplete records and documents.
2) Improper accounts on the volume and type of cargo.
3) Under or over-allocation of labor.
4) Idling trucks in the open bay after unloading.
5) Pallets being put away or moved pre-maturely by forklift operators.
6) Using too much time in finding and matching up labels.
7) Taking too long to put away stock.
Apart from looking for errors, you can also create a list of actions to automate or improve via better strategy. These tasks should come second on the priority list as they already have a smooth run.
The best way to find solutions is to bring the entire team together. People who actively engage with the process tend to know it much better. You and the team can then brainstorm and create a list of every idea that comes up. Keep no bias and let the creativity flow for the best results.
Once you exhaust your brain of its creative juices, discuss, and list the pros and cons of each idea. The method allows you to opt for the best from the list. Diving into some research on current tech, tools, or strategies before the session will expand your base of thought to come with practical and unique plans.
To begin, you can find below a list of simple ideas to achieve a higher rate of receiving efficiency:
1. Use a Scheduling Software
To allocate the correct amount of labor based on volume, managers must define the time and date before arrival. Carriers and managers need to be aware of the status and when to drop or receive stock.
Using a dock management system or dock scheduling software aids in reducing traffic congestion and chaos at the dock. It further boosts the proper and complete use of all available docks to the max. It allows both the manager, and the carrier, to interact and be on the same page for inbounds and outbounds.
2. Provide Resources to Communicate Better
You can provide each worker with a specific task list or a list of details they need to check during the process. This way you can ensure that every aspect your team checks and records every aspect and not miss out on any. You can further streamline the process by using a common platform for data entry or interacting with the entire team.
3. Use of Scanners
The use of IoT or scanners such as barcode and RFID tags can automate data entry and make it more accurate. It not only cuts down on human errors, but it speeds up tasks such as stock-taking by a multi-fold. These tags have unique IDs, which allow you to track each item and keep a count of the quantity.
With the use of RFID tags, the staff can have more time and energy to focus on other tasks and manage each step more efficiently.
Merged with an Inventory Management System, the use of the scanners becomes better and easier. The use of a common platform to keep track of goods is a good practice to follow for other stages of the supply chain as well.
4. Use Mobile Printers
Labeling stock and pallets correctly are key to maintain efficiency down the line. But to add labels, the staff needs to travel to and from the printing station, which takes a ton of extra time.
Mobile printers allow workers to print and label products and pallets on the spot, thereby saving time. It also helps create a flow that permits them to keep momentum and focus during the process.
If all of your docks are in full use, a great way to bring in more volume is to use cross-docking. To meet more product needs, you can allow fast-moving goods to go out as soon as they come in. Goods do not need to be put away, taking away most of the micro-steps of receiving.
The process directly improves receiving efficiency as it lets you handle more stock with the same amount of time and labour at a very low cost. The correct paperwork with cross-docks will further speed up the process and reduce errors.
6. Track other KPIs
Receiving Efficiency is only a measure of how much your team can get done in a given time frame. But the reason behind low productivity levels across your team could be many. To trace the root cause down, you can look at quite a few other metrics that will help attain your goal.
1) Some of these KPIs are:
2) Receiving Accuracy: A measure of how much of the stock was put away correctly or with no errors.
3) Cost of Receiving per Line: The amount of money it takes to receive a single line of products.
4) Dock Door Utilization: The number of docks in use in contrast to the total.
Total Cycle Time: The total time it takes to process each receipt or delivery.
Efficiency does not always mean that you will have to add on to your process. Many times there are methods that are slow or wasteful which need to be let go of. Or there are accidental redundancies where the same step repeats twice or more without notice. Such cases can also impact your KPI value to a great extent and must be dealt with at once.
At the end of it all, solutions are subjective. Only you and your team can decide what works best for your facility. To optimise a process, you need to aim for accuracy and instant action from the very start. But this is not a one-time attempt. To improve means to always seek new goals that help you achieve a better state or process. There is always plenty of room, the key is to start with the right strategy, mindset, and at the right stage with the right tools.