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By monitoring and analysing essential Warehouse Inventory KPIs, businesses can fine-tune their processes, reduce costs, improve customer satisfaction and boost profitability.
Implementing technology such as warehouse drones for inventory management can lead to increased accuracy, efficiency, and cost savings while also enabling better decision-making based on real-time data insights.
In the fast-paced world of logistics and supply chain management, optimising warehouse operations is crucial for businesses to remain competitive.
One of the key tools in achieving this optimisation is tracking and analysing Warehouse Inventory Key Performance Indicators (KPIs).
These metrics provide valuable insights into the efficiency, accuracy, and overall health of your warehouse inventory management.
In this article, we’ll delve into the essential Warehouse Inventory KPIs that every business should monitor to streamline operations and boost profitability.
Stockout rate measures the frequency with which a product is out of stock and unavailable for customers. This KPI is vital for customer satisfaction and revenue generation. A high stockout rate can result in lost sales and dissatisfied customers, whereas a low rate indicates a well-managed inventory that meets customer demands consistently.
The fill rate is the percentage of customer orders that can be fulfilled from on-hand inventory without backorders or delays. Maintaining a high fill rate is crucial for customer satisfaction and retention. This KPI helps businesses assess their ability to meet customer demands promptly and accurately.
Order accuracy measures the percentage of orders that are processed without errors, such as incorrect items shipped or missing items. High order accuracy is essential for maintaining customer trust and reducing costly returns and customer service inquiries. Monitoring this KPI helps identify areas where process improvements are needed.
Carrying Cost of Inventory
The carrying cost of inventory encompasses expenses related to holding inventory, such as storage, insurance, and financing costs. It is crucial to keep this cost as low as possible to maximize profitability. Calculating and monitoring carrying costs helps businesses make informed decisions about inventory levels and storage methods.
Deadstock percentage represents the portion of inventory that has not been sold or used for an extended period. Identifying and minimising deadstock is essential for freeing up warehouse space and capital. Regularly reviewing this KPI can lead to more efficient inventory management practices.
Order-to-delivery time measures the time it takes to fulfil a customer order, from the moment it is placed to the moment it is delivered. Reducing order-to-delivery time can improve customer satisfaction and operational efficiency. Tracking this KPI can help identify bottlenecks in the fulfilment process.
11 ways that autonomous drones help to improve warehouse inventory control
Autonomous inventory drone solutions – such as inventAIRy XL – can significantly improve inventory control in several ways:
- Real-time Data Collection: Drones equipped with barcode scanners and cameras can quickly scan barcodes on pallets and localise the data to the precise rack location. This real-time data collection ensures that inventory data is always up to date.
- Faster Inventory Audits: Drones can perform inventory audits much faster than human workers. They can fly through the warehouse, scanning pallets and comparing them to the WMS or ERP database, significantly reducing the time and labour required for periodic audits.
- Reduced Human Error: Manual inventory counting is prone to errors. Drones, utilising Artificial Intelligence and Machine Learning techniques, can provide more accurate data as they do not suffer fatigue or get distracted by external factors.
- Improved Stock Rotation: In the case of perishable goods, drones can identify products that are approaching their expiration date or need to be rotated to prevent spoilage. This ensures that older stock is sold or used first, thereby reducing waste and improving profitability.
- Inventory Tracking in high-bay racks: Warehouses with high racks are typically challenging for humans to access, drones – on the other hand – can easily and safely navigate and access pallets stored in these locations, ensuring that ALL pallet storage locations are checked regularly.
- Optimised Replenishment: Drones can help identify low-stock items and trigger automated reordering processes. This minimises the risk of stockouts and ensures that products are consistently available to meet customer demand.
- Streamlined Warehouse Layout: By continuously collecting data on product locations and movement patterns, drones can provide insights into warehouse layout optimisation. This information can help warehouse managers rearrange items for more efficient picking and restocking processes.
- Data Analytics: The data collected by warehouse drones can be used for advanced analytics. Machine learning algorithms can analyse this data to identify trends, demand patterns, and opportunities for process improvements.
- Reduction in Labour Costs: Labour costs associated with manual inventory counting, auditing, and tracking are immediately reduced, thereby delivering typical project payback periods of less than 12 months.
- Enhanced Safety: Drones can perform tasks in hazardous or hard-to-reach areas of the warehouse, reducing the risk of accidents or injuries for human workers.
- Compliance: Inventory drones can assist in maintaining compliance with regulatory requirements for inventory tracking and reporting, especially in industries with strict quality control and traceability standards.
Efficient warehouse inventory management is a cornerstone of successful supply chain operations. By monitoring and analysing these essential Warehouse Inventory KPIs, businesses can fine-tune their processes, reduce costs, improve customer satisfaction, and ultimately boost profitability. Implementing technology such as warehouse drones for inventory management can lead to increased accuracy, efficiency, and cost savings while also enabling better decision-making based on real-time data insights.
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