“If you cannot measure it, you cannot improve it.”
That’s an observation that famed British physicist, Lord Kelvin, made about scientific experimentation and operational improvements over 100 years ago. It’s still pertinent today as we seek to improve e-commerce operations, be competitive and look to improve our profitability and customer service.
In order to improve operations, we first need to measure key metrics, which are units of work such as the total warehouse cost per order, shipped cost per carton, the cost per line on an order and cost per unit. Once we understand what these metrics show, we can then develop options for processes that reduce steps and therefore cost; or improve service levels in the warehouse such as order turnaround time measured in hours.
What key operational performance metrics do you monitor and use to improve processes? Here are the metrics which we recommend as the starting point in measurement and improvement process: