What are the most important performance indicators to track for shipping and receiving operations?

In the 3PL environment, collaboration is key to reducing order cycle time. To keep the picking line well-designed, information is key. Customers must keep their 3PL partners informed on new products, special promotions, etc. Besides, consolidating orders is super important during the picking process. Sometimes customers want us to pick by the restaurant or the supermarket, but the drop size is too small; therefore, additional handling will be required during the truck loading process. Another important component is organizing the picking waves by loading schedule, so less space in the staging area will be needed.

Having the right inventory level is a must. After that, implementing technology such as voice picking, light picking, or even robotics will increase the fill rate. If you are a 3PL, there are so many variables, too many SKUs, and customers that add another layer of complexity to this equation. Therefore, adding spot verification checks to reduce the errors and correct them afterward is super important. As a temperature-controlled operator, we also included a check by weight. When we close the picking, we weight the pallet - if we find a difference higher than 5% (compared to the master file, in which we have the std weight of the boxes), so we open the pallet to verify it before loading the truck.

Customers expect you to meet the promised delivery date. It is important to set the right expectations with your customers and meet them. If you can’t meet your customer’s expectation and deliver on time then they will find a supplier who can.

Planning is essential. Having the pallets ready to load the truck ahead of time will increase your on-time delivery. Besides the fill rate, this is one of the most important KPIs - especially if we are delivering to restaurants where you can not deliver products during peak hours (breakfast, lunch or dinner), since the staff must be focused on attending to customers.

There are some additional components that can impact this, such as: - transportation costs - outsourcing the last mile or consolidating with other companies will reduce your transportation costs. Besides, routing can be impacted enormously on this. A well-designed route will dramatically reduce your transportation costs. - drop size - the bigger the drop size, usually the better. Sometimes, we need to deliver small quantities on some locations, and the cost of delivery is higher than 20% of the goods. It should never be more than 5%, otherwise, you lose competitiveness.

I have seen the improvement in these KPIs over time with the good use of data and technology. Implementing best practices, measuring and paying workers based on their productivity and accuracy will increase your ability to control the many variables in the warehouse.