Pregis, a leading global manufacturer of protective packaging, has developed a proven process to help companies reduce the cost of damages incurred during product fulfillment and improve packing efficiencies.
This is in response to inhouse research which uncovered that replacing a product damaged during transit (or incorrectly shipped) can cost a business up to 17 times more than the original order.
“Not paying attention to key performance indicator (KPI) benchmarks will lead a company down a very costly path and damage customer relationships—particularly now that e-commerce shipments are growing exponentially. Our analysis shows that it is important to first identify the KPIs for your fulfillment operation and then put a system in place to track them,” explains Mike Purgatorio, segment marketing manager. What remains unmeasured can’t be improved. Assessing your fulfilment center’s performance can reveal inefficiencies, opportunities to reduce costs and ways to improve customer satisfaction.”
Pregis recommends that the first step to assessing performance is to determine KPI benchmarks. Typical key KPIs that should be tracked include . . .
- Order fill rate
- Distribution costs
- Damage rate
- Orders picked per hour
- On-time shipping
- Order cycle time
- Internal order cycle time
- Perfect order percentage
The next step is to analyze the data to determine if there are problems with equipment and packaging materials, warehouse space, and personnel. For example, if the KPI for orders picked per hour is low, that might indicate issues with the layout of the warehouse and packing stations. Using the data to solve performance problems can reduce operating costs, forecast more accurate budgets, make upgrades to equipment, address issues with employees, and improve customer satisfaction. Continuing to track KPIs on an ongoing basis is key to keeping costs and efficiency on track.