It’s not hard to find articles on warehouse management tips, including tips for arranging items for maximum productivity, pick/pack systems, valuable information for ensuring thorough inventory, and other helpful advice.

Do warehouse metrics matter as well? After all, your company collects inventory, warehouse management, and shipping metrics; this is vital information for successful warehouse management.

However, what happens if you make decisions based on incorrect warehouse metrics? If you make assumptions based on flawed assumptions, you may miss significant opportunities.

Tips for Successful Warehouse Management

Most of us are untrained in data analysis, and many people can find charts and graphs challenging to read. When it comes to analyzing business metrics, others simply make mistakes.

Nevertheless, business owners are urged constantly to operate by metrics, to make better decisions based on data, etc. It’s about time to address some common metrics mistakes so businesses can make the most of this valuable warehouse information.

3 Common Metrics Mistakes

Here are three of the most common mistakes businesspeople make when looking at data.

  1. Lack of Strategic Alignment

Misalignment between KPIs and metrics is one of the most common metrics errors.

Before diving into the metrics, ask, “What is the goal?” How will you use the data? Data alone isn’t valuable; it’s only useful when it’s used to measure progress toward goals and KPIs.

It is not uncommon for businesses to embark on a digital transformation and add excellent ERP platforms to their organization, only to fail to receive the full ROI benefits of the technology because they did not align their data collection process with the company’s objectives.

Understanding what drives business outcomes is crucial—what improves profitability, efficiency, margins, and service. Each major area should be assigned metrics and goals to ensure your company’s data collection, metrics, and success are aligned.

  1. Neglecting the Full Picture

There is a tendency for manufacturers to focus on leading indicators or things that may occur in the macro- and microenvironment that may affect future sales and profits. Neglecting lagging indicators, however, could prove detrimental to your business. 

Unlike leading indicators, lagging indicators are measures of past events. In the past, there are clues to the future. Don’t make decisions based on a subset of the available data, but on all available data.

  1. Missing Industry Benchmarks

There is often a tendency for companies to focus solely on their own activities and fail to consider the fact that customers have access to the activities of many companies. Consequently, distributors may miss essential benchmarks for the industry by only looking inward.

Alternatively, a company that only looks outward will chase its competitors. They get lost in the shadow of their competitors, striving to be like them and fail to improve based on their own merits.

Finding a balance between looking internally and chasing after the competition is the key. Internal benchmarks separate the two. By failing to set these benchmarks, you open yourself up to chasing the competition.

Examining past data within the ERP system allows you to determine, set, and manage benchmarks crucial to your company’s success. By having your own goals, you’ll be able to judge success or failure and won’t have to worry about competing with others.

Avoid Poor Quality Data

An inaccurate or incomplete piece of data is considered poor quality data. Inaccurate data can provide a completely misleading picture in some industries. Imagine that your company is still conducting inventory using clipboards and paper for counting and marking products. The chances are good that your system has inaccurate inventory data. Manual data entry often introduces errors that are difficult to detect and correct. 

The same is true for warehouses and shipping areas with poor procedures leading to inaccurate inventory data. Uncollected invoices, unreconciled bank statements, and other delays may also lead to inaccurate data.

Often, incomplete data is collected from situations when only a partial set of data is collected. For example, there may be a missing phone number on the form field in an ERP record for a customer, and as a result, the record is incomplete.

Reports with inaccurate or incomplete data will display flawed information. Companies can lose hours, productivity, and revenue if they interpret flawed data as accurate.

Changing Bad Data into Good Metrics

The first step to ensuring good quality metrics is to ensure your data is clean and error-free. You’ve likely heard the term “data dictionary” in meetings if you’re starting to transition to an ERP platform. Data dictionaries contain rules about what types of data are collected and how they should be updated in a database. If your company has already implemented an ERP, it’s a good idea to revisit the data dictionary to ensure it’s up to date and the rules are fresh.

There is an art to cleaning data. It takes a lot of time and effort to update address files, suppress records of no longer existing companies, and determine which record should be used when two exist for a company. Some third-party companies provide mailing list hygiene services, such as updating address files, and others specialize in updating databases. Using their services may be worthwhile if your data is incorrect.

Metrics are only as good as the data. Gaining insights from your ERP system will be easier if you prevent common database errors and ensure clean data. To learn more, contact us for a free consultation.