Determining key performance indicators for warehouse performance measurement - A case study in construction materials warehouse

Abstract

Warehouse performance measurement is needed to improve performance of logistics system. In order to improve warehouse performance, it is necessary to identify Key Performance Indicator (KPI). Different warehouses have different KPI, therefore this research aims to identify the most important KPI of warehouse so that warehouse manager can determine corrective actions in their warehouse efficiently and effectively. In this research, 25 KPI of warehouse are identified in five warehouse activities based on Frazelle model. The most important KPI are then determined in each warehouse activity using Analytical Hierarchy Process (AHP). Warehouse performance are measured and final score is determined using SNORM. Improvement steps are proposed base on benchmarking among warehouses. Warehouse performance measurement is conducted in 5 construction's material warehouses located in Yogyakarta, Indonesia. From this study, it is found that most important KPI for receiving is productivity (receive per man-hour), KPI for put away is cycle time (put away cycle time), KPI for storage is utilization (% location and cube occupied), KPI for order picking is cycle time (order picking cycle time) and KPI for shipping is productivity (order prepared for shipment per man-hour). Improving warehouse performance could be done by comparing warehouse performance with the best performance among peer group.