PSM-602:

Storage and distribution

Engr. Md. Enamul Huque, MCIPS

MBA (Marketing), Dhaka University;
MPSM, BRAC University;
B. Sc. Eng. (Civil), BUET.

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 Chapter 9

Performance Measurement of
Storage and Distribution

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Inventory Performance Monitoring
To monitor inventory performance the following KPIs are commonly used:
▪ Percentage of orders satisfied on time in full (OTIF)
▪ Lead times
▪ Service levels
▪ Rate of stock turn (Inventory velocity)
▪ Stockouts in a given period
▪ Stock cover
▪ Costs (Avg. cost per delivery, warehouse expenditure per month)

▪ Read more Inventory-KPIs.pdf

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Performance monitoring
KPIs in Warehousing/Logistics:
 Number of deliveries
 Time to destination
 Available vs. used storage capacity / vehicle capacity
 Time per delivery
 Time since last accident
 Backorder rate
 Number of deliveries
 Transportation Costs (Freight Cost per Unit Shipped, Cost
per mile)

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 Performance monitoring
KPIs in Warehousing/Logistics:
 Time to destination
 Capacity Utilization
 Available vs. used storage capacity / vehicle capacity
 Time per delivery
 Backorder rate
 Number of Shipments

 Safety KPIs:
 Accidents per year
 Time since last accident
 Read more https://www.zoho.com/inventory/guides/everything-you-need-to-know-about-
warehouse-kpis.html
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Inventory Shrinkage
▪ Inventory shrinkage is defined as excess inventory that is
recorded in accounting but is no longer physically available.
▪ Causes of Inventory Shrinkage:
▪ Shoplifting
▪ Employee theft
▪ Administrative errors
▪ Supplier fraud
▪ Unrecorded damages
▪ Unknown causes

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Backorder rate
▪ Backorder rates compare the number of backorders you
have placed to your total orders.
▪ A high backorder rate indicates that you need to work on
your forecasting, planning, and inventory tracking.

▪ Backorder rate = (Total backorders / Total orders)

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 Stocktaking
• Stocktaking is an audit check of the stock physically held
• Stocktaking is the process of examining, counting, and valuing goods held by a store
• This may be by amount or value or both
• Stocktaking can include the actual counting and weighing of stock.
• This should be done using a cross functional team (CFT)
• Although this helps to reduce stock shrinkage, too frequent stocktaking may reduce
efficiency of warehouse and may be costly.
• Methods of stocktaking include:
• Periodic stocktaking - weekly, monthly, yearly
• Spot checks – random, sudden & unscheduled
• Continuous, perpetual stocktaking - throughout the year at a few different points.

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 Stocktaking
• Reasons for stocktaking:
• Identifying any discrepancies between the stock in the warehouse and the stock
reflected in the accounting records.
• Identifying the damaged stocks and the reasons for being damaged
• Identifying the obsolete and obsolescent stocks
• Identifying already outdated and soon to be expired stocks
• To reduce stock shrinkage
• Uncover and eliminate theft within the business

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