Key Metrics to Calculate for Distribution Performance
For any business to succeed, it’s important to understand how your organization is running and where there is room for improvement, especially within the wholesale distribution industry. Misinterpreting your data could be the difference between having an inventory shortage or losing money in excess. Making money is important, and in order to be successful there are a few key metrics to consider when determining your distribution center performance. Utilizing these key metrics to measure performance is crucial for helping your business grow, but how do you prove that you’re performing as well as you think that you are, and how do you use this to drive revenue?
Seasonal Inventory Fluctuation
Seasonal inventory fluctuation is another key metric that should be considered when evaluating your wholesale distribution company’s performance. Keeping in mind and keeping track, of your organization's peak seasons (i.e. holidays, seasonal shifts) you will be able to effectively manage your inventory levels so you know just how much of a product to keep in your warehouse at a time; limiting waste and preventing shortages in the process. This metric is sure to help limit losses in your stocked inventory levels. Wholesale Distribution management systems like Acumatica cloud ERP are great places to start and can give you real-time analytics into what has previously been needed in the past to keep you from making inventory decisions blind.
Being aware of the length of time it takes to work through a sales cycle is crucial for measuring efficiency within your wholesale distribution organization. Businesses that are able to capitalize on their strengths and streamline their sales cycle from dock to delivery, internally and externally are the organizations that are able to effectively promote growth. Being able to pinpoint inefficiencies within your distribution center’s cycle time is a metric that can help you repair the weaknesses and capitalize off of your strengths to improve overall performance and drive revenue.
Returns and Defects
Calculating the metrics on your returned and defect orders is crucial for determining just where your errors are occurring and how you can repair the damaging. Being aware of whether your damages happen in the warehouse, during shipment or delivery can help your warehouse distribution center flourish. Utilizing Warehouse Management Systems, ERP software or CRM solutions can provide more insight into what’s working for your business and what isn’t. That way, you can access real-time dashboards, allowing you to pinpoint the issues as they occur.
These are just three of the many key metrics to consider when evaluating your wholesale distribution organization’s performance that can help better prepare you for some of the more unexpected aspects of the distribution industry. Investing in a wholesale distribution management software or ERP system like Acumatica or Microsoft Dynamics GP is a great place to start. Without an effective Warehouse management system, saving money in stocked inventory and planning for the future can be increasingly difficult.
Have questions on whether not an ERP system could help your distribution company? Contact Logan Consulting, your Chicago based Microsoft Dynamics Partner and schedule a consultation.
2020 Nucleus Research Report on ERP Technology