RICHARD A. ANDREWS
The key in measuring productivity is determining what should be measured. For fulfillment processes this means assessing job functions and the appropriate parameters associated with each. You may want to consider the following:
Break out the time to pull items, if this is a distinct function that can be done by a dedicated staff member or within a dedicated time frame. This can identify areas for improvement that would be hidden when you measure combined pick-and-pack time.
Count the number of picking errors and repacks. The same rationale mentioned above applies.
Record the time spent on handling reverse logistics. Identify shipping errors and isolate reasons for merchandise that is returned. My experience suggests that it takes up to ten times the normal pick-and-pack time to correct these errors, so eliminating them can be a key driver in improving productivity.
Measure results daily to identify productivity shifts that may call for some adjustments in work scheduling among your employees.
These adjustments make your staff more accountable for their time, removes some “make work” from the process, makes use of the technology you have at hand, simplifies the completion of the spreadsheet for your management, and results in more accurate and timely reports.
As your business grows, you will need to integrate more of the modules that are available for your software so that you can take advantage of the efficiencies that come from entering information once and having the software update all the modules. If this is not in your forecast for capital expenses, you should plan for it now.
York Consulting Group
Unfortunately, your dollars/hour measurements may be appropriate for the chief financial officer, but are not appropriate for tracking employee productivity. For example, the impact on dollar shipments due to sales promotions and pricing changes should not be related to individual employee productivity.
Employee productivity is generally measured as pieces or cases per hour per person. When a pick list is printed and issued to an employee, then you have the total number of pieces or cases to be selected. After picking, and adjusting for possible stock-outs, you need to add up the total actual picks from each pick list for each employee for the shift, and divide by the productive hours worked for that employee. This gives you their productivity.
For instances where product pick rates would vary considerably because of size or shape, you can try to separate them when adding up the quantities. For example, you may get a pick rate for normal product, and another pick rate for bulky product. To decrease the time spent on clerically adding quantities (although it appears that you do this already), you may want to have the ability to enter the employee’s name into the system for the pick list, and have the system generate a report for the daily picks per employee.
On the packing side, the UPS system may give you the data you need for packing measurements. By printing the number of parcels per shift, you can sort these by employee, divide by productive time, and get an hourly pack rate per employee. This should give you some useful measurements to use as a baseline. From this, you can gauge the effectiveness of steps you may take to improve efficiency in your operation.
As for the financial measurements, you can continue to provide these as needed. The dollars per hour can be derived from the daily accounts-receivable postings, which are generated from the invoices from daily shipments. Take the receivables and divide by the total productive hours of your staff. This gives you a sales rate — just don’t use this as employee productivity!