Q: What information can you provide on benchmark figures for warehouse in industrial industries to assist us in setting up our KPI targets. We are reporting on stock accuracy against volume and stock accuracy against value (via stock-check). As well as warehouse stock-turn (goods issued/ave warehouse inventory for the last 12 months)?
A: In my view your stock turn target (excluding the high volume consumables) should be 2.0. The best I have seen (literally the benchmark) is 3.8 but that would be too much of a stretch for you because of the circumstance of that company (geography, size, proximity to suppliers etc.). This should be measured as you indicated – goods issued in the past 12 months divided by the stock value. I usually suggest that people use the value today but am Ok if you use the average over the same period. As I recall, you don’t include repairable items in your stock value so you need to be sure that their value is not included in your goods issued data.
Stock accuracy is slightly more problematic. The problem with this benchmark is that it usually assumes that the same rate of inaccuracy is Ok for all items. In my view it is not. Critical and Insurance Spares deserve a higher target than others where a stock out is less important. I think that you should aim for 100% accuracy on Critical and Insurance Spares and a lower target (say +95%) on others. How this mathematically resolves as an overall target is kind of interesting but actually irrelevant. If you stock out of a critical item because of inaccurate stock I doubt that anyone would accept you saying ‘oh well, overall we are at 95%’.
It is important to recognize that while stock accuracy should be broken down to categories, the stock turn should not. Stock turn only works as an overall measure because we expect variations by category. Telling us that slow moving items are slow and fast ones fast, tells us nothing! For example, I you have a fast moving item that turns over 12 times a year (which sounds high compared to the average) but where you could actually hold less of it so that it turns 24 times a year, looking at stock turn tells you very little. In this case you need to look at the max-min setting and the applicability of those values to the specific item.