Lots of warehouses in your network, all performing at different levels and all performing at different costs, is a very common problem.
When we look at the performance of each of those warehouses, we’re measuring the resource usage, all the various costs involved, how much space is being utilised, the order profiles, and looking at the product throughput — by doing this, we’re trying to get a very accurate picture of the performance of each of the warehouses.
But what exactly is your throughput, and why is it important?
What Throughput Means in Warehouse Terms
In warehouse lingo, your warehouse throughput refers to the rate at which goods or materials move through the warehouse — how much product can be processed in a given time period. This can typically be on a weekly, daily or even hourly basis if you want a more in-depth analysis.
This includes things like the rate at which your items are received and unloaded, put away into storage locations, picked for orders and then packed and shipped out.
For example, a warehouse might measure their throughput as:
- Orders per hour
- Items per day
- Pallets through receiving per shift
- Weekly volume
More throughput is better, but you need to balance that with accuracy and quality control to ensure customer satisfaction. Maintaining optimal inventory levels is important if you want peak warehouse efficiency, as excess inventory can cause additional costs and operational issues.
An Example of Warehouse Throughput (& Why It’s Important!)
Imagine a warehouse that processes online orders with these characteristics:
- 20 warehouse pickers
- 8-hour shift
- 2 picking zones
- 10 packing stations
With this, we would have the following current throughput metrics:
- Each picker averages 100 items per hour
- Each packer processes 30 orders per hour
- Total daily output: 2,400 orders processed and shipped
This is because even though the pickers can pick 100 items per hour each (100 items x 20 pickers x 8 hours = 16,000 items picked), they are limited by the packers to 2,400 orders per day (10 packing stations x 30 orders per hour x 8 hours = 2,400 items packed).
Why is this important, you may ask? Well, it gives us a good idea of how we can increase our throughput by adjusting your warehouse processes. So, if management wants to increase throughput to 4,800 orders per day, they might consider:
- Adding more packing stations
- Implementing batch picking (picking multiple orders simultaneously)
- Optimising the warehouse layout
- Adjusting the picking route to reduce walking time using warehouse slotting
- Installing a conveyor system between zones
So in this example, you know that you have the capacity to double the amount of packing stations if you wanted to double your throughput. This is a crucial part of good inventory optimisation and warehouse management in general, and by using this data you can set yourself up for operational success.
You can use this for individual items, products and the pallets you use as part of your stocking and inventory processes. There are also some other things to benchmark across your warehouse network:
- Cost per case throughput (or pallet, tonne, etc.)
- Lines picked per hour per FTE (Full Time Equivalent employee)
- Lines receipted per hour per FTE
- Sales per square metre of warehouse (or cubic metre for warehouses above 3 pallets high)
- Cost per order processed
- Warehouse costs as a % of sales
Overall, your warehouse throughput is simply the rate at which your orders are being processed through your facility.
Thank for such useful information. This has given me so much more clarity
Glad it was useful. thanks for visiting.