Question

''The performance of a warehouse can be measured using KPIs (key performance indicator) that reflects customer satisfaction.''

(a) Propose one (1) warehouse KPI that reflects customer satisfaction.[10 marks]

(b) Support your proposal in part (a) above with a suitable example.[5 marks]

(c) Propose one (1) unit of measurement for your proposal in part (a).[5 marks]

Answer 1

(a) Order Picking Accuracy is one KPI that reflects customer satisfaction. It is an indicator of the controls which ensures that shipments to customers contain the correct goods or materials as per the order. A low value for this KPI highlights that the company has highly manual order picking processes. There is also lack of quality control standards and even the matching order documentation is done to the wrong shipments. It also signifies that there is no adequate training of employees. It also states that the management has no proper controlling system or the goals related to service are not related to order picking accuracy. Inaccuracies related to order picking will lead to rise in cycle times, increase the number of incorrect or wrong shipments sent out to the customer and, therefore, reduce customer satisfaction.

(b) For example, there is a girl who has to go for a party and she r orders a pair of shoes, a makeup kit , a dress and accessories matching to it. Once the good is delivered to the customer she finds out the whatever dress and shoes she has ordered were not that what she has received in the delivery package. The return process and new delivery will take time and she suffers the problem of not attending the party as per her choice of attire and accessories. This leads to customer dissatisfaction and no further sales even from the same customer.

(c) In order to calculate KPI two values are used
(1) what is the total number of orders that have been picked , checked and verified to be accurate prior to the shipment,
(2) the total number of orders that have been picked for shipment within the same measurement period.
formula for order picking accuracy = (Number of Accurate Orders Picked / Total Number of Orders Picked) * 100 So the unit will be in percentage