Your warehouse is either making you money—or quietly draining it.
Every misplaced item, delayed shipment, or wasted labor hour adds up. And without the right metrics, you won’t see the problem until it’s too late.
That’s why tracking warehouse KPIs is essential. These metrics help you measure efficiency, spot bottlenecks, and make data-driven improvements that keep operations running smoothly.
And as time goes by, more and more businesses are realizing this. The global warehouse management systems market is projected to grow at a 16.1% CAGR from 2022 to 2030, highlighting the increasing shift toward data-driven warehouse management.
Having said that, not all KPIs matter equally. The key is tracking the right ones—the ones that directly impact efficiency, cost, and overall performance.
In this guide, we’ll break down 22 essential warehouse KPIs, grouped by category, with formulas and insights on how to use them to optimize operations and cut costs.
22 Warehouse KPIs to Measure Warehouse Performance and Efficiency
Monitoring warehouse KPIs is essential for optimizing operations. Here are the top 22 warehouse KPIs you need to track:
Inventory Management KPIs
1. Inventory Accuracy
Inventory accuracy measures the alignment between recorded inventory levels and the actual physical stock in the warehouse and is one of the most important warehouse KPIs to track.
It helps warehouse managers determine how reliable their inventory records are, preventing costly errors in order fulfillment and stock replenishment.
Formula: Inventory Accuracy = (Counted Inventory / Recorded Inventory) x 100
Discrepancies between recorded and actual inventory can occur due to theft, damage, counting errors, or supplier shortages. Inaccurate inventory records lead to stockouts, overstocking, and inefficiencies in picking and packing operations.
Keeping inventory accuracy above 95% ensures smooth warehouse operations and reduces the risk of lost sales or excess holding costs.
Regular cycle counting, real-time inventory tracking using a warehouse management system (WMS), and stringent receiving processes can significantly improve this KPI.
2. Inventory Turnover Rate
Inventory turnover rate tracks how efficiently a warehouse moves stock by measuring how many times inventory is sold and replaced within a given period. It helps assess demand, storage efficiency, and cash flow.
Formula: Inventory Turnover = (Cost of Goods Sold / Average Inventory Value)
A higher turnover rate indicates strong demand and efficient inventory management, while a lower rate suggests overstocking, sluggish sales, or poor purchasing decisions.
Low turnover can lead to increased storage costs and obsolete stock, negatively impacting profitability.
Keeping an optimal turnover rate requires accurate demand forecasting, lean inventory strategies, and efficient supplier coordination to ensure stock levels match sales velocity.
3. Stockout Rate
Stockout rate measures how often a warehouse runs out of inventory before replenishment, leading to missed sales and dissatisfied customers. A high stockout rate suggests poor inventory planning, supply chain disruptions, or inaccurate demand forecasting.
Formula: Stockout Rate = (Stockout Events / Total Orders) x 100
A high stockout rate results in lost revenue, backorders, and damaged customer trust. It also forces businesses to resort to expensive emergency restocking or alternative fulfillment solutions.
To keep stockout rates below 5%, warehouses should implement safety stock levels, predictive analytics, and automated replenishment systems to align inventory with demand fluctuations.
4. Carrying Cost of Inventory
Carrying cost of inventory represents the total expense of holding unsold goods, including warehousing, insurance, depreciation, and capital costs. It helps measure how efficiently a warehouse is managing its inventory and storage space.
Formula: Carrying Cost = (Total Inventory Holding Costs / Total Inventory Value) x 100
High carrying costs indicate inefficient inventory management, excess stock, and wasted resources. It can tie up capital that could be used elsewhere in the business and lead to markdowns or losses if products become obsolete.
To reduce carrying costs, businesses should focus on lean inventory practices, supplier negotiation for just-in-time (JIT) stock, and warehouse automation to optimize space and labor utilization.
5. Inventory to Sales Ratio
Inventory to sales ratio measures the balance between stock levels and sales volume, helping warehouses understand how much inventory is being carried in relation to demand.
Formula: Inventory to Sales Ratio = Ending Inventory Value / Total Sales for the Period
A high ratio suggests excess inventory, which can lead to increased storage costs and product obsolescence. A low ratio may indicate insufficient stock, leading to potential stockouts and lost sales.
Optimizing this KPI requires accurate demand forecasting, data-driven stock replenishment strategies, and seasonal inventory adjustments to ensure a healthy stock-to-sales balance.
6. Shrinkage
Shrinkage represents the portion of inventory that disappears due to theft, damage, administrative errors, or supplier fraud. It directly affects profitability and inventory accuracy.
Formula: Shrinkage = (Recorded Inventory Value – Physical Inventory Value) / Recorded Inventory Value x 100
A high shrinkage rate results in financial losses, disrupted inventory levels, and inaccurate stock tracking. Warehouses can reduce shrinkage by implementing better security measures, employee training programs, improved receiving procedures, and stricter inventory audits to catch discrepancies early.
Receiving KPIs
7. Receiving Accuracy
Receiving accuracy tracks how often the quantity and quality of received stock match purchase orders. It’s a critical first step in warehouse efficiency, ensuring that inventory records start off accurate and preventing downstream errors.
Formula: Receiving Accuracy = (Correctly Received Items / Total Received Items) × 100
Discrepancies in receiving lead to inventory mismatches, operational delays, and costly rework. Common causes of low receiving accuracy include miscounts, supplier errors, and poor documentation processes.
Warehouses can improve this KPI by implementing barcode/RFID scanning, automating receiving workflows, and establishing supplier performance metrics to ensure higher accuracy from the start.
8. Dock-to-Stock Time
Dock-to-stock time measures how quickly incoming shipments are unloaded, verified, and stored in their designated locations. This KPI is essential for reducing warehouse congestion and ensuring stock availability for order fulfillment.
Formula: Dock-to-Stock Time = Total Time from Receiving to Stocking / Total Shipments Received
Long dock-to-stock times can lead to delayed order processing, higher labor costs, and stock bottlenecks. Warehouses with slow receiving processes often experience inefficiencies across the supply chain.
Reducing this KPI requires streamlining receiving workflows, automating data entry with WMS, using RFID/barcode scanning, and ensuring optimal staffing at receiving docks to accelerate stock processing.
Putaway KPIs
9. Putaway Accuracy
Warehouse putaway accuracy measures how often inventory is stored in the correct location upon receipt. A low putaway accuracy results in misplaced inventory, inefficient picking routes, and delayed order fulfillment.
Formula: Putaway Accuracy = (Correctly Stored Items / Total Putaway Items) x 100
Misplaced inventory can lead to stockouts, inefficient labor utilization, and increased order cycle times. Warehouses with poor putaway accuracy often suffer from disorganized storage systems, leading to higher picking errors and lost productivity.
To improve putaway accuracy, warehouses should implement real-time inventory tracking, optimized warehouse slotting, and employee training programs to ensure workers follow structured putaway procedures.
10. Putaway Cycle Time
Putaway cycle time measures how long it takes for received goods to be stored in their correct locations. A shorter putaway time improves warehouse flow and ensures stock is ready for picking and order fulfillment.
Formula: Putaway Cycle Time = Total Putaway Time / Total Items Stored
Long putaway times can disrupt warehouse efficiency, delay order fulfillment, and increase labor costs. This KPI is often affected by poor warehouse layout, lack of automation, and inefficient workforce allocation.
To reduce putaway cycle time, businesses should implement warehouse slotting strategies, use conveyor systems, and invest in employee training to ensure goods are placed quickly and correctly.
Order Management KPIs
11. Picking Accuracy
Warehouse picking accuracy measures how often warehouse staff select the correct items for orders without errors. It directly affects order fulfillment efficiency and customer satisfaction.
Formula: Picking Accuracy = (Correctly Picked Orders / Total Orders Picked) x 100
A low picking accuracy leads to higher return rates, shipping delays, and dissatisfied customers. Errors often occur due to poor inventory organization, incorrect labeling, or human error in manual picking processes.
To improve picking accuracy, warehouses should implement barcode scanning, real-time inventory tracking, and optimized picking routes to ensure staff selects the right items efficiently.
12. Order Cycle Time
Order cycle time tracks the total time taken from order placement to shipment, impacting overall customer satisfaction and warehouse efficiency.
Formula: Order Cycle Time = Total Order Processing Time / Total Orders Shipped
Long order cycle times can be caused by inefficient picking and packing processes, inventory shortages, or order verification delays.
Reducing order cycle time requires streamlined warehouse workflows, batch order processing, and automation in picking and packing to speed up fulfillment without sacrificing accuracy.
13. Backorder Rate
Backorder rate measures the percentage of orders that cannot be fulfilled immediately due to stock shortages. It highlights inventory management effectiveness and supplier reliability.
Formula: Backorder Rate = (Backordered Items / Total Ordered Items) x 100
A high backorder rate results in delays, lost sales, and customer dissatisfaction. Frequent backorders may indicate poor demand forecasting, supply chain issues, or inefficient inventory replenishment strategies.
To minimize backorders, warehouses should improve forecasting models, implement automated restocking systems, and work closely with suppliers to ensure steady stock availability.
14. Order Lead Time
Order lead time measures the total time from when an order is placed to when it is delivered. This KPI helps evaluate warehouse efficiency, supplier responsiveness, and transportation reliability.
Formula: Order Lead Time = Sum of Total Time from Order Placement to Delivery / Total Orders
Long lead times can indicate slow picking processes, warehouse bottlenecks, or unreliable carriers. Customers expect shorter delivery times, so optimizing this KPI is crucial for meeting service-level agreements (SLAs).
Warehouses can reduce order lead time by improving inventory accuracy, automating picking and packing, and optimizing delivery routes for faster fulfillment.
15. Fulfillment Accuracy Rate
Fulfillment accuracy rate measures the percentage of orders that are successfully completed without errors, including correct items, quantities, and timely deliveries.
Formula: Fulfillment Accuracy Rate = (Orders Completed Without Issues / Total Orders Received) x 100
A low fulfillment accuracy rate can result in returns, refunds, and additional customer support costs. Common causes include mis-picks, incorrect packaging, and warehouse workflow inefficiencies.
To improve this KPI, warehouses should implement quality control checks, use automated order verification, and continuously train staff on fulfillment best practices.
16. Rate of Returns
Rate of returns measures the percentage of orders sent back due to incorrect shipments, product defects, or damages. It highlights issues in order accuracy, product quality, and packaging.
Formula: Rate of Returns = (Total Returned Orders / Total Orders Shipped) x 100
High return rates indicate poor fulfillment accuracy, quality control issues, or misleading product descriptions. Processing returns increases operational costs and negatively affects customer satisfaction.
To lower return rates, warehouses should enhance packaging protection, conduct order verification before shipping, and analyze return reasons to address recurring problems.
Warehouse Productivity KPIs
17. Labor Productivity (Orders Per Hour)
Labor productivity measures how efficiently warehouse staff process and fulfill orders. A higher productivity rate means better workforce efficiency and lower labor costs.
Formula: Labor Productivity = Total Orders Processed / Total Labor Hours
Low productivity can be caused by poor warehouse layout, inefficient picking methods, and undertrained staff. It directly affects order fulfillment speed and operational costs.
To improve labor productivity, warehouses should use automation for repetitive tasks, optimize picking routes, and track employee performance to identify bottlenecks. Investing in warehouse management systems (WMS) and robotics can also significantly increase efficiency.
18. Space Utilization Rate
Space utilization rate measures how effectively a warehouse uses its available storage capacity. Optimizing space usage reduces storage costs and improves picking efficiency.
Formula: Space Utilization Rate = (Used Storage Space / Total Warehouse Capacity) x 100
A low space utilization rate indicates wasted warehouse space, while an overly high rate can cause congestion, slower picking times, and difficulty accessing inventory.
To maximize warehouse space, businesses should use vertical storage solutions, optimize slotting arrangements, and implement automated storage and retrieval systems (ASRS) to reduce wasted space.
Safety KPIs
19. Accidents per Year
Accidents per year tracks the number of workplace incidents that result in injury or damage within a given year. A lower accident rate ensures a safer work environment and reduces liability risks.
Frequent accidents can result from poor warehouse organization, lack of safety training, or improper equipment handling. High incident rates also increase worker compensation claims and operational downtime.
To improve safety, warehouses should implement regular safety training, enforce protective equipment use, and conduct frequent safety audits to identify potential hazards.
20. Time Since Last Accident
Time since last accident measures the number of days since the last recorded warehouse incident. It’s an indicator of safety compliance and risk management effectiveness.
A higher number means a safer warehouse environment, while a low number suggests frequent incidents and potential safety risks.
To increase this KPI, businesses should prioritize workplace safety programs, conduct regular hazard assessments, and ensure strict adherence to safety protocols to prevent recurring accidents.
Shipping & Compliance KPIs
21. On-Time Shipping Rate
On-time shipping rate measures the percentage of orders shipped by their promised delivery date. It’s critical for customer satisfaction and supply chain reliability.
Formula: On-Time Shipping Rate = (Orders Shipped On Time / Total Orders) x 100
A low on-time shipping rate can be caused by delays in picking and packing, inefficient carrier selection, or inventory stockouts.
To improve this KPI, warehouses should streamline order fulfillment processes, optimize warehouse layout for faster picking, and integrate with reliable shipping carriers.
22. Shipping Cost Per Order
Shipping cost per order tracks the average cost of shipping each order, including carrier fees, packaging, and handling expenses.
Formula: Shipping Cost Per Order = Total Shipping Costs / Total Orders Shipped
High shipping costs indicate inefficiencies in carrier selection, packaging, or fulfillment processes. Reducing this KPI can improve profitability and competitive pricing.
To lower shipping costs, warehouses should negotiate bulk shipping rates, optimize package dimensions, and use regional fulfillment centers to reduce transportation expenses.
Click here to learn more about warehouse shipping mistakes and how to overcome them.
How Da Vinci Unified WMS Helps You Track and Improve Warehouse KPIs
Tracking warehouse KPIs isn’t just about collecting data, it’s about using that data to make smarter, more efficient decisions.
From optimizing inventory turnover and reducing stockouts to improving order accuracy and labor productivity, monitoring these metrics helps warehouses streamline operations, cut costs, and improve overall performance. The key is having the right tools to track and act on these insights in real time.
That’s where Da Vinci Unified WMS comes in.
As a cloud WMS, it provides real-time inventory visibility, automated order processing, and advanced analytics to help businesses improve their warehouse performance.
With features like barcode scanning, RFID tracking, and automated stock updates, warehouses can maintain high inventory accuracy and reduce stock discrepancies. The system also supports wave and batch picking methods to enhance order fulfillment speed and accuracy while optimizing labor productivity.
Additionally, Da Vinci Unified WMS integrates with major shipping carriers, allowing businesses to automate carrier rate shopping, reduce shipping costs, and improve on-time delivery performance. Its labor management tools help track employee productivity, optimize workforce allocation, and minimize overtime costs.
The platform also offers comprehensive reporting and KPI dashboards, enabling warehouse managers to make data-driven decisions for continuous improvement.
Request a demo today to see how Da Vinci Unified WMS can help you optimize your warehouse operations and improve key performance metrics.