Third-party logistics providers (3PLs) must continuously monitor how products move through their warehouses. Warehouse throughput measures this movement at each stage of the process.
There are a variety of tracking metrics that give you a picture of throughput. The overall throughput is how many orders are completed within a specific timeframe, from when inventory arrives to when orders leave the loading docks.
Clear throughput measurements help you maintain proper inventory levels and know when to restock. They also help you improve how orders are picked and organize storage more efficiently, leading to faster deliveries and happier customers.
In this article, we’ll discuss warehouse throughput, its role in 3PL operations, 20 key metrics to track, and best practices for improving speed, accuracy, and fulfillment.
What is Warehouse Throughput?
Warehouse throughput measures the amount of goods your warehouse can receive, pick, pack, and ship within a specific period.
It helps you assess your warehouse’s ability to handle multiple client demands, optimize storage, and allocate resources to meet service-level agreements (SLAs) and client expectations.
How is Warehouse Throughput Calculated?
Warehouse throughput is calculated by dividing the number of units processed by a specific time period, such as per hour, day, or month.
The basic formula is:
Warehouse throughput = Total Units Processed/Time Period
For example, if a warehouse ships 50,000 units in 30 days, the throughput would be:
= 50,000/30
= 1,667 units per day.
But this calculation isn’t as simple as you think. Several key factors contribute to achieving higher throughput, such as receiving rate, picking speed, order processing rate, and shipping rate. You need to measure all these metrics to know your throughput accurately.
20 Important Warehouse Throughput Metrics to Track
Warehouse throughput metrics measure different aspects of warehouse performance, helping you track performance, optimize processes, and increase profit margin.
These metrics focus on how quickly and accurately your inventory moves through receiving, storage, picking, and shipping.
Here are 20 important warehouse throughput metrics you need to track:
1. Order Processed Per Hour
Order processed per hour measures how many orders the warehouse completes in an hour. Managing this metric well helps you reduce order backlogs and improve order fulfillment speed.
Formula:
Orders Processed Per Hour = Total Orders Completed/Total Hours Worked
2. Order Processing Rate
Order processing rate determines the number of orders fulfilled per hour or day, reflecting overall warehouse throughput.
A lower rate can mean you need to improve your inventory management or picking process to avoid shipment delays.
Formula:
Order Processing Rate = Total Orders Completed/TimePeriod
3. Average Order Handling Time
Average order handling time indicates how long it takes to process an order from start to finish. This includes picking, packing, quality checks, and any necessary paperwork.
Formula:
Average Order Handling Time: Total Time Spent on All Orders/ Number of Orders Completed
4. Dock-to-Stock Cycle
The dock-to-stock cycle measures how long it takes to receive, inspect, and stock inbound inventory, making it available for picking.
A shorter dock-to-stock cycle leads to faster inventory availability and reduces storage congestion at receiving docks.
Formula:
Dock-to-Stock Cycle = Stocked Time − Receiving Time
5. Receiving Rate
The receiving rate measures the number of inbound shipments processed within a specific time frame.
A low receiving rate means your new inventory isn’t stocked on time, which may affect your throughput.
Formula:
Receiving Rate = Total Received Units/Time Period
6. Cycle Time
Cycle time is a key throughput metric that shows the total time taken to complete an order, from receiving to shipping. It reflects your overall warehouse performance. Reducing it results in faster order fulfillment and better consumer satisfaction.
Formula:
Cycle Time = Shipping Time − Order Placement Time
7. Lines Picked Per Hour
An order line refers to a single SKU or product unit in an order, and lines picked per hour is the number of individual order lines a picker retrieves within an hour.
Formula:
Lines Picked Per Hour = Total Lines Picked/Total Hours Worked
8. Pick Rate Per Picker Per Hour
The pick rate per picker per hour indicates how many items from multiple orders a picker retrieves in an hour.
This metric helps you improve your labor performance and identify picking delays that may affect your throughput.
Formula:
Pick Rate Per Picker Per Hour = Total Items Picked/Total Hours Spent Picking
9. Travel Distance per Order
Travel distance per order tracks the average distance your workers or robots travel in a warehouse to pick up an order.
This metric helps you optimize your warehouse layout, assess picking speed, and improve inventory placements to shorten the distance for faster throughput.
Formula:
Travel Distance per Order = Total Distance Traveled for Picking/Total Orders Picked
10. Picking Travel Time
Picking travel time indicates the time your workers spend moving between pick locations while fulfilling an order. This is different from travel distance per order, which measures physical distance.
Formula:
Picking Travel Time = Total Time Spent Traveling/Total Orders Picked
11. Bin Replenishment Rate
The bin replenishment rate determines the frequency at which storage bins are refilled with new inventory for continuous picking operations.
A well-managed replenishment rate prevents stockouts in picking areas and reduces disruptions in warehouse throughput.
Formula:
Bin Replenishment Rate = Total Bin Refills/Time Period
12. Packing Station Throughput
Packing station throughput tracks how well your packing stations handle and finalize orders for shipping.
Formula:
Packing Station Throughput = Total Packing Time/Total Orders Packed
13. Packing Time Per Hour
Packing time per hour measures the average time taken to pack and label an order.
Formula:
Packing Time Per Order = Total Packing Time/Total Orders Packed
14. Orders Shipped Per Hour
Orders shipped per hour measure the number of completed shipments per hour.
Formula:
Orders Shipped Per Hour = Total Orders Shipped/Total Hours Worked
15. On-Time Shipping Rate
On-time shipping rate is a key metric to determine the percentage of orders shipped on time.
Formula:
On-Time Shipping Rate = (Orders Shipped On-Time/Total Orders Shipped) x 100
16. Outbound Dock Utilization
Outbound dock utilization determines how well your outbound docks are used for staging and shipping.
Formula:
Outbound Dock Utilization = (Time Dock is Active/Total Available Dock Time) x 100
17. Perfect Order Rate
Perfect order rate is the percentage of orders delivered without any errors, such as mispicks, damages, or delays.
Formula:
Perfect Order Rate = (Error-Free Orders/Total Orders) x 100
18. Return Processing Rate
The return processing rate calculates the speed at which returned goods are inspected, sorted, and restocked.
Formula:
Return Processing Rate = Total Returns Processed/Time Period
19. Inventory Velocity
Inventory velocity determines how fast your inventory moves through the warehouse.
Formula:
Inventory Velocity = Total Units Sold/Average Inventory On Hand
20. Conveyor Throughput Rate
The conveyor throughput rate measures how many items move through conveyor systems per hour.
Formula:
Conveyor Throughput Rate = Total Items Moved via Conveyor/Total Hours of Conveyor Operations
Benefits of Warehouse Throughput
When you improve your warehouse throughput metrics, your entire operation becomes more efficient and responsive. Here’s what better throughput management delivers:
Faster Order Fulfillment
According to a study, 53% of 3PLs say consumers expect deliveries in less than two days. Warehouse throughput helps you process more orders in less time. It speeds up inventory movement through receiving, picking, packing, and shipping. This reduces backlogs and prevents delays.
Grow Revenue
Increasing warehouse throughput allows you to process more orders and move inventory faster. Improved picking methods and reduced travel time help you fulfill orders quickly, serving more clients and expanding your operations.
With greater accuracy, you can lower operational costs. This frees up your resources to handle more business and increase revenue.
Optimizes Space Utilization
Higher throughput moves inventory quickly through receiving, storage, picking, and shipping, preventing stock from piling up. This leads to faster turnover and opens up space for new inventory, reducing congestion.
Increases Customer Satisfaction
Warehouse throughput helps you consistently ship orders on time to build trust and retain customers.
5 Best Practices to Improve Warehouse Throughput
Here are 5 best practices to improve your warehouse throughput:
Optimize Your Warehouse Layout
Optimize your warehouse layout by arranging receiving, storage, picking, packing, and shipping areas in a sequence that reduces unnecessary movement. You can implement a U-shaped, L-shaped, or straight-through layout based on your warehouse size and order volume.
Place equipment like conveyors, pallet jacks, and packing stations in wide aisle areas to prevent congestion and improve workflow. Make sure high-traffic zones have sufficient space for forklifts and carts to move freely, reducing delays and safety risks. Proper equipment placement and a suitable layout keep your operations smooth and maximize throughput.
Adopt Suitable Picking Methods
Use the right picking method to reduce travel time, minimize picking errors, and speed up the order fulfillment rate.
Here are three picking methods you should know:
- Batch picking: Workers pick multiple orders in one trip instead of making separate runs.
- Zone picking: Workers pick items only from their assigned areas.
- Wave picking: Orders are grouped into “waves” based on delivery deadlines or carrier schedules.
Implement Slotting Optimization
Warehouse slotting means placing high-demand items in easily accessible locations to reduce picking time and improve order fulfillment speed. Use automated software like a warehouse management system (WMS) for better inventory management based on your demand and workflow patterns.
Da Vinci’s WMS helps you optimize warehouse slotting by analyzing your inventory data. It helps you identify high-demand SKUs and suggests optimal storage locations for faster picking and fulfillment.
Use Real-Time Inventory Tracking
Use IoT sensors (Internet of Things devices that collect and share data from physical objects), barcode scanning, and RFID tags (radio-frequency identification tags that use wireless signals to track items) to monitor stock levels instantly and prevent stockouts or overstocking. These tools provide real-time updates, confirm item movements, and help workers quickly find inventory, reducing delays in picking and restocking.
Standardize Processes for Order Fulfillment
Standardize warehouse processes across all areas, from receiving to shipping. You need to develop clear, written procedures for every task and make sure all departments follow them consistently.
This will allow employees to perform tasks more quickly and accurately, as they know exactly what is expected.
How Da Vinci’s WMS Optimize Your Warehouse Throughput
Da Vinci’s advanced WMS features automate your operations, from receiving to shipping.
Here’s a detailed look into our WMS:
- Real-time Tracking: Da Vinci’s cloud-based WMS provides real-time inventory tracking, giving you instant updates on order status and location.
- Demand Forecasting: Our system analyzes your past trends to predict future demands more accurately.
- Data Analytics: Da Vinci’s WMS provides real-time data analytics to track and optimize warehouse throughput. This helps you identify issues and improve fulfillment workflows by analyzing key metrics such as order processing rate, cycle time, and inventory velocity using accurate data.
- Optimized Routing and Slotting: Da Vinci’s WMS optimizes order routing and product slotting. The software predicts demand patterns to place high-demand items closer and low-demand items farther from picking zones.
- Integration with Other Systems: Our cloud-based software integrates with your e-commerce systems. We tailor our WMS code to meet your system requirements to prevent any disruptions or delays.
Book a demo with our team to learn more about Da Vinci’s advanced WMS features.