Warehouse KPIs: 10 inventory metrics to track in Exact Online
Warehouse KPIs are measurable metrics that show whether your warehouse delivers on time, whether your stock is accurate and how much money is tied up in inventory. The most important ones are delivery reliability (OTIF), inventory accuracy, days of cover, the share of dead stock and the stock value. This article gives you ten KPIs with formula, worked example and target, and shows where to find them when you work with Exact Online.
The 10 KPIs at a glance
| KPI | Formula | Common target |
|---|---|---|
| 1. Delivery reliability (OTIF) | lines on time and in full ÷ lines delivered | 95% or higher |
| 2. Shortages / backorders | undeliverable open lines ÷ open lines | as low as possible |
| 3. Inventory accuracy | count lines without difference ÷ count lines | 97–99% |
| 4. Days of cover | stock ÷ average consumption per day | longer than the lead time |
| 5. Inventory turnover | cost of goods sold ÷ average stock value | depends on the industry |
| 6. Dead stock | value without movement ÷ total stock value | as low as possible, falling |
| 7. Stock value | stock × cost price | stable relative to revenue |
| 8. Supplier reliability | purchase lines on time and in full ÷ lines received | 95% or higher |
| 9. Lead time | time from order to delivery (or receipt) | falling |
| 10. Picking productivity | lines processed per employee per period | rising, without more errors |
The targets are guidelines many companies use. What is achievable for you depends on your industry, range and customers. More important than the exact value is that you measure a KPI the same way every period and follow the trend.
Service: do you deliver what the customer expects?
1. Delivery reliability (OTIF)
OTIF stands for On Time In Full: the percentage of order lines delivered on time and complete. It is the KPI your customer notices directly.
- Formula: OTIF = lines delivered on time and in full ÷ total lines delivered × 100%.
- Example: you deliver 500 order lines in October. 470 are on time and 480 are complete, but only 460 are both. OTIF is 460 ÷ 500 = 92%.
- Improve: look per customer and per item where it goes wrong. Did stock arrive too late (see KPI 2 and 8), or are orders processed too late in the warehouse (see KPI 9)?
Measure OTIF per order line, not per order: one missing item in a twenty-line order tells you less than an order with half its lines missing.
2. Shortages and backorders
The share of open order lines you cannot deliver right now, and above all: which items block the most orders.
- Formula: shortage rate = open lines not (fully) deliverable ÷ all open lines × 100%.
- Example: of 120 open order lines, 9 cannot be delivered; 6 of them wait for the same item. The shortage rate is 7.5%, and one purchase order solves two thirds of the problem.
- Improve: reorder the items that block the most orders first. With the Delivery availability check you see per sales order whether it can be picked.
Accuracy: is your stock correct?
3. Inventory accuracy
Inventory accuracy is the percentage of counted lines where the physical stock matches the stock in Exact Online. Without reliable stock, all other KPIs are worth little.
- Formula: inventory accuracy = count lines without difference ÷ count lines × 100%.
- Example: this month you count 200 item-location combinations; 192 are correct. Accuracy is 96%.
- Improve: find the cause for items and locations that keep deviating: picked wrongly, not booked or the wrong unit. Count them more often with cycle counting.
Besides the percentage, look at the value of the differences: ten differences on screws weigh less than one difference on a 2,000 euro item. Read how to prevent them in inventory discrepancies in Exact Online.
Money: how much capital is tied up in stock?
4. Days of cover
Days of cover tells you how long your current stock will last at average consumption. Too little cover leads to shortages, too much to idle capital.
- Formula: days of cover = stock ÷ average consumption per day.
- Example: 300 units in stock and an average consumption of 12 per day gives 25 days of cover. If your supplier’s lead time is 30 days, you are already late reordering.
- Improve: compare cover with lead time. Order everything below the lead time now; items with hundreds of days of cover are candidates for buying less.
5. Inventory turnover
How often your stock "turns over" per year. The higher, the less money is tied up in stock on average.
- Formula: inventory turnover = annual cost of goods sold ÷ average stock value.
- Example: cost of goods sold of 1,200,000 euro and an average stock value of 200,000 euro gives a turnover of 6: the stock turns six times a year, about 61 days on average.
- Improve: reduce the stock of slow movers (see KPI 6) without affecting the service level of your fast movers (A items).
6. Share of dead stock
Dead stock is stock that has not been sold or consumed for a long time. Its share shows how much of your stock value no longer earns anything.
- Formula: dead stock share = value of items without movement in X days ÷ total stock value × 100%. Common thresholds are 90, 180 or 365 days.
- Example: of 400,000 euro in stock, 48,000 euro has not moved for 180 days: 12% of your stock is standing still.
- Improve: decide per item: discount, return to the supplier, move or write off.
7. Stock value
The total amount tied up in your stock, per warehouse and per item group. On its own the stock value says little; the trend relative to revenue says a lot.
- Formula: stock value = stock × cost price, summed over all items.
- Note: items without a cost price count as 0 euro. Add them in Exact Online first, otherwise the KPI is too low. If Exact Online values stock at an average purchase price, the amount can differ from the balance sheet.
Suppliers and process
8. Supplier reliability
The same measurement as OTIF, but for purchasing: how many purchase order lines arrive on time and complete?
- Formula: supplier reliability = purchase lines received on time and in full ÷ purchase lines received × 100%. Also look at the average delay in days.
- Improve: discuss the figures with suppliers who often deliver late or incomplete, or keep more safety stock for their items.
9. Lead time
The time between creating an order and delivering it (sales), or between purchase order and receipt (purchasing). A rising lead time is often the first sign of capacity problems.
- Formula: lead time = delivery date − creation date, as average and median over the period. The median shows what is normal; the average is inflated by a few outliers.
10. Picking productivity
The number of order lines processed per employee per period. Always measure it together with KPI 1 and 3: more lines per hour is only a gain if errors do not increase.
- Formula: picking productivity = order lines processed ÷ hours worked (or per employee per day).
- Improve: put the items with the most picks close to the packing area and set up a picking route. Which items those are is explained in ABC analysis of your inventory.
Which KPIs should you start with?
Introducing ten KPIs at once rarely works. Start with four that together cover service, accuracy and money:
- OTIF – what does the customer notice?
- Inventory accuracy – can we trust the numbers?
- Days of cover – what do we need to order now?
- Share of dead stock – how much money is standing still?
Review them every month at a fixed moment, with the same definition and the same period. Only when these four are stable do you add supplier reliability, lead time and productivity.
Four measurement pitfalls
- Measuring at order level instead of line level. One late line makes the whole order "late"; you do not see where the problem is.
- Unreliable master data. Missing cost prices, lead times or reorder points in Exact Online make KPIs like stock value and days of cover wrong.
- Calculating manually in Excel. An export is outdated immediately and the definition differs per month and per person.
- Steering on a single KPI. Higher productivity at the cost of accuracy, or less stock at the cost of OTIF, is not an improvement.
Measuring warehouse KPIs with Exact Online
Exact Online holds the data for all these KPIs: orders, deliveries, receipts, counts, cost prices and stock per location. However, Exact Online does not calculate most warehouse KPIs itself. The Barcode Scan App books every scan directly in Exact Online and calculates with that same data. Under Analytics you see, without exporting, among others OTIF, shortages & backorders, count accuracy, days of cover, dead stock, stock value, supplier performance and the lead times and lines processed per employee. You calculate inventory turnover with the stock value from Analytics and the cost of goods sold from your Exact Online reports.
Because the figures come from the scans in the warehouse, you measure reality and not what someone entered afterwards. Analytics is part of the advanced subscription.
Frequently asked questions
What is a warehouse KPI?
A warehouse KPI (Key Performance Indicator) is a measurable metric that shows how well your warehouse performs, for example the percentage of order lines delivered on time and in full (OTIF) or the percentage of count lines without a difference. You measure a KPI the same way every period and compare it over time with a target.
Which warehouse KPIs matter most?
Start with four or five KPIs that together cover service, accuracy and money: delivery reliability (OTIF), inventory accuracy, days of cover, the share of dead stock and the stock value. Add supplier reliability and lead time once that basis is in place.
How do I calculate OTIF?
OTIF = (order lines delivered on time and in full ÷ total order lines delivered) × 100%. On time means delivered on or before the requested delivery date; in full means the complete quantity was delivered at once. If 460 of 500 lines were on time and complete, OTIF is 92%.
How do I calculate inventory accuracy?
Inventory accuracy = (count lines without a difference ÷ total count lines) × 100%. If you count 200 item-location combinations and 192 are correct, accuracy is 96%. Many companies aim for 97 to 99%.
How do I calculate days of cover?
Days of cover = current stock ÷ average consumption per day. With 300 units in stock and an average consumption of 12 per day, cover is 25 days. If cover is shorter than your supplier’s lead time, you need to reorder now.
Can I get warehouse KPIs from Exact Online?
Exact Online holds the data, but does not calculate most warehouse KPIs itself. The Barcode Scan App uses the data from Exact Online and shows OTIF, count accuracy, days of cover, dead stock, stock value, supplier performance and lead times under Analytics, without exporting to Excel.