Welcome to the exciting world of startups, where innovative ideas fuel businesses and boost economies globally. The United States leads the pack with an impressive 75,056 startups; Indonesia stands strong in 5th place with 2,347.

While startups are full of ambition and creativity, it’s crucial to know that only about 40% of them become profitable, indicating their challenges.

In this chapter, we’ll introduce you to these young companies, drawing inspiration from “The Startup Owner’s Manual” by Steve Blank and Bob Dorf. We aim to equip you with the knowledge and tools necessary for your entrepreneurial journey.

What is a startup?

A startup is a brand-new company that’s just starting. Entrepreneurs create businesses to develop a product or service they believe people want to purchase. These companies usually begin with high expenses and little income, seeking funds from different sources like venture capitalists.

Steve Blank, on the other hand, has a more specific view. He defines a startup as a temporary organization that searches for a business model that can be repeated and expanded.

To better understand startups, let us divide its definition into four parts and analyze them.

1. Temporary: Startups want to grow and change. They don’t stay the same forever.
2. Designed to search: Initially, these ventures explore and find answers to essential questions about how their business will work.
3. Repeatable: They aim to create a business model that consistently generates steady growth.
4. Scalable: Once they figure out a successful business model, they expand their operations to reach more people and have a more significant effect.

The startup lifecycle

Different experts have different ideas about how startups evolve. According to Steve Blank, a startup goes through three stages before becoming a large company: search, build, and grow. Let’s take a closer look at each stage:

1. Search

In the ‘search’ stage, your main focus is to find a business model that works. At this point, it’s crucial to be flexible and willing to make changes to find the right product-market fit. 

Product-market fit here means having a product that meets the needs of a specific market. It’s like being in the right place with the right thing people want.

Companies in this stage are typically small, with fewer than forty people, and they often rely on funding from seed rounds or Series A investments. To succeed in this stage, companies adopt a “do what it takes” mentality because failing to do so can lead to the startup’s failure.

2. Build

After completing the initial ‘search’ stage, your business moves into the ‘build’ stage, sometimes called the ‘execute’ stage. The main goal is to scale up by attracting more customers and generating positive cash flow.

During this phase, the company typically has around forty employees and can grow to 175 to 700. If your company has venture backing, this is when a Series C or D funding round might happen.

In the ‘build stage,’ a different mindset is required. Simply having a “do what it takes” attitude may be less effective and can lead to chaos. Implementing culture training, product management, and efficient processes and procedures is essential. These initiatives will help your business operate smoothly and thrive as it expands.

3. Grow

According to Steve Blank, the last stage of the journey is the ‘grow’ stage. At this point, your organization has achieved liquidity, which means it has gone through an IPO, been acquired, or merged with another company. During this phase, your company keeps expanding, and you have established consistent processes and procedures based on Key Performance Indicators (KPIs) from the previous stages.

Read more: Unlocking Growth: 19 Traction Channels for Business Success

6 different types of startups

There are various types of startups, each with unique characteristics. They all begin with entrepreneurs, but they can differ significantly in terms of people, funding, and strategies. 

It’s essential to grasp these distinctions because they can substantially influence your likelihood of success. Let’s explore six different startup types you should be aware of:

Lifestyle

These ventures are all about pursuing your passion. These are businesses started by people who love technology or creative work and enjoy what they do without the primary goal of becoming huge or making tons of money. In Silicon Valley, you might find freelancers driven by their passion for technology and take up coding and UI jobs because they genuinely love it.

Small business startups

These startups typically hire local people or family members and provide services to their community. They’re not looking to become huge or make massive profits; their main goal is supporting their livelihood and caring for their family. Examples of such startups include businesses like dry cleaners, gas stations, and convenience stores. They usually start with their savings or borrowing money from relatives and banks.

Scalable startups

These new ventures are launched by ambitious tech entrepreneurs who aim to make a significant impact and build billion-dollar companies. To find a workable business model, they require funding, which often comes from venture capitalists. These startups attract top talent and snowball. Companies like Google, Skype, Facebook, and Twitter were once examples of this type of startup.

“Buyable”

These young companies have different goals compared to others. Instead of aiming to become huge companies, they want to be acquired by more giant corporations. Nowadays, creating web/mobile apps is cheaper and faster, making it easier for these startups to begin. They don’t need as much money to develop and launch their products, and angel investors are more willing to provide financial support.

Large company startups

Even big companies can act like startups now because they know they won’t last forever. As things change, like what customers want, new technology, laws, and competition, they need to come up with fresh and disruptive ideas. 

To do this, they use lean startup practices that make them agile, creative, and competitive. Sometimes, they even create teams or incubators inside the company to work on new ideas and projects outside their usual business. This way, they stay ahead and keep growing.

Social

Entrepreneurs who care about improving the world start social startups. These emerging companies aim to change society and the environment rather than just making money. Entrepreneurs can establish social startups as non-profit organizations, for-profit ventures, or a combination.

9 reasons why many of them fail

It’s a fact that 90% of startups fail, with 10% not even making it to their second year. Avoiding these nine common mistakes can significantly impact their success. Let’s explore each one:

1. Founders assume they know their customers

According to Steve Blank, a common reason for startup failure is the assumption that founders already understand their customers. However, initially, startups have no customers, so these assumptions are like guesswork.

Turning these assumptions into solid evidence sooner rather than later is essential to improve your likelihood of success. One effective way to do this is by meeting potential customers and validating your assumptions. Relying solely on assumptions can lead to developing products or services that don’t solve customers’ problems.

2. Wrong product-market fit

The second mistake often stems from the first one. Founders may believe they thoroughly understand their customers, leading them to assume they know what their customers require.

This assumption leads them to create a complete product using traditional development methods without involving customers directly. As a result, they may not know if the product’s features will appeal to customers.

A great product or service is not enough for a startup to succeed. It must also meet the specific demands of the target market and address a genuine market need. Without this alignment, the business is likely to struggle.

3. Focusing too much on the launch date

In emerging companies, there’s often a fixed date for product launch, like a trade show, and they feel compelled to stick to it, even if they aren’t ready. Investors expect results tied to this launch date too.

However, launching the product doesn’t mean they understand their customers or the best marketing strategies. This approach is a big mistake, as it assumes customers will come just because the product is well-made.

Unfortunately, many startups realize only after launching that they haven’t attracted enough customers, their product doesn’t solve significant problems, or the cost of getting it to customers is too high. Avoiding this mistake is vital for a startup’s success.

4. Not embracing trial and error

Startups are different from established companies. Nothing is set in stone, and they need to find a working business model that can grow. At first, they make many guesses, but many of them will be wrong.

That’s why focusing solely on execution isn’t the most important thing. To succeed, your startup should embrace a culture of experimentation. Learn from failures and adapt your strategies accordingly. 

If you avoid trying new things, your company might not improve or evolve. So, be open to experiments and learn from the results, which are crucial for success.

5. Not searching for a repeatable business model

Traditional business plans and product development models have their advantages. They offer clear milestones for boards and founders to follow, but they may not be the best fit for startups. 

Metrics like income statements and balance sheets are not helpful for emerging companies because they don’t track progress toward the most important goal: finding a repeatable and scalable business model.

As a young company, your main objective is to become repeatable and scalable, but you’re not there yet. A business plan can provide a solid structure to work towards these goals. Still, it should also be flexible and subject to changes as your startup develops and evolves. Keep it editable and adaptable along your journey.

6. Not tailoring job titles to suit its necessities

In startups, avoiding job titles borrowed from big companies is essential. Traditional job titles may not fit a startup’s diverse and ever-changing roles. For example, the CEO can often take on various tasks in a startup.

Using generic job titles can lead to hiring mistakes, as candidates may not grasp their responsibilities in the unique work environment. It’s crucial to tailor job titles to match the specific needs and challenges of the startup.

7. Not hiring the right people

To succeed, startups need skilled sales and marketing professionals who can effectively reach their target audience, leading to increased traction and revenue.

Don’t hire based solely on titles. Considering skills and suitability for the startup’s specific challenges is more critical. Some executives might stick to their knowledge, which might not fit startups best.

Assessing progress through product launches or revenue plans alone can be misleading. Gathering honest customer feedback and validating assumptions is crucial to make informed decisions.

Read more: B2B vs. B2C in Tech: What are the 5 Key Differences?

8. Premature scaling based on the premise of success

When you start a business, it’s essential to remember that things won’t always go in a straight line. It’s more like a rollercoaster ride with ups and downs. Just because someone likes your idea doesn’t mean everyone else will jump on board. 

To measure your success accurately, you need feedback from many customers. This way, you can make better decisions for your company. Taking your time when hiring and spending money is essential. Focus on establishing stable and repeatable sales and marketing processes that you can scale up.

Achieving success and stability should be your priority before aiming for rapid growth. Growing too quickly without a solid foundation and a proven business model could lead to inefficiencies and financial strain, ultimately failing your startup.

9. Reactive decision-making

When startups face tough times, making quick decisions without thinking things through can result in short-term fixes that don’t solve the core problems. For example, when a young organization launches its product and sales aren’t going as expected, it might quickly fire the sales VP to fix the issue. 

However, the successful ones use this feedback as an opportunity to pivot or change their business approach based on what they learn. It’s not a crisis; it’s a normal part of the journey to success.

Summary

Startups are like temporary organizations searching for a workable business plan they can use to grow. Initially, startups explore and adjust to determine how their business will function. They can expand and reach more people when they discover a successful plan.

The next chapter will discuss the customer development process, a crucial part of the startup journey. This process involves four main steps: Customer Discovery, Customer Validation, Customer Creation, and Company Building. 

References

Blank, Steve, and Bob Dorf. The Startup Owner’s Manual: The Step-By-Step Guide for Building a Great Company. 2020.

In the previous chapter, we talked about off-page SEO and how to build links effectively. Now, let’s focus on something just as important: measuring SEO performance and understanding key metrics that show how well your efforts are working.

SEO is not just about doing on-page and off-page optimizations; you also need to measure how well your SEO is doing. Tracking these metrics helps you find areas where you can improve, make decisions based on data, and improve your website’s visibility, organic traffic, and conversions.

In this article, we’ll explore how to evaluate your SEO performance and discuss eleven important metrics that every SEO practitioner should know. We’ll explain why these metrics matter and how they can help you make your SEO strategies better. By the end, you’ll understand the metrics to track and the insights they provide to improve your SEO.

Read more: SEO Fundamentals: Key Definitions & 4 Best Practices

How to evaluate your SEO performance?

SEO isn’t a sprint but rather a marathon. Therefore, Evaluating your SEO performance is crucial for determining the effectiveness of your optimization efforts and making improvements where necessary. Here are four steps to help you evaluate your SEO performance:

Set clear objectives and goals

To evaluate your SEO performance, begin by setting clear goals. Make sure your goals are specific and measurable. For example, you aim to increase the number of people visiting your website from search engines, improve your rankings for important keywords, or increase the number of visitors who take a desired action, such as purchasing or filling out a form. Setting these goals will give you a target to aim for and help you track your progress.

Monitor and track key metrics

It’s important to watch certain numbers that tell you how well your website is doing. These numbers are called metrics. Some important metrics in SEO include organic traffic, keyword rankings, click-through rates, bounce rates, and conversion rates. 

Regularly monitoring these metrics over time allows you to spot trends and patterns that show whether your SEO strategies are working. In the following section, we will provide more detailed information about each of these metrics and how to use them to evaluate your SEO performance effectively.

Conduct a comparative analysis

To assess and monitor your SEO progress, comparing your website’s performance to your competitors is crucial. Look at where your website ranks in search results, how often your keywords appear, and how you’re doing online.

This comparison helps you see where your competitors are doing better. It gives you ideas on how to improve your SEO strategies. By studying what they’re doing right, you can make changes to improve how visible your website is and get better rankings in search results.

Make data-driven adjustments

Finally, the last thing to do is to use the insights gathered from monitoring and analysis to make data-driven adjustments to your SEO strategies. 

Take note of what’s going well and keep building on those successes. For areas that need improvement, make specific adjustments like improving your website content, choosing better keywords, making your site faster, or improving the experience for your visitors. Monitor the impact of these changes by monitoring the related metrics regularly.

Key metrics for measuring SEO performance

When it comes to measuring your search engine optimization (SEO) efforts, there are specific metrics that can give you valuable insights. These metrics help you understand how well your website performs in visibility, organic traffic, user engagement, and overall SEO success. Here are the eleven key metrics you should pay attention to:

1. Organic traffic

Organic traffic is when people visit your website through search engines without payment. It shows how well your website appears in search results and tells you if your SEO is working. It’s important to remember that an increase in organic traffic doesn’t necessarily translate into higher sales.

To track organic traffic, you can use tools like Google Analytics. This tool gives you detailed information about the number of visitors who found your website through organic search.

2. Clickthrough rate (CTR)

CTR is a way to determine how many people click on the link to your website when they see it in search engine results. It helps you understand how well your keywords, ads, and free listings are doing by showing how often people click on them. If your website has a high CTR, many people click on your link after seeing it in search results. 

Here’s how you can calculate CTR: 

3. Bounce rate

The bounce rate shows the percentage of visitors who leave your website after only viewing one page without doing anything. Although it doesn’t affect your ranking, a high bounce rate may indicate problems with specific pages or your entire website. 

However, you shouldn’t obsess over the bounce rate for these three reasons:

• The bounce rate can be misleading due to poorly configured Google Analytics, visitors who leave quickly, ad-block users, and session timeouts.
• The metric needs to be segmented and filtered extensively to obtain meaningful insights.
• There is no universally “good” bounce rate benchmark; it depends on the niche, page type, traffic source, and user intent.

The formula to calculate bounce rate:

4. Conversion rate

This SEO metric is the percentage of website visitors who do what you want them to do, like buying something or filling out a form. It shows how well your website turns visitors into customers or leads.

Here’s how Google calculates this metric:

5. Engagement time

Engagement time, or time on page, measures how long visitors interact with your website’s content. It tells you if your content matches what users are searching for. 

Longer engagement time means visitors find your content valuable and engaging, showing a positive user experience. Conversely, a short time on a page suggests a disconnect between what the user wants and what your page offers.

To track engagement time on your website, you can use tools like Google Analytics. It provides metrics for average session duration. 

When a user starts a new session, Google Analytics begins recording the time in milliseconds. This time is sent to Analytics when any of the following actions occur:

• The user switches to another app or minimizes the screen.
• The user clicks away from your web page or loses focus.
• The user leaves the website or app (for example, by closing the tab, window, or app or navigating to another page or screen).
• The site or app crashes.

6. Keyword ranking

Keyword ranking indicates where your website stands in search engine results for certain words or phrases. Higher rankings mean more visibility and organic traffic because people tend to click on websites at the top of search results.

However, keyword rankings can change often due to various reasons. For example, Google might update its algorithm, you could lose backlinks, or your competitors may publish new content. That’s why keeping an eye on your SEO rankings is crucial.

You can utilize SEO tools like SEMrush or Ahrefs to monitor your keyword rankings. These tools offer features that allow you to track your keyword rankings.

Read more: Mastering Keyword Research in 8 Steps

7. Number of backlinks

Backlinks are links from other websites that lead to your website. They show search engines that your site is trusted and authoritative, which can improve your search rankings. Google considers backlinks a crucial factor in determining the credibility and value of your site.

You can use tools like Ahrefs, Semrush, or Moz to keep track of your backlinks. These tools provide valuable information about the links pointing to your website.

It’s important to consistently work on acquiring high-quality backlinks for your site. Here are some popular strategies you can use:

• Content marketing 
• Link building 
• Guest blogging 
• Social media marketing 
• Brand mentions and PR

8. Referring domains

One way to measure SEO involving backlinks is by looking at referring domains. Think of referring domains as online signposts that guide people to your website. When other websites link your site, they create these signposts. Each separate website that links to you counts as a referring domain.

Referring domains matter because when other websites link to yours, search engines view your site as more reliable and significant. They can help your website appear higher in search results.

While referring domains and backlinks are related, they’re not the same. Referring domains count the number of different websites that link to yours. Even if one website often links to you, it’s still considered one referring domain.

On the other hand, backlinks are the individual links that connect one website to yours. Simply put, if five websites have two links pointing to your website, you would have five referring domains and ten backlinks.

Read more: 5 Effective Off-Page SEO Strategies for Building Authority

9. Website health score

A website health score is a way to evaluate the overall condition of your website in terms of technical aspects and SEO-related factors. It gives you an idea of how well your website optimization is for search engines and user experience. 

The great thing about the health score is that it shows you any changes compared to previous evaluations, including specific errors that affected the score. A high website health score means your website is well-optimized, leading to better visibility on search engines and a positive user experience.

Various SEO auditing tools assess different aspects of your website to calculate the health score. These tools look at factors such as how fast your site loads, how friendly it is for mobile devices and any technical SEO problems it might have.

10. Index coverage errors

When search engines can’t crawl or index certain pages on your website, it’s an index coverage error. Fixing these errors is important because it helps search engines find and show your website’s pages in organic search results. 

Google may deindex or delay indexing your pages for various reasons. Since index coverage errors often occur unintentionally, it’s crucial to be aware of them and fix any issues.

You can use Google Search Console to identify and resolve index coverage errors. This tool provides detailed reports on problems related to crawling and indexing.

11. Page speed

Page speed is how fast your web pages load for people visiting your website. When your pages load quickly, it makes the user experience better. It reduces the number of people leaving your site right away. It can also positively impact how search engines rank your website.

You can use tools like Google PageSpeed Insights or GTmetrix to check your page speed. These tools will give you information and suggestions for improving page loading times.

Read more: Technical SEO: Definition and 7 Key Steps to Take

Tools for measuring SEO performance

Now that you understand the important metrics for measuring and tracking SEO performance, it’s time to explore the available tools. These tools come in handy for assessing various aspects of your website’s visibility, rankings, and traffic. Here are some commonly used options for measuring SEO performance: 

Google Analytics

Google Analytics is a free and popular web analytics tool that gives detailed information about your website’s visitors, what they do on your site, and whether they convert into customers. It helps you track how much traffic you get from search engines, which keywords drive that traffic, and how engaged your users are.

Google search console

Having a fast and functional website is important for SEO. If your website is slow to load, hard to navigate, or has many errors, people won’t want to stay on it. Luckily, Google has a tool called Google Search Console to help you find and fix these issues. By using this tool, you can improve your search ranking.

Google Search Console provides useful information about how your website appears in Google search results. It tells you how many times your website appears in searches, how many people click on it, and the rate at which people click through to your site. It also helps you find and fix any problems with how Google crawls and indexes your site. On top of that, it provides an analysis of the keywords that are driving traffic to your site.

Google Trends

Google Trends is a useful tool that lets you check how popular certain keywords or topics are and how often people search for them. It can help you spot trends at specific times of the year, assess how well certain keywords are doing, and gain insights into how people search for things.

PageSpeed Insights

Google PageSpeed Insights (PSI) is a tool from Google that checks how fast your website loads on computers and mobile devices. It gives you tips on how to make your site more quickly and better for users. After testing your site, PSI gives it a score between 0 and 100. The higher the score, the faster and more efficient your website is. PSI also gives you suggestions on how to make improvements.

Ahrefs

Ahrefs is a helpful tool for improving your website’s search engine optimization (SEO). It offers a range of features like keyword research, backlink analysis, competitor analysis, rank tracking, and site audits. 

With Ahrefs, you can see important information about your website, such as backlinks, keywords, and page performance, all in one place. It’s useful for tracking your SEO over time and making smarter decisions about your content.

SEMrush

SEMrush is a comprehensive SEO tool offering various features to enhance your website’s performance. With SEMrush, you can conduct keyword research, analyze backlinks, audit your site, and track your rankings. It also provides valuable insights into your competitors’ strategies. 

The tool makes it simple to discover, monitor, and utilize keywords, track your backlinks, and compare your SEO with your competitors. Additionally, you can obtain keyword reports to assess whether your website has gained or lost rankings for specific keywords.

Moz

Mom offers various SEO tools, including keyword research, link analysis, rank tracking, and on-page optimization. They provide metrics like Domain Authority (DA) and Page Authority (PA) to assess website strength. 

Moz aggregates SEO information into a paid dashboard and offers free tools for keyword checking, measuring SEO performance, and providing daily updates through MozCast. Their Google Algorithm Update History explains major shifts in SEO performance due to algorithm changes.

GTmetrix

GTmetrix is an excellent tool for checking how well your website is doing in terms of SEO. It focuses on website speed and performance. With GTmetrix, you can find out how fast your website loads, its pages’ size, and other essential performance details. 

GTmetrix examines your site’s performance and suggests ways to make it better. For example, optimize your images, use browser caching, or reduce the time it takes for your server to respond. GTmetrix also gives you helpful charts and historical data to see how your site’s performance has changed.

Screaming Frog

Screaming Frog is a helpful tool for website owners and marketers to see how well their sites are doing on search engines. It finds problems that need fixing to make your site show up better on Google and others.

It’s also great for conducting technical site audits. The tool looks through everything and finds broken links, duplicate content, and slow pages. It checks how your site is set up, like the main words and the maps for search engines. It even looks at how well your site works on phones, whether it’s secure with HTTPS, and whether the web addresses work correctly. 

Summary

This article emphasizes the importance of measuring SEO performance and understanding key metrics to assess your efforts’ effectiveness. You should track specific metrics that provide valuable insights to evaluate your SEO performance. 

These metrics help you measure how well your website is doing regarding visibility, organic traffic, user engagement, and overall SEO success. By paying attention to these key metrics, you can use data to make informed decisions and improve your website’s performance.

Remember, SEO is an ongoing process that requires continuous evaluation and adjustment. It’s important to be proactive and adapt to the ever-changing digital landscape. Understanding and using these key metrics can improve your website’s visibility, attract organic traffic, and achieve your SEO goals.

Warehouse managers need to understand the importance of measuring warehouse performance. It is crucial to measure performance because it helps companies keep track of trends, assess efficiency, and identify any problems that may arise.

When it comes to measuring warehouse performance, there are different approaches you can take. You can begin with the traditional method or utilize specific metrics or Key Performance Indicators (KPIs) tailored for warehouses. In this section, we will describe alternative methods for measuring warehouse performance.

The importance of measuring warehouse performance

Measuring warehouse performance is essential for companies to understand how well their warehouses operate. It helps them in a few key ways:

1. Ensuring customer satisfaction.
2. Encouraging continuous improvement.
3. Spotting and fixing potential problems early on.
4. Training staff effectively.

When warehouse managers can identify issues, evaluating and fixing them becomes more manageable. There are many ways to measure warehouse performance, all aimed at objectively assessing and evaluating warehouse activities.

Read more: Understanding Warehouses: Definition and its Importance

Key Considerations for Measuring Warehouse Performance

According to Ackerman (2003), measuring warehouse performance involves focusing on four key areas:

• Reliability: This means ensuring on-time delivery, high fill rates, and accurate order fulfillment.
• Flexibility: The best way to measure flexibility is by looking at the time to complete an order cycle. It includes everything from how we handle the order, the availability of stock, the speed of order processing in the warehouse, to how quickly we can deliver the order to the customer.
• Cost: Measuring costs involves calculating the percentage of sales spent on warehouse operations and evaluating productivity to the hours worked.
• Utilization of assets: This area focuses on efficiently using warehouse space, material handling equipment (MHE), and storage equipment. The goal is to optimize the use of these assets to improve overall performance.

Performance management effectively manages various aspects of a company’s operations and economic performance. According to Slack et al. (2001), high-performance procedures can be described as follows:

1. High-quality operation: This means avoiding mistakes or errors that require redoing tasks and ensuring that customers are not frustrated by poor service quality.
2. Quick turnaround: It involves swiftly processing and fulfilling customer orders without unnecessary delays.
3. Reliable operation: The focus is consistently delivering products or services precisely as planned, without any deviations.
4. Flexible operation: This entails adapting promptly to changing circumstances without causing disruptions to the overall function.
5. Low-cost operations: By minimizing costs, companies can generate higher profits and offer their products at competitive prices.

To effectively measure performance, it’s essential to monitor how well you meet the criteria that matter to your customers and how well you manage costs.

The figure below shows that different industries have different ideas about what matters most in measuring performance. It illustrates the Key Performance Indicators (KPIs) that retailers find essential and the ones that their third-party logistics service providers prioritize.

To effectively measure performance management, it is crucial to record and analyze the time it takes to complete various tasks in the warehouse. Consider the following factors when measuring these activities:

• Preparation time (such as gathering items, getting equipment ready, arranging pallets, and handling documents).
• Human factors (including skills, motivation, and burnout).
• Mechanical factors (like replacing batteries, changing attachments, and refueling).
• Operational aspects (such as location systems, organizing product placement, and identifying bottlenecks).

Choosing an Effective Warehouse Performance Measurement Method

There are several ways to measure warehouse performance management, and each method has its benefits. Different companies have different priorities, customers, and ways of doing things. To choose the best approach, you should follow these steps:

• Understand your business and its strategy.
• Set clear goals.
• Identify which Key Performance Indicators (KPIs) can help you achieve those goals.
• Make sure the selected KPIs align with your employees’ roles.
• Ensure that everyone is working towards the targets.
• If targets are unmet, figure out why and introduce processes to help meet them.
• If a target is unrealistic, change it.

The first step in creating a sound performance measurement system is understanding the company’s vision and how your department can help achieve its goals. Sometimes, department heads develop performance measures they find comfortable and easy to achieve. Still, these measures don’t match the company’s vision and don’t interest senior managers.

It’s essential to follow the SMART approach to achieve success. Your actions should meet the following criteria:

• Specific: Clearly state what you want to achieve.
• Measurable: Make sure you can track and measure your progress.
• Achievable: Set targets that are realistic and attainable.
• Realistic: Consider your resources and ensure your goals are within reach.
• Timely: Set a realistic timeline and establish regular check-ins to provide accurate data collection.

Moseley (2004) and Vitasek (2004) suggest the following tips for introducing KPIs:

• Use words that your staff understands and finds meaningful.
• Based on the KPIs, determine what your team needs to do to improve services or save money.
• Consider using common industry KPIs to compare your operations with others.
• Look at the data regularly and watch for patterns.
• Don’t get too worked up about individual data points.
• Only introduce actions that you can do and measure.
• Ensure the metrics you use are cost-effective, meaning they don’t cost more to manage than you might save.
• Focus on actions that you can change.
• Don’t measure things that you can’t or won’t change.
• Use the data you collect — it’s frustrating to collect information and then not do anything with it.

6 Methods for Measuring Warehouse Performance

Companies can choose from six different methods to measure warehouse management performance. Let’s take a look at each type of measurement method:

Traditional productivity measurement

In today’s warehouses, we use several traditional ways to measure productivity. These measures fall into four main types:

1. Traditional measurements based on labor hours, space, and equipment

• The utilization of working hours examines how labor hours are used in the warehouse. It measures the proportion of actual working hours to the available hours for a specific shift, day, or week. This measurement does not include breaks.

Hours worked: (Hours worked × 100) ÷ hours worked available

• To gauge warehouse area utilization, you can measure it in different ways. One method is to calculate the total cubic capacity of the warehouse. Alternatively, you can determine the number of pallet locations used compared to the total number of available sites.

Warehouse area utilization:  (Used space × 100) ÷ available space

• Utilization of Material Handling Equipment (MHE)

MHE utilization: (used MHE hours × 100) ÷ available MHE hours

2. Traditional measurement based on cost

In financial terms, a cost measure represents a percentage of sales and the cost incurred per order shipped. To calculate this measure, follow these steps:

• Cost as a percentage of sales

Percentage cost of sales: (Total warehousing costs × 100) ÷ total sales revenue

• Cost per order shipped

Order costs shipped: Total warehouse cost ÷ total number of orders shipped

3. Traditional measurement based on productivity

• Picked units per hour

Picked units per hour: Units picked ÷ total available hours

• The dock-to-stock time represents the time it takes for the vehicle to arrive at the receiving bay and for the system to display the stock.

4. Traditional measurement based on customer service

• Delivery accuracy

Delivery accuracy : Unit selected ÷ total hours available

• Timely delivery

Timely delivery: Orders shipped according to customer requests ÷ total orders received

New performance metrics

OTIF (on time and in full) is one of the most commonly used metrics in the UK today. It combines with the perfect order metric, the most popular measure of customer service. To meet the OTIF standard, we must deliver items on time, without any damage, and ensure they have the correct documentation and labeling. Moreover, accurate invoicing is crucial.

Let’s break down the calculation for the perfect sort percentage. We measure four metrics individually and then multiply them:

• We measure on-time delivery, which stands at 97%.
• We calculate delivery in total, which is at 98.5%.
• We measure damage-free deliveries, which reach 99.5%.
• We measure accurate documentation, labeling, and billing, which is at 98%.

To find the perfect order metric, we multiply these percentages: 97% × 98.5% × 99.5% × 98% = 93.2%.Now, let’s focus on the OTIF (On-Time-In-Full) measurement. It considers two metrics: on-time delivery and delivery in full. The yield for OTIF is calculated as 97% × 98.5% = 95.5%.

Additionally, our latest warehouse measurements include inventory evaluations. When assessing inventory, we should measure the following aspects:

Stock cover in days

To calculate the stock turnover, divide the current stock level by the total annual sales and multiply the result by 365. You can calculate this using the actual number of units in stock or the stock value. This calculation helps us determine how many days’ worth of stock we have.

For example, let’s look at the table below. It shows that product code 99172100 has been in stock at the warehouse for two and a half years. On the other hand, product code 90152100 has only been in store for five days.

Stock run

To calculate stock turnover, divide the total units sold by the average number of units available. For example, product 90132100 sold eight units in the past, which is considered reasonable. However, product code 99172100 only had a stock turnover of 0.4, meaning the stock turnover was less than once yearly.

This calculation helps determine stock ordering policies and decide whether to return stock to producers, discard it, or launch sales campaigns.

Stock/inventory accuracy

Inventory measurement includes assessing stock accuracy, which ensures efficient order fulfillment. Whether you count stock once a year, twice a year, or daily using cyclical or perpetual inventory counting methods, maintaining accurate stock levels is crucial. The more precise your stock records are, the better your chances of fulfilling orders correctly and increasing overall efficiency.

To measure stock accuracy, follow these steps:

• Calculate the percentage of accurate stock locations by dividing the number of correct sites by the total number of places you calculated, and then multiply the result by 100.
• Determine stock line accuracy by dividing the number of correctly counted lines by the total number of lines measured and multiplying the result by 100.
• Evaluate the accuracy of stock units by dividing the actual quantity per SKU by the expected amount per SKU and then multiplying the result by 100.

Damaged Inventory

To determine the extent of damage in the warehouse, you can measure it in two ways. First, divide the damaged goods by the total number of items processed through the warehouse. Second, assess the monetary value of the damage.

Percentage of damaged items = items found to be damaged ÷ items shipped per month

Hard and soft measures

The measurement forms mentioned earlier are known as hard measures. They are relatively easy to measure, concrete, and straightforward. In contrast, soft measures refer to intangible qualities.

For instance, consider customer satisfaction with prompt delivery as a soft measure. Soft measures effectively capture perceived changes and provide a more comprehensive understanding of success than narrow-focused strict measures.

Although it can be challenging, soft measurement can be defined and measured. For example, we can use a survey with a rating scale from 1 to 10 to assess user satisfaction. This survey can be repeated at appropriate intervals to track perceived changes in service.

Research conducted by Landrum et al. (2009) highlights reliability and responsiveness as the most critical factors for service quality. Reliability factors include:

• Delivering services as promised
• Addressing customer service issues reliably
• Getting the service right the first time
• Providing services at the promised time
• Maintaining accurate and error-free records

Integration model

The integrated performance model blends actual performance data and customer perceptions. We gather data from performance reports and send questionnaires to customers regularly.

We assign ratings based on survey results and actual performance, which produce scores. We use red, yellow, and green models to highlight poorly performing areas. Red areas require attention.

When measuring performance, make sure your actions match customer requirements and expectations. For example, delivering 100 percent of available warehouse items doesn’t always mean fulfilling the exact customer order quantity.

Benchmarking

Benchmarking is when a company compares its performance with other companies or operations. The goal is to discover what successful companies do to achieve high performance.

Companies use benchmarking to:

• Understand how well they’re doing.
• Identify areas where they need to improve.
• Learn from others who do things better.
• Set achievable goals.
• Speed up and manage changes.
• Make processes better.
• Learn about best practices.

When benchmarking, it’s important to collaborate, keep things confidential, provide value, be flexible, honest, open, and maintain a good reputation. One way to keep things hidden and anonymous is to involve outside parties like benchmarking groups, consultants, or universities.

Balance scorecard

Kaplan and Norton (1996) created the balanced scorecard, which tracks performance. It assesses aspects like finance, customer satisfaction, internal processes, staff development, and innovation.

We will set goals and targets for each measure and measure them against actual performance. By implementing a balanced scorecard approach, we aim to improve processes, motivate teams, increase customer satisfaction, and enhance communication.

Read more: Warehouse Manager: Roles and 10 Challenges to Overcome

Summary

To achieve efficient operations, measuring performance effectively by following SMART steps that align with the company’s strategic vision is essential.

It’s worth noting that traditional KPIs report the status of an operation or process at a specific time. While they help compare performance over time, adjusting targets and actions is crucial as the environment changes quickly.

There are many performance measures related to warehouse operations. However, it’s best to measure only the areas that matter to your customers and your company.

References

Richard G. 2011. Warehouse Management. Great Britain: Kogan Page Limited.

Warehouse costs usually make up 1% to 5% of a company’s total sales, depending on the type of company and the value of the goods stored. Out of the overall logistics costs, about 22% goes towards warehousing, and an additional 23% is for inventory holding costs.

To effectively manage warehouse costs, the warehouse manager must clearly understand the company’s specific expenses. They should also implement the right strategies to significantly reduce warehouse costs and prevent financial strain on the company.

The purpose of this article is to assist managers in gaining a better understanding of warehouse costs. It guides creating budgets, calculating return on investment, and making informed decisions. Additionally, the article compares different financing models for warehouses and practical tips to help reduce warehouse costs.

Read more: Understanding Warehouses: Definition and its Importance

9 types of warehouse costs

Warehouse fees can change depending on the facilities, storage space, and services you need. The most common costs are handling (receiving and shipping), storage space, operating administration, and general administrative expenses. Now, let’s explore nine types of costs associated with warehouse operations:

1. Space cost

There are several types of costs involved in warehouse space. These costs include renting or leasing buildings or land and the decrease in value of the buildings (depending on how they were acquired). Other expenses include insurance, rates, utility bills, wear and tear of fixtures and equipment, wear and tear of shelves, wear and tear of refrigerators, repairs and maintenance costs, cleaning and security costs, depreciation of other building equipment, and waste disposal costs.

2. Direct labor costs (fixed)

The company spends direct labor costs to pay warehouse workers directly involved in running the warehouse. These costs include wages, additional expenses, employee insurance, safety clothing (PPE), taking care of the workers’ well-being, and providing training.

3. Indirect labor costs (fixed)

Indirect labor costs (fixed) are the company’s warehouse management expenses, including supervisors and administrators. These costs include wages (with additional fees), insurance, safety clothing (PPE), employee well-being, and training.

4. Labor costs (variable)

Labor costs consist of direct and indirect labor expenses and variable labor costs. Variable labor costs encompass additional fees such as overtime payments and bonuses provided to workers.

5. Equipment fees (fixed)

The company uses various equipment in the warehouse. Every year, the equipment depreciates. Moreover, the company doesn’t own all the equipment in the warehouse; some of it is leased. As a result, the company incurs fixed costs for the equipment, such as depreciation, borrowing, or rental fees.

6. Equipment fees (variable)

Equipment costs in the warehouse vary based on the usage of equipment. These costs cover fuel, tires, lubricants, and packaging materials such as pallets and stretch wrap. The total equipment cost includes some of these expenses.

7. Overhead costs (management, finance, HR, IT, & administration)

The overhead costs of management, finance, HR, IT, and other divisions include different expenses. These expenses cover salaries, extra costs, and benefits like cell phones and accommodation. They also encompass expenses for company cars, operations, and the depreciation, rent, or lease of office equipment and furniture. Furthermore, they include costs for information technology hardware and software.

8. Overhead costs (sales and marketing)

Sales and marketing overhead costs consist of various expenses. These include salaries, surcharges, and in-kind benefits like mobile phones and accommodation. Additionally, company cars and their operational costs are part of these expenses. Moreover, marketing spending, which encompasses advertising, exhibitions, and brochures, is also included.

9. Other costs

The warehouse has different costs, including expenses for communication, shipping, banking, interest, funding, insurance, and legal and professional services.

In addition to wages and salaries, the total labor costs include contributions made by the employer for things like national insurance and pensions on behalf of employees. It also covers other expenses like sick leave, maternity, training, recruitment, and other non-monetary benefits.

Costing systems for warehouses

Most companies don’t know how much they should spend on warehouses. The people in charge of operations know how much money is going toward warehouses. They might realize they need to spend less. Every year, companies worldwide spend about €300 billion on their warehouse operations, and that number keeps increasing.

The reason warehouses cost so much is that most companies don’t have a clear way of figuring out how much they should spend. If a company doesn’t know the right amount to invest in warehouses, any attempts to reduce costs and improve efficiency will likely fail.

Over the past ten years, McKinsey’s research has shown that many companies are spending way more than they should. To deal with this problem, companies need to use the correct method to calculate their warehouse costs.

Two types of costing systems matter for warehouses: traditional costing methods and activity-based costing. Below is an explanation for each way:

Traditional costing system

Traditional costing systems determine costs for generating profits by allocating indirect production costs. These systems calculate predefined overhead rates and apply them to specific metrics.

In these systems, we estimate overhead rates for specific cost drivers. Let’s consider Customer A as an example. Customer A uses many man-hours and warehouse space but requires low management time. In traditional costing, allocating overhead costs may result in penalties for Customer A.

With the rise in products and complicated services, using a single overhead rate is no longer enough. Cutting down on labor or equipment doesn’t bring down overhead costs. So, when the volume decreases, the percentage of overhead expenses concerning direct costs increases.

Predicted volume or utilization forms the basis of overhead rates. When utilization decreases, companies need to increase the percentage of overhead allocation. Consequently, traditional costing methods have a few drawbacks. That’s why many companies are making a switch to alternative costing methods.

Activity-Based Costing (ABC)

Activity-Based Costing (ABC) is a method that helps identify the specific overhead operations associated with manufacturing each product. Instead of applying the exact overhead costs to all products, ABC recognizes that not all products need the same support from overhead costs.

Accountants created the ABC method to solve the inaccuracies arising from traditional costing approaches. Managers need a more accurate cost method to determine which profits are genuinely profitable and which ones are not.

ABC costing increases the number of indirect cost pools companies can assign to specific products, distinguishing it from traditional costing. In the conventional method, total firm overhead costs are universally collected and distributed to all products.

To introduce the ABC model, you must thoroughly understand the company, its operations, and the roles of each staff member. You can achieve this by observing procedures for a time and noting each activity’s duration.

Regarding warehouses, the following table provides an example of the ABC model. Companies can calculate the pallet space occupied and allocate the labor and MHE (Material Handling Equipment) hours to each customer. The company also distributes management time in hours per customer. It assigns other overhead costs, such as postage, legal fees, and insurance, based on a percentage.

After performing all the calculations, the company can also determine the unused capacity in the warehouse. However, using ABC has its disadvantages. It requires significant work, and collecting accurate data can be challenging. Implementing ABC takes time and necessitates a cost-benefit analysis to assess the time invested and the benefits obtained.

Comparison of traditional and ABC systems

To make it easier to understand the distinctions between traditional and ABC costing systems, take a look at the table below for a straightforward comparison:

Comparison Aspect	Traditional System	Activity-Based Costing (ABC)
Calculation	Uses predetermined rates for costs and applies them evenly to all products.	Allocates costs more accurately among products, including non-manufacturing expenses.
Time	Faster, involves fewer variables.	Slower and more complex, requires input from multiple departments.
Accuracy	Less accurate, uses limited information.	More accurate, provides detailed information.
Cost	Cheaper, the process is simple.	Tends to be more expensive due to specific software requirements.

Tips for reducing warehouse cost

Cutting down on warehousing expenses is crucial for businesses to improve their operations. Here are some straightforward tips to help you lower your warehousing costs:

Reduce excess inventory

Companies must grasp customer demand accurately and make products based on actual orders rather than relying on estimates. This approach is called a pull system, where the company only produces goods when customers place orders. By following this method, companies can reduce the risk of too much inventory.

Increase inventory flow

To make inventory flow better, giving each item in the warehouse a designated spot is essential. It will make it easier to move stocks around when needed. For example, put the items you ship most often closest to the shipping dock.

Evaluate current warehouse space

To make your warehouse more efficient, check if you need all the items. If there are things you don’t use, take them out to save space. Smaller and more flexible items can also make accessing everything in the warehouse easier. Try using shelves and layouts that fit well and help you maximize the available space.

Lower operational costs

The warehouse’s operational costs include electricity, fuel, and transportation expenses. To lower these costs, you can take a few steps:

• Select efficient delivery routes to save energy and time.
• Use vehicles that are fuel-efficient for warehouse operations.
• Monitor the procurement process for goods and plan warehouse schedules effectively to prevent electricity wastage.

Read more: 7 Warehouse Picking Methods: How to Choose the Right One

Summary

Warehouse managers need to understand the costs associated with their warehouse operations entirely. This understanding is essential for the company’s budget and accurately allocating costs to products and charging fees for services provided in third-party relationships.

Consider using an ERP system to simplify and streamline the company’s business processes. Impact ERP includes a warehouse module that can help reduce waste and make the warehouse picking process more efficient. In addition to the warehouse module, it offers other modules such as inventory management, accounting, sales, and human capital management (HCM).

References

Richard G. 2011. Warehouse Management. Great Britain: Kogan Page Limited.

In a warehouse, you can handle goods by hand or with machines. When you take goods manually, you use tools and equipment to lift heavy loads to or from the warehouse.

Modern warehouses have Material Handling Equipment (MHE) that includes various types of machinery. MHE helps you carry out tasks safely and efficiently, so you don’t have to rely on manual labor as much.

This article will give you a better understanding of warehouse storage systems and their handling equipment. It will explain MHE, discuss different types, and highlight the advantages and disadvantages.

What is Material Handling Equipment (MHE)?

Material Handling Equipment (MHE) comprises many tools, vehicles, storage units, equipment, and accessories. MHE actively transports, stores, controls, and protects products at every stage of manufacturing, consumption, distribution, or disposal.

There are four main types of MHE. They are storage and handling equipment, engineered systems, industrial trucks, and bulk material handling. However, this article will focus on the first type, storage, and handling equipment.

Read more: Understanding Warehouses: Definition and its Importance

A. Storage equipment

Stockpile systems usually involve grouping non-automated setups with engineered systems. These systems actively use storage equipment to accommodate or support materials during downtime or when the materials are not in transport.

This timeframe can also refer to temporary pauses during long-term transportation or storage, allowing stock to accumulate. The most common storage equipment includes pallets, racks, or shelves where materials can be neatly stacked, ready for transportation or consumption.

Many companies have explored ways to improve storage efficiency by designing packaging that enables materials or products of a specific type to occupy less space while in stock.

3 types of warehouse storage systems

In warehouses, there are different tools for storage. Each device has its advantages and roles. Companies must consider trade-offs between speed, cost, and capacity for storage systems. 

The more storage an operation needs, the denser pallet storage is required. The choice of storage also depends on the building layout, the type of material handling equipment (MHE) in use, and the budget available.

Two popular storage tools in warehouses are pallet racks and stacking. Now, let’s take a closer look at warehouse storage systems.

Block stacking

In situations where warehouse heights are low, budgets are tight, and products and packaging are robust, block stacking is the most common method for storing large quantities of single SKU products.

Block-stacking is a method where we put each item on the floor and stack them up to a safe height based on how heavy and stable the stack is. It works well for products you can’t store on pallet racks and are difficult to stack.

This method allows us to store products such as washing machines, refrigerators, cans, and bottles. It provides a cost-effective solution for robust products that have a high number of units per SKU. Additionally, we can utilize tools like pallet collars and converters to minimize the potential damage to the bottom pallet.

However, block-stacking also has its downsides. It can be tough to reach the goods, and there’s a greater chance of damage. Managing inventory without following the last in, first out (LIFO) method can be tricky, especially when optimizing limited space.

Racked storage

People often use shelving systems to store fragile, high-maintenance items requiring extra attention. This system is pricier than stacking, but it offers improved accessibility.

The terms adjustable pallet rack and wide aisle rack are interchangeable. Moreover, there are various shelving systems, each with pros and cons. Here are eight common types of racked storage found in warehouses:

1. Wide-aisle pallet racking

Warehouses around the world commonly use this type of rack. It is highly versatile and doesn’t require any special equipment for handling. You can easily adjust the beam height to meet your needs.

With this rack, you can quickly and easily access each pallet. It is simple to install and move. However, there is a downside to consider. The forklift truck needs a broader aisle to turn around quickly.

2. Double-deep racking

Double pallet racking allows for storing pallets at two different depths. This system requires special equipment, like extendable forks and wider aisles. However, it’s important to note that this configuration slows down the access speed.

On the other hand, the double-deep configuration, which reduces the number of access aisles, offers a highly efficient storage system by utilizing the saved space to accommodate additional shelving.

3. Narrow-aisle racking

This rack uses APR and can store more pallets by narrowing the aisle width to around 1.6 meters. You need narrow aisles or tower trucks to store and access pallets in this rack.

When setting up narrow aisle racking, it is crucial to ensure a flat floor, particularly for heights exceeding 10 meters. During construction, we use lasers to guarantee a perfectly level floor.

4. Drive-in/drive-through racking

Drive-in and drive-through racking systems improve safety and efficiency by preventing the stacking of fragile or unstable loads. The L-shaped rail in each upright drive-through rack accommodates pallet placement and allows forklift trucks to maneuver easily.

Drive-in racking eliminates the need for aisles, allowing for maximum utilization of floor space. The amount of space used depends on the lifting capacity of the forklift truck.

It’s important to note that drive-in racking does not support First In, First Out (FIFO) systems. These racks are ideal for storing large quantities of single SKUs in a high-density manner.

However, there are some disadvantages to consider. This storage method has a higher risk of damaging both the products and the shelves. In addition, the loading and unloading rates are relatively low. Since there is no room for picking individual cartons from the ground floor, this storage relies mainly on handling full pallets in the central area.

5. Pallet-flow racking

Gravity drives the operation of pallet-flow racking. It is suitable for rapidly moving products that require rotation in the order of their arrival. Here’s how it works: You load the pallets at the top of the slanted track and automatically move down using skate wheels when you remove them from the picking area.

With a single block roller conveyor rack, you only need two aisles for loading and picking. This setup allows for quick processing times. Plus, you can best use your warehouse space by storing the pallets in a sequence with fewer aisles.

However, there are a couple of downsides to consider. First, you may be unable to utilize the available space efficiently in terms of volume. Second, different products require different angles of inclination based on their weight.

6. Push-back racking

The push-back system actively positions pallet loads on carts that move forward along sturdy steel rails due to gravity. When an operator loads a pallet from the front, it pushes it behind its back in one position. During unloading, the system releases the front pallet, and the rear pallet automatically moves to the front picking position. This active process facilitates easy inventory management in a last-in, first-out (LIFO) manner.

Operators can store products from two to five pallets deep using the push-back system. They can load pallets from the front using just one aisle. This system offers flexible storage because each lane works independently. Additionally, the vertical storage operates separately from the routes below, allowing for efficient use of space.

7. Mobile racking

In compact warehouses with limited floor space, shelving units can be mounted on rollers to enable easy movement. Only one access passage is needed, and the operator can create an entry by moving the unit. However, this approach slows down the process of picking up goods to save floor space.

8. Satellite/shuttle racking

Satellite systems work like drive-in racking, but they use shuttles placed at the front of the rack. The remote control system operates the shuttles utilizing a radio frequency (RF) battery-operated control system and dedicated channels.

This storage system can handle pallets in racks up to 40 meters long. The shuttles have sensors built-in to detect where the pallet was before. Then, they place the new load at a set distance and return to the starting point.

Forklift trucks can quickly move shuttles between lanes. One forklift truck can control several shuttles. By not needing to drive into the rack, the system reduces the risk of damage.

The system automates the placement of pallets on the storage lines, making the loading and unloading times faster. Satellite racks also make good use of the space above the building.

 Other storage media

• Cantilever racking: Perfect for storing long or heavy items like pipes, lumber, carpets, or furniture.
• Mezzanine floors/raised storage area: Building a mezzanine floor is a cost-effective option if the shed is tall enough. You can create extra storage space with great flexibility, allowing you to utilize it for value-added services or long-term storage. Typical applications include inbound and outbound areas.

Read more: 7 Tips for Selecting the Ideal WMS

B. Warehouse handling tools

Manufacturers encounter various challenges due to a culture of round-the-clock operations and an aging workforce. These challenges demand higher accuracy, shorter lead times, and lower costs. As a response, manufacturers have developed handling systems that require minimal manual input and increased throughput.

To overcome these challenges, companies can achieve the following advantages by selecting the right equipment:

• Cut down on material handling unit costs.
• Reduce the time spent on handling.
• Save floor space.
• Protect staff from injuries.
• Decrease energy consumption.

4 types of warehouse handling tools

In a warehouse, different actions happen when storing, picking, or moving goods. Each activity needs a specific tool to handle it. Here are some simple steps in the warehouse and the tools used for them.

1. Equipment for horizontal movement

Here are some examples of equipment that can handle horizontal movements in warehouses:

• Hand Pallet Truck (HPT): The operator can use this truck to lift and move pallets across the warehouse floor. It’s cost-effective for short distances and moving pallets in racks or behind trailers.
• Powered Pallet Truck (PPT): This truck runs on batteries and performs tasks such as loading, unloading, packing, and moving pallets between receiving and shipping areas. Depending on your pallet-moving needs in quantity per hour and distance within the warehouse, you can select from a pedestrian, stand-on, or seated version.
• Automated Guided Vehicles (AGV): AGVs are becoming more popular as companies deal with a shortage of skilled workers, high labor costs, and the need for round-the-clock operations. A recent innovation is a laser-guided truck, which improves warehouse productivity and efficiency. Remember that these trucks can be expensive and require a dedicated floor area.
• Tractor crane/tugboat: A tractor crane or tugboat is the right choice when moving multiple pallets over long distances in the warehouse. Load the pallets onto trailers, connect them, and tow them to the desired location.

2. Equipment for vertical and horizontal movement

You need to lift pallets, or unit loads into position to make the most of a building’s space. Here are six common types of forklift trucks that can help:

• Pallet stacker: These trucks can move pallets around the warehouse and lift them to 5 meters. They come in versions that you can walk behind, ride, stand on, or sit on.

• Counter-balance trucks (CBT): These are the most commonly used trucks in warehouses. They are fast, flexible, and versatile. The main drawback is that they must approach pallets at a 90° angle to stack or retrieve them. The truck’s turning circle determines the minimum width of the aisle.
• Reach trucks: These trucks are perfect for narrow aisles. They carry the load within their wheelbase and can operate in passages as little as 2.7 meters. They can lift loads to 12 meters high and work in single and multiple environments.
• Man-up order pickers: Use these trucks when many products can’t fit on the ground floor alone. They allow you to pick items from elevated locations. It can be a slow process, but sometimes it’s necessary when you have thousands of different products and can’t automate the process.
• Narrow aisle/turret trucks: These trucks operate in aisles narrower than their width. The standard width is about 1.6 meters. By using narrower aisles, you can increase storage capacity by about 33 percent. However, there are downsides, such as the need for gang transfers, security concerns, and longer operating times.
• Articulated forklift trucks (flexi, bendi, aisle master): These trucks require more extended training than other types, and the driver’s skills can affect storage and retrieval times. Experts recommend having aisles at least two meters wide to achieve higher productivity. Articulated trucks eliminate the need for costly and inefficient setups.

3. Automated storage and retrieval systems (AS/RS)

In an automated storage and retrieval system (AS/RS), a fixed-track crane actively collects pallets from the front of the racking system and transports them to an empty location in the rack. This method boosts productivity by storing full pallets at the front of the aisle before retrieving another pallet.

The crane moves horizontally and vertically simultaneously, reducing the time it takes to lift and place the pallets. Usually, the crane remains in one aisle. However, haul trucks can actively move the cranes from one aisle to another if there is a high need for storage and low throughput.

4. Special equipment

Specific warehouse units require special handling equipment since they cannot be moved or lifted using standard pallets. Here are some examples of additional equipment used in these operations and for such products:

• Extended forks: We use these to extract items from multiple racks.
• Crane attachment: This equipment helps us lift heavy bags and objects.
• Attachment boom: We use it to lift loads with a central coil, like tires or carpets.
• Drum handles and clamps: These tools move drums and barrels.
• Loading clamp: It helps us move or tilt goods.
• Carton clamp: We use this to lift or move bulky boxes or white goods.
• Double pallet handlers: With these, we can move two pallets simultaneously.
• Slip sheet attachments: These attachments have a load push/pull mechanism that allows us to transfer products from a slip sheet to a pallet.

Summary

To select the right equipment and storage, focus on the characteristics of your products, warehouse size, environment, product speed, and budget. There are different storage types like collections and racks and handling equipment such as forklift trucks.

Using storage and handling tools helps companies improve productivity and efficiency in warehouse activities.

You can also automate all company processes by using an ERP system. ERP Impact includes a WMS module that reduces waste and streamlines the picking process. It also has modules like inventory, accounting, sales, and HCM.

References

Richard G. 2011. Warehouse Management. Great Britain: Kogan Page Limited.