Kaizen is a Japanese word that literally translates to “continuous improvement.” Any type of organizational process can benefit from the Kaizen approach which looks at standardized and systemized processes in a phased manner. By doing so, it identifies processes that need improvement and their implications, planning improvement steps, executing improvements, and finally reviewing their progress.

During peak season, many third-party logistics (3PL) warehouses have to look critically at their businesses and make lean performance improvements. With volumes significantly exceeding prior years, Kaizen in warehouses need to measure and act on key performance indicators (KPIs) to identify areas to drive efficiency. This can seem daunting for some, but establishing key baseline indicators allows you to identify low hanging fruit to optimize your business.

Identify the KPIs that you can track

Part of the Kaizen event is to standard work through a phased approach. Any Google search can tell a warehouse to start tracking kaizen for warehouse improving productivity by the user, track volume movement in the warehouse operations, or even look at the profit and loss (P&L) for any section of the warehouse. The common issue with these metrics is that they are not always tangible or easy to measure without a robust business intelligence tool or without a warehouse management system (WMS) in place. For warehouses that do not have tools set up to automatically track and measure more complex metrics, standard KPI tracking can be more insightful than you may think. Here are some examples.




Potential Bottlenecks

Tips to Improve

On-Time Shipping Rate


Total # of Units on time /Total Number of Units Shipped

Inefficient Pick processes or Pick and Pack practices with too many labor redundancies

Implement a Batch pick process

Process orders, generate shipping labels, and rate shop within one application

Pick Speed Pick Complete (Time Stamp) - Pick Start (Time stamp)

Paper based process

Warehouse layout/pick line route inefficiencies

Setup Pick bins with unique items

Implement Pick to Bin processes to pick more with each warehouse pass

Order Accuracy 100 - (total mispicks/ total orders) No barcode scanning

Implement mobile scanning, like SmartScan, to automate accuracy checks

Implement pack stations to scan verify items through pack out

Receiving Efficiency The time between inventory receipt & Inventory available for orders

No systemized put away process

Improper utilization of floor Space/layout best practices

Implement a Dock-to-Stock process utilizing a put away/ or automatic location suggestion
Return Rate (Units returned / Units Sold) * 100 Pack accuracy
Damaged inventory

Implement QA on inbound and at pack stations, depending on commodity

Implement Hold/Quarantine locations in the warehouse for damaged inventory management

Align with your customers on return policies


The Amazon Effect has further raised expectations of on-time delivery, seamless return processing, and service quality. Recognizing the 5-10 key metrics to measure will drive business focus and help clearly find the areas with the biggest opportunities for improvement. In our industry today, most efficiencies are gained from insights and automation, so reviewing outdated or paper-based processes and considering smart investments in scalable technology can prove meaningful for growth-minded warehouse businesses.

The best part about the Kaizen aims is that it continues beyond your initial improvements. As a business’s needs grow, there are new areas for improvement and new solutions that need to be identified. Sometimes coming up with the solutions can be daunting, but thought leaders in your networks, as well as your WMS and technology partners can serve as advocates for you by sharing best practices and helping your business succeed.

To learn more about key KPIs to track during Peak Season, join the upcoming webinar. Or Demo the Most Trusted WMS by 3PLs to speak to an expert.

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