Distribution Center Expense as a Percentage of Revenue
Metric Details & Benchmarking Report Download
KPI Benchmarks : Distribution Center Expense as a Percentage of Revenue
- Benchmark Range
- Benchmark Average
- Benchmark Sample Size (n) 32
* Is High or Low Best: Lower is Better
Distribution Center Expense as a Percentage of Revenue
KPI Details
Distribution Center Expense as a Percentage of Revenue measures the expense incurred by a company's distribution center in relation to the total dollar amount of revenue generated by the company over the same period of time. High values for this metric can be indicative of highly manual (i.e., error and rework prone) distribution processes and procedures (e.g., receiving, picking, packaging, warehousing, sorting and inventory control processes that are almost entirely managed through manual labor), overstaffing, general inefficiencies within distribution processes (e.g., inaccurate demand forecasting methods, inefficient customer order documentation, poor inventory management, etc.), and sub-par distribution employee training and performance. While companies typically seek to streamline operations and employee positions to reduce expenses in the Distribution Center, great care should be taken when doing so as too many layoffs can have a negative impact on company morale and make it difficult to provide timely distribution services.
KPI Definition
The expense incurred by a company's distribution center (e.g., expense focused on receiving shipments, warehousing, sorting, inventory control, picking, etc.) divided by the total dollar amount of revenue generated by the company over the same period of time, as a percentage.
KPI Best Practices
- Reduce stocking levels where possible to minimize inventory carrying costs
- Update inventory forecasts regularly to avoid overstocking
- Conduct cycle counts regularly to reduce shrinkage and improve inventory accuracy
KPI Calculation Instructions Distribution Center Expense as a Percentage of Revenue?
Two values are used to calculate this KPI: (1) the expense incurred by a company’s distribution center (e.g., expense focused on receiving shipments, warehousing, sorting, inventory control, picking, etc.), and (2) the total dollar amount of revenue generated by the company over the same period of time. Include labor (wages, salaries, commissions, benefits), overhead (occupancy, utilities, supplies, advertising, legal fees, travel costs, etc.), and technology (hardware, software, etc.) costs in the numerator.
KPI Formula :
(Distribution Center Expense Incurred / Total Company-Wide Revenue Generated) * 100
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