Material Handling Damage

Material Handling Damage

KPI Details

Material Handling Damage measures the quality and diligence of the company's materials management processes. High values for this KPI may suggest ineffective product packaging, a high number of touchpoints for materials, improper use of packaging or transporting equipment, etc. A high value for this KPI will not only be costly to the company in terms of damaged raw materials (that will need to be replaced), but a high rate of material damage can slow down cycle times for manufacturing and deliveries and increase the rate of backorders and stock-outs.

KPI Definition

The total value of goods and materials damaged from handling or storage divided by the total cost of goods sold (COGS) over the same period of time, as a percentage.

KPI Best Practices

• Train employees on proper storage and handling practices to minimize damaged inventory
• High inventory location accuracy to avoid materials being placed in vulnerable locations
• Put way supplier shipments as soon as they are received to minimize susceptibility to handling damage

KPI Calculation Instructions Material Handling Damage?

Two values are used to calculate this KPI: (1) the total dollar value of goods and materials that are damaged, and (2) the total COGS during the same measurement period. Damaged goods or materials should be defined as those that cannot be sold or used as a component due to defects in the good/material. COGS includes the cost of the materials used in creating the good along with the direct labor costs used to produce the good.

KPI Formula :

(Dollar Value of Damaged Goods and Materials / Total COGS) * 100