Overall Warehouse Effectiveness (OWE): A New Integrated Performance Indicator for Warehouse Operations

Background: Warehouses play a vital role in logistics systems, not only for storing goods but also for providing value-added services. To improve warehouse productivity and reduce costs, it is essential to measure their performance and identify inefficiencies. Method: This paper introduces a new aggregated key performance indicator (KPI), called Overall Warehouse Effectiveness (OWE), to evaluate the efficiency effectiveness of the physical structure of a warehouse. OWE utilizes the concepts of Availability, Performance and Quality, similar to the Overall Equipment Effectiveness (OEE) metric used in manufacturing. Results: The proposed indicator is then applied to a case study to demonstrate its use and provide theoretical and practical implications. Conclusions: In terms of theoretical implications, the proposed metric fills a gap in the literature by providing an aggregated indicator specifically designed for storage systems. For practitioners, OWE enables the identification of efficiency waste, customer service faults and adequacy of inventory management policies.