The Danger of Blended Metrics
I hate averages. An average is a liar. If I stand with one foot in a bucket of ice and one foot in a fire, on average, I am comfortable. In reality, I am in agony.
The same applies to warehouse metrics. I see so many businesses using "Blended Cost Per Order." They take their entire company expenditure—rent, CEO salary, marketing budget, warehouse wages—and divide it by orders.
Why This is Useless
This number tells you nothing about operational efficiency. If your rent goes up, your "efficiency" looks worse. Did the packers get slower? No. Your landlord just bought a new boat.
If you hire a new Marketing Director, your "Cost Per Order" goes up. Why should the warehouse manager be penalised for that?
Separate the Variables
You must separate Direct Operational Costs (the variable costs of doing the work) from Fixed Overheads.
Your warehouse manager controls the Direct Operational Cost. Hold them accountable for that. Your CEO controls the Overheads. Hold them accountable for that.
When you blend them, you give everyone an excuse. "Oh, costs are up because of the rent hike." Maybe. Or maybe costs are up because we've stopped caring about packing efficiency. Blended metrics let inefficiency hide in the shadows.