How can you track logistics performance with KPIs?

1 What are KPIs and why are they important?

KPIs are measurable values that indicate how well a process, activity, or outcome is performing in relation to a predefined objective or standard. They help you to monitor and evaluate the progress and results of your logistics operations, identify strengths and weaknesses, and implement corrective actions and improvements. KPIs are important because they provide you with data-driven insights and feedback, enable you to align your logistics strategy with your business goals, and demonstrate your value and impact to your stakeholders and customers.

3 What are some common and useful KPIs for logistics?

KPIs are a great way to measure and track your logistics performance, depending on your objectives and challenges. Some of the most common and useful KPIs for logistics are the on-time delivery rate, order fill rate, inventory turnover rate, inventory accuracy rate, and logistics cost per unit. The on-time delivery rate measures the percentage of orders or shipments delivered within the agreed or expected time frame, indicating how reliable and consistent your service is. The order fill rate measures the percentage of orders or items fulfilled from available inventory without any backorders or delays, showing how well you manage your inventory levels. The inventory turnover rate measures how often you sell and replace your inventory within a given period, indicating how efficiently you use your assets. The inventory accuracy rate measures the percentage of inventory records that match the actual physical inventory, showing how accurate and reliable your data and systems are. Lastly, the logistics cost per unit measures the total cost of activities divided by units shipped or sold, demonstrating how cost-effective and profitable your operations are.

4 How to set realistic and relevant targets and benchmarks for your KPIs?

Setting targets and benchmarks for your KPIs is essential to evaluate your logistics performance and compare it with your desired or expected outcomes. You need to make sure that the targets and benchmarks are realistic and relevant, meaning they are achievable and appropriate for your business and industry. To do this, you can use historical data and trends to establish a baseline and range of variation for your KPIs. You can also use external data to benchmark your KPIs against competitors or industry standards, based on your market position and environment. Additionally, you should use the SMART criteria to define your targets and benchmarks, which should be specific, measurable, achievable, relevant, and time-bound. Finally, you can gather feedback from stakeholders and customers to align your targets and benchmarks with their needs, expectations, and satisfaction.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?