Critical Logistics Metrics Manufacturers and Distributors Should Track

Logistics is a crucial manufacturing and distribution industry aspect that can make or break a company's success. Therefore, measuring logistics metrics is essential to ensure operations run efficiently and effectively.

In this blog post, we will discuss critical logistics metrics for manufacturers and distributors, including order management metrics, supply management metrics, inventory management metrics, distribution management metrics, and transport management metrics.

Order Management Metrics

Shipping time is when an order is placed and when it's delivered to the customer. This metric is essential because customers expect timely delivery, and a delay can impact customer satisfaction.

Order accuracy: the percentage of orders that are fulfilled correctly. A high order accuracy rate is critical because errors can lead to customer dissatisfaction and increased costs.

Perfect order: the percentage of orders that are delivered with no issues. This includes factors like delivery time, accuracy, and completeness. A high ideal order rate is essential for customer satisfaction.

On-time in-full: the percentage of orders delivered on time and in full. A high on-time in-full rate is critical because it indicates that operations are running efficiently and that customers are receiving their orders as expected.

The number of shipments: the total number of shipments made during a particular period. This metric is important because it helps measure the volume of orders and the capacity to fulfill them.

Supply Management Metrics

Lead time: the time it takes to receive an order once it's placed. This metric is essential because it helps to measure the speed of the supply chain process and to identify any bottlenecks.

Capacity utilization: the percentage of capacity used in production or distribution. This metric is important because it helps identify unused capacity and optimize operations.

Productivity: the amount of output produced for a given input. This metric is important because it helps to identify areas where productivity can be improved.

Inventory Management Metrics

Customer backorder rate: the percentage of orders that cannot be fulfilled due to a lack of inventory. This metric is essential because it helps to identify any inventory shortages and to optimize inventory levels.

Inventory accuracy: the percentage of inventory that is accurate and up-to-date. This metric is important because it helps identify discrepancies in inventory levels and improve inventory management.

Inventory turnover: the number of times inventory is sold and replaced during a particular period. This metric is important because it helps to identify slow-moving inventory and to optimize inventory levels.

Distribution Management Metrics

Trailer utilization rate: the percentage of trailer space utilized during transportation. This metric is essential because it helps to optimize transportation capacity and reduce transportation costs.

Warehousing costs measure the cost of storing and handling inventory. This metric is important because it helps identify unnecessary costs and optimize warehouse operations.

Average dwell time measures the average time shipments spend in the warehouse. This metric is important because it helps to identify any bottlenecks in warehouse operations and to optimize warehouse processes.

Transport Management Metrics

Delivery Time: How long it takes for a shipment to be delivered from the warehouse to the customer. This metric can help you evaluate the effectiveness of your shipping process and identify opportunities to reduce shipping times.

Average Days Late: The average number of days that shipments are late. This metric can help you identify areas for improvement in your shipping process and improve customer satisfaction.

Truck Turning: The time it takes for a truck to turn around and return to the warehouse after delivering a shipment. This metric can help you optimize your shipping routes and reduce transportation costs.

Freight Payment Accuracy: The percentage of freight bills paid accurately and on time. This metric can help you manage your transportation costs and ensure you pay the correct amount for shipping services.

Transportation Costs: The total cost of all expenses related to transportation, such as fuel, labor, maintenance, insurance, taxes, and fees. By monitoring transportation costs, businesses can identify areas where they can reduce expenses, improve processes, and increase profitability.

Logistics metrics can be incredibly valuable for manufacturers and distributors. By analyzing key performance indicators such as inventory accuracy, delivery times, and transportation costs, businesses can identify areas for improvement and optimize their supply chain operations. With the right logistics metrics, companies can reduce costs, improve customer satisfaction, and ultimately gain a competitive edge in the marketplace. Therefore, manufacturers and distributors must incorporate logistics metrics into their business strategies to ensure long-term success and profitability.