Track These KPIs for Delivery Excellence
May 21st, 2020 4 Min Read
All logistics managers spend hours tracking, visualizing, and optimizing their processes to make them efficient in every stage. Service delivery and operational excellence, after all, are key determinants of a successful logistics business. But executives and managers must keep track of the correct logistics key performance indicators or KPI or metrics. Below is the delivery excellence KPIs to track for logistics businesses to serve their customers even better.
Businesses must strive to achieve on-time shipping, which pertains to the ratio of orders that have been shipped on or before the expected ship date, divided by the overall number of requests. Shipping time is the first logistics metric that organizations must measure to evaluate their supply chain performance. A long time in between the time the customer ordered and the moment when the order is prepared could be an indication of an inefficient logistics process.
Accuracy of Orders
A Perfect Order Rate is another essential logistics KPI. It measures the number of orders that were processed, shipped, and delivered without problems. This means that the delivery and shipping time is well within the target, and the orders sent out is correct, without any damage or prolonged delay.
Businesses must strive to achieve a higher Perfect Order Rate as this metric directly impacts overall customer satisfaction.
Enterprises must always track the time needed for orders to be prepared correctly until they reach their end destination, or what is referred to as Average Delivery Time. This is measured by tracking the time it takes from the moment a customer placed the order until the moment it is delivered.
After benchmarking the Average Delivery Time, businesses must then work on decreasing this number. For example, if the benchmarked average time is four to five business days, then, organizations must aim to minimize the time to one to five business days.
The Average Transportation cost is another essential KPI. It is the sum of all the costs involved in the entire method, from the processing of an order through delivery completion. The average transportation costs should show the expenses involved for various categories such as administrative, order processing, inventory carrying and storage or warehousing, and the actual transportation expenses. Executives should make it a goal to decrease the average transportation costs without sacrificing high-quality order delivery.
Warehousing expenses pertain to the funds spent on having the goods moved both inside or outside of the warehouse. The costs include:
- Equipment & Repairs
- Energy Use e.g., storing, ordering and the loading of goods
- Labor & Employment related expenses
Businesses need to measure and evaluate warehousing costs regularly so they can improve their operations by eliminating inefficiencies in warehouse operations, wherever possible.
Number of Shipments
Evaluating the number of orders being shipped out of the warehouse is another KPI to track. Businesses should remember that shipping isn’t purely about dispatching goods and packages in delivery vehicles but also involves the quality and preciseness of order fulfillment, which demonstrates an organization’s service quality. Measuring the number of orders being shipped out of the warehouse will provide valuable insights during the rush seasons, thus allowing the business to allocate resources adequately.
Accuracy of Inventory
Experts say inventory accuracy can make or break the warehouse as inconsistencies between the actual physical inventory and the databases can hobble business efficiency. An inaccurate inventory often results in unexpected backorders, and eventually, lower customer satisfaction. A business should regularly check their physical inventories against their electronic records to avoid inventory shortages and logistical nightmares.
This key metric measures the number of times the inventory is sold over a particular time period. It indicates the efficiency in the production planning process and sales and marketing programs. Executives must aim for a higher turn over as the opposite can result in difficulties in converting stocks into revenues, or being stuck with the unwanted product. There is no single number or rate to indicate a healthy inventory turnover since it varies per industry. For example, a car dealership generally has a lower turnover than an appliance store. The best practice is to use the average rate of each particular industry as a benchmark.
Inventory to Sales Ratio
This KPI measures the inventory business carry vis-a-vis the number of units sold. It is a good measure of evaluating the overstock of the business. The inventory turnover and the inventory to sales ratios will provide helpful insights into a business’s financial stability along with another metric. The KPI also helps in deciding whether to sell the inventory as soon as possible or wait on the market to decide.
Effective inventory management will have an enduring positive effect on a business’s reputation, overall operating efficiency, and financial health. These KPIs eliminate uncertainties in the processes as they help in forecasting with realistic benchmarks. All said, measuring the right metrics correctly will provide useful data and valuable insights that can drive superior decision making, thus propelling the business into greater heights.
DispatchTrack is a leading provider of SaaS solutions that enable end-to-end optimization of operations and customer experiences in last-mile delivery. The company’s platform includes modular tools for self-scheduling, route optimization, customer communication, real-time tracking and ETA, proof of delivery, and delivery network intelligence and analytics. With customers across North America, Europe, South America, and Asia, DispatchTrack is used by thousands of businesses of all sizes and many multi-billion-dollar enterprises across a wide range of industries, including furniture, appliances, building supplies, food, and beverage. More than 60 million scheduled delivery experiences are powered by DispatchTrack each year. For more information, visit www.dispatchtrack.comKeep Reading: 30 minute break rule the straight story →