Key Performance Indicators in Supply Chain & Logistics

What about the power of the KPI’s of the Supply Chain to improve corporate performance? A lot of people get confused about KPIs or Key Performance Indicators in Logistics and Supply Chain operations. Which one should we use? How many to use? Here’s a quick scan of different KPI’s logistics companies use to boost their productivity and growth.

*Article initially published on Medium.com 24/10/2019

The backbone of any business, the supply chain, needs effective KPI’s. While Key Performance Indicators (KPIs) may be reviewed monthly or weekly, the speed with which supply chain operations occur makes a daily view of more tactical and operational metrics necessary. Every company runs on data nowadays so the choice of the right metrics is key!

What Are Supply Chain Metrics?

Supply chain metrics are defined by establishing specific parameters that are used in quantifying the performance of the supply chain. A company can spot inefficiency within its ecosystem by collecting, curating, and analyzing key supply chain metrics.

Supply Chain Indicators that matter

Most businesses fall into one of three operational types that are grouped by a focus on customers, products, or operational excellence.

1. Service excellence

These companies have as a primary focus: the customer experience.

There has never been such a big focus on service delivery. This due to the customer-oriented world. Companies such as Amazon, Coolblue and Bol.com created such a great competitive advantage thanks to their loyalty and their delivery and return policies. Their supply chains are flexible and responsive to the needs of the customer.

Top 5 KPIs for Service excellence companies:

  • Call volume and queue
  • First contact resolutions
  • Item fill rate
  • Perfect order
  • Delivered full / on time

2. Product excellence

Typical product-oriented companies like Apple and other technology leaders are generally focused on commodity goods. Delivering the best value at a minimal cost, that’s the spirit! Product excellence companies are focused on: the costs, the reliability of the product and the supply chain’s flow.

Top 5 KPIs for Product excellence companies:

  • The total cost of goods sold
  • Supply chain cost per unit sold
  • Labour utilization
  • Warehousing and transportation costs
  • Enterprise software performance

3. Operational excellence

Here the focus is to be “lean”, which means to manage a business that supports the concept of continuous improvement. A lean approach has 5 principles: value, value stream, flow, pull and perfection. Lean KPIs are daily-oriented and tend to be pragmatic. The focus on eliminating waste in the Supply Chain is very important for lean organizations. At every stage! KPI’s are mapped by 7 categories of waste and inefficiency in a lean management system.

  1. Excessive waiting
  2. Overproduction
  3. Rejects
  4. Motion
  5. Processing
  6. Inventory
  7. Transport

Top 5 for Operational excellence companies:

  • Asset utilization rate
  • Defect and acceptance rates
  • Queues and wait times
  • Stock levels and safety stock
  • Inventory days of Supply

Conclusion

We can’t deny it: having an optimal supply chain management will result in fruitful long-term results. It will help your business evolve and scale over time.

Questions?

We hope we succeed in giving you more insights on this subject. If you have any questions feel free to reach our Shippr team at “hello@shippr.be”. You can also connect with the team on Facebook, Instagram, LinkedIn!

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