en

Measuring Supply Chain Performance: the 4 KPIs You Need to Know

December 16, 2015

The metrics that matter most when measuring your shipping performance.
Shipping is only half the battle when knowing which KPIs to monitor to optimize your supply chain. You also need to focus on inventory. Luckily, we've outlined the most important KPIs for monitoring inventory too. You can read that post here.

Want a copy of this to hold on to? Download the PDF here.

We also made an even more in-depth guide to help you to map out all of the KPIs that matter most to your unique company, and why it's critical to only focus on a select number of KPIs to get the best view of your company's health.

Now that that's out of the way and you've downloaded those great resources, let's get into it, shall we?

There are three critical factors that are directly telling of the success of your supply chain. Is the supply chain:

  1. Acquiring the things your organization needs?
  2. Providing customers with the things they need?
  3. And doing it all for the right price in the right time?
In order to answer these questions, there are seven KPIs that should be constantly monitored. You can read about the first three of those KPIs in this guide to help you measure inventory progress and drive performance: Measuring Supply Chain Performance – Inventory.

Today, let’s dive into the second set of supply chain KPIs that must be monitored. These are centered around the shipping process.

1.  On time, in full delivery

In other words, did the compete order make it to the doorstep of the customer at the time it was promised? Emphasis on complete. Some online retailers have shipped incomplete orders to avoid penalties for lateness. If the entire order isn’t where it’s supposed to be, it should be considered late.

While this number is important, it’s also critical to be able to drill down into the details. A totally acceptable overall average might be hiding that there’s one warehouse in one region that’s pulling down the entire national average, for example.

This free eBook includes an example of how drilling down into the details of a number can help you make better, more informed decisions that affect the entire company overall.

2. Average days late

Analyzing when and why shipments are late can help an organization understand the consequences of late deliveries. It can also help paint a picture of what went wrong. It’s important to know, for example, what happened to the package that was a day late versus the package that was a month late, as that makes a BIG difference to the customer.

This data collection should be automated and display how many days on average a product spent in the factory, in the warehouse, and in route to the customer.

3. Rate of returns due to shipment damage or shipment error

Did the shipment contain exactly what was ordered? Did it arrive in the same condition as when it left the factory? This KPI is closely linked with the KPI that examines timeliness since, as I mentioned above, a delivery is not truly on time if the wrong or incomplete item is delivered or if the item is damaged.

If the wrong item reaches the customer, the return process begins, which is also why it’s important for organizations to consistently track and record cause of returns.

4. Order picking accuracy

This KPI measures the quality of warehouse operations. The picking process is the first step in ensuring a customer receives the correct product. In order to accurately measure order picking accuracy and catch errors before they make their way any further downstream, every supply chain company must have some way of verifying that every picked item corresponds to a specific order before it leaves the warehouse.

Measuring and monitoring these KPIs will provide the data needed to make the entire shipping process more efficient. Used optimally, it will also provide a valuable source of data on performance and incentivization for improvement. This video shows how displaying storyboards of KPIs on warehouse floor ensures everyone in the company has the insight and motivation needed.


Want to see even more great examples of how monitoring the right KPIs can help you make better, faster decisions for your company? This free guide helps you design a BI strategy for your unique supply chain needs.

Share