A Guide to Navigating KPIs When Working With a Logistics Provider
If business logistics is a maze, consider KPIs the compass guiding you.
But wait, what exactly are KPIs?
KPIs, or key performance indicators, help you measure the performance of an activity to ensure that the results meet your expectations. Having a logistics provider that understands the importance of identifying and measuring the right KPIs can make all the difference for your business maze.
Let’s explore the world of KPIs and identify how to use them to optimize your logistics operations.
Key Performance Indicators in Logistics
By navigating your logistics operations with the right KPIs, you can make informed decisions that improve the customer experience and boost your success.
Here are some of the fundamental KPIs in logistics:
Delivery accuracy measures the average time and percentage of on-time delivery orders. It's a good way to assess the reliability and efficiency of your logistics provider. A high delivery accuracy rate indicates that the company is meeting customer expectations by delivering the right products, in the right quantities, to the right place, at the right time. A low delivery accuracy rate indicates the opposite.
Lead time measures the speed at which a logistics company ships and delivers orders. It indicates the exact time between a customer placing an order and receiving the delivery. The lower the lead time, the faster customer receives the order. Lower lead times typically result in higher customer satisfaction.
Order Fulfillment Rate
Order fulfillment rate measures the percentage of orders that are fulfilled on time and in full. This rate helps you determine the efficiency of your logistics provider in processing and fulfilling orders.
The Cost of Reverse Logistics
The cost of reverse logistics measures the average price of orders returned due to non-acceptance, waste, damage, or any other reason. It helps you determine a better channel for reverse logistics and reduce associated costs.
The Cost per Successful Delivery
The cost per successful delivery measures the average price of each delivery, including transportation, handling, and other related expenses. This KPI helps you determine how much of the shipping cost should be reflected in the retail cost of the product.
Damage or Waste Rate
The damage or waste rate measures the percentage of deliveries that got wasted or arrived damaged. If you’re in the business of edible products, pharmaceuticals, or other fragile items, this KPI is extremely important as it helps you determine the quality of your logistics provider's handling and transportation processes.
Sustainability KPIs include carbon emissions, fuel efficiency, recycling rate, sustainable procurement, and water usage. Having insights into these functions can help you work towards reducing your environmental impact and ensure that your logistics operations align with your sustainability goals.
Tips for KPI Success
The right KPIs can provide invaluable insights into your logistics operations that help you improve performance and increase customer satisfaction, but achieving this takes time and careful planning. If you're working with a logistics company and feel lost in the maze of operations, here are some strategies that can help:
- Do more than communicate. Collaborate with your provider by sharing your goals and other important information, so you’re on the same page.
- Encourage your provider to leverage technology (if they don't already) to track KPIs. Transportation management systems, warehouse management systems, and real-time tracking software can be your best friend in getting accurate data.
- Regularly monitor your KPIs and be open to making changes where necessary. As your company scales, your KPIs should reflect the same growth.
- Be realistic in setting targets and timelines for each KPI.
- Incentivize your team to achieve KPI targets, so they feel encouraged and focus on continuously improving performance.
Need Help Navigating the Maze?
If you want a logistics partner that knows the ins and outs of measuring the right KPIs and can handle any curveballs that come its way, Ziing would love to be your partner in success.
Working with us is like having a trusty sidekick by your side, helping you navigate the KPIs of your business alongside the complexities of logistics while delivering results with a smile.
So, reach out to us today, and let’s make it happen.