Supply Chain KPIs are Essential – The Right Ones!
The information on this page WILL help you get it right.
Many people get confused about KPIs or Key Performance Indicators in Logistics and Supply Chain operations. Which ones to use?… How many to use?
Sadly, it’s not such an easy question to answer. Still, in this article, I will help you evaluate the need for supply chain and logistics KPIs in your organisation, and identify which types of measurement might be most appropriate.
I’ll conclude with a case study illustrating why the above headline emphasises the need to choose the right KPIs. But, first, let’s walk through why KPIs are essential and explore some of the principles for applying them successfully.
A Couple of KPI Do’s and Don’ts
Of course, your supply chain and logistics KPIs need to be SMART—Specific, Measurable, Achievable, Relevant, and Time-phased—but this may too rudimentary a set of rules to ensure KPIs are useful. Later in this article, I will suggest some more comprehensive guidelines. For now, though, aside from applying the SMART acronym, my basic take on KPIs is this…
1) Don’t have too many! I’ve seen KPI “packs” the size of phone books, and even KPI sets circulated as a monthly magazine… that no one reads. Remember what the K stands for!
2) Make sure they “tie” in with your goals and objectives. Do they directly support those objectives?
Supply Chain KPI Tips
All you need to know about Supply Chain KPIs
Unfortunately, even these most basic standards imply that many of your supply chain KPIs may not be stock-standard ones. However, in Supply Chain, you would generally expect to see the following standard set, along with those that are more specific to your business needs.
- DIF – Delivery in Full
- DOT – Delivery on Time
- DIFOT – Delivery In Full on Time
- Cost as a percentage of sales (Logistics or Supply Chain)
- Inventory stock turns in Days.
If you’d like to read more about Supply Chain KPIs, you can download (free) a chapter from one of our Best Selling Books on the topic.
KPIs in Supply Chain – The Basics
As in any business activity, supply chain operations need to focus doggedly on improvement to compete in the marketplace, but how do you know if your supply chain performance is satisfactory or getting better or, god forbid, worsening?
That’s where KPIs come in.
What’s a KPI Anyway?
KPI stands for Key Performance Indicator. A KPI is a practical and objective measurement of progress, either:
- Towards a predetermined goal, or
- Against a required standard of performance
It might help to think of a KPI as something like an instrument on a car dashboard—a speedometer, for example.
If you are driving your car and you wish to maintain a speed of 50 KPH, you will use your speedometer to maintain that velocity. You will go a little faster if your speedometer needle drops below 50KPH, or you will slow down if it climbs above the required speed.
You will use a KPI in the same way as your car’s speedometer. The only difference is that typically, you wouldn’t wish to lower performance when a business activity exceeds the required standard.
As a similar and perhaps more accurate example, if your car has a fuel consumption gauge and you use this to try to drive economically, you are using a bona fide KPI.
Why Are KPIs Important?
Using KPIs for performance measurement ensures that you are continuously evaluating your business activity against a static benchmark. That makes fluctuations immediately visible, and if performance moves in the wrong direction, you can quickly respond.
Once a given KPI shows that performance consistently meets or exceeds the required level, you can raise the bar and set a higher target. For this reason, KPIs are essential for any business improvement strategy.
Apart from an internal desire to improve and compete, KPIs play a part in attracting and retaining customers.
That’s especially true in any business where customers tie into agreements or contracts. Service level agreements, in particular, will be monitored through KPIs agreed between an enterprise and its customer, with the possible application of penalties should performance fall below agreed levels.
In short, KPIs provide visibility of business performance and allow objective quantitative and qualitative evaluation. When you align them with business goals, they take away the guesswork and sharpen the focus on improvement.
Another powerful use of KPIs is in the benchmarking of your company’s performance against that of your competitors and industry peers.
Of course, the big challenge in this type of external benchmarking is obtaining the necessary data, since many companies are wary of sharing performance data with potential competitors.
That’s where a benchmarking partner such as Logistics Bureau can be a massive help. To learn more about how we help our clients to measure and compare supply chain performance with other companies, check out our benchmarking service page.
Supply Chain KPIs
When measuring the effectiveness and cost of your supply chain, you will need to set up and monitor KPIs that give visibility of cross-functional activity along with those applicable to individual supply chain components.
Later in this article, we’ll look at some examples of functional and cross-functional KPIs. Broadly speaking, though, the following areas are those where KPIs will be necessary:
- Order capture
- Inventory management
- Purchasing and supplier management
Cross-functional KPIs are likely to provide snapshots of the following end-to-end performance factors:
- Perfect order (the degree of accuracy to which customers’ requirements are met)
- Inventory levels
- Stock losses and/or damages
- Gross profit
- Cost of goods sold
- Total logistics cost
Try to construct cross-functional KPIs in a way that allows each function to see its contribution to overall supply chain performance.
Why Do Companies Have Too Many KPIs?
At the beginning of this article, I stressed the importance of not having too many KPIs. Nevertheless, in the course of my consulting activity, I have come across this issue repeatedly. The most common cause is a state of confusion about what constitutes a KPI.
Let me try to clarify. First and foremost, a KPI is a metric… but not just any metric. A KPI is a metric focused on a KEY element of business, departmental, or team performance.
There is nothing intrinsically wrong with capturing a large number of metrics, especially with today’s sophisticated analytics software solutions to help. However, it is beyond realistic to expect anyone to scrutinise them all daily or even weekly.
KPIs should comprise a handful of metrics that your teams CAN realistically monitor and react to continuously. They don’t need to be exceptionally granular, but should instead track the most vital elements of supply chain performance.
How Many are Too Many?
Of course, the difference between KPIs and metrics will vary at different levels of your organisation, so while a metric recording “receiving accuracy” in a warehouse would undoubtedly be a KPI for a warehouse manager, it would be utterly extraneous as an executive-level KPI.
In determining your supply chain KPI suite then, the secret is to identify performance elements critical to those with the power to influence them, and develop appropriate KPIs for that audience.
At no functional or cross-functional level, though, should anyone need to monitor more than a few KPIs. Exactly how many is hard to say and will, in any case, vary from business to business, but frankly, if you are tempted to ask if you have too many KPIs, you probably do.
The Importance of Hierarchy
Another reason not to have too many KPIs is the need to apply various levels of detail to each one. Because of this particular necessity, the development of even half a dozen logistics KPIs will ultimately result in two to three times this number in total… at the very least.
Therefore, as you might imagine, an excess of KPIs will soon have your portfolio approaching the volume of that proverbial telephone directory, making it hard to monitor, and act on, the mass of data generated.
Nonetheless, it is essential to have a hierarchy of KPIs. That’s because, as mentioned, the degree of granularity suitable for one management level will either be too general or too detailed for another. But, at the same time, it is not wise to have too many levels in your hierarchy.
The Two-Level Hierarchy
If you wish to keep things as simple as possible, you should find that for logistics performance measurement, two levels (or tiers) of logistics KPIs are enough. For example, you might call the highest level the “primary tier” and the second level the “secondary tier.”
The first-tier KPIs would be the ones monitored at an executive level in your company, and would perhaps include metrics like:
- Logistics costs as a percentage of sales
- Inventory turns
- Total inventory days
- Source-to-deliver cycle time (the time from sourcing raw materials to delivery of finished goods)
At the secondary level, you would have KPIs that provide more granularity and highlight the causes of fluctuations in tier 1 metrics. Examples of these secondary KPIs could include:
- Warehouse costs as % of sales
- Transportation costs as % of sales
- Finished goods inventory turns
- Raw materials inventory turns
- Inventory obsolescence
- Work in progress days
- Finished goods days
- Raw material days
- Inbound delivery in full
- Inbound delivery on time
- Outbound delivery in full
- Outbound delivery on time
- Manufacturing cycle time
The Three-Level Hierarchy
A three-tier KPI solution is a little more involved, with the top two tiers comprising end-to-end supply chain metrics, with Tier 2 being more granular than Tier 1. Meanwhile, the third tier can include KPIs that show performance at a functional level, and highlight how each function’s primary activities contribute to end-to-end performance.
Whether you choose a two or three-tier system will depend on the specifics of your company’s business, the company’s size, and other similar factors.
Of course, it’s also possible to add further tiers for even more granularity, but again, the more levels you have, the more complex your KPI solution.
Now let’s get a little more granular in this study of supply chain KPIs, and look at some of the specifics of cross-functional and functional performance tracking.
Cross-Functional and Functional KPIs: How to Apply the Right Ones
Functional KPIs offer value, of course, but when you combine and integrate them to offer an end-to-end view of performance trends, you can magnify that value considerably. Therefore, it can be helpful to identify the processes involved in your supply chain before deciding upon the functional-specific measures that collectively will show how these processes are performing.
It’s also worth remembering that you may wish to benchmark your business processes against competitors and peers, so your choice of KPIs might need to take that into account. For example, it will be challenging to benchmark using KPIs that are not in common use in your industry.
As part of our benchmarking services, the KPI consultants at Logistics Bureau will be pleased to offer guidance on which metrics are most suitable for your business to use when benchmarking.
You can identify and categorize your company’s processes in any way that suits you. Still, as an example, it is worth briefly discussing one of the process cycles commonly used when monitoring supply chain performance. That cycle typically goes under the heading of order-to-cash.
Order to Cash
Order to Cash (OTC) is the end-to-end process involved in capturing and fulfilling a customer’s order, and can be measured using a carefully coordinated range of functional KPIs. The OTC cycle loosely comprises the following sub-processes:
- Customer-order capture
- Order picking and packing
- Dispatching, shipping, and delivering the order
- Billing the customer
- Receiving and recording the customer’s payment
OTC is a process that illustrates clearly, how the supply chain comprises a broader range of business functions than you might have thought.
For example, the sales function is not typically seen as part of the supply chain, but if your sales team captures orders from your customers, the first step in the supply chain is very much sales-related.
Similarly, it’s easy to forget that a supply chain comprises the flow of information and money, in addition to goods. That necessarily implies a need for financial functions to be measured if you want a complete picture of end-to-end supply chain performance.
Who’s Involved in Order-to-Cash Measurement?
When you measure the order-to-cash cycle, you will need to set appropriate KPIs for your sales department, warehousing and transportation functions, and for some areas of finance, such as accounts receivable. To illustrate how much this matters, consider the possible consequences of any failure or delay in the process of recording a customer’s payment.
Let’s assume a system or process issue that results in the delayed posting of the customer’s payment. If the customer purchases frequently, the receipt of payment for the previous delivery might not be recorded before the customer places a fresh order.
Because there is no record of payment, the customer’s account might be placed on hold in your ERP system, and the whole process of supplying that customer stops until somebody spots the problem and resolves it. That’s a supply chain performance issue, just as much as if your warehouse team fails to pick the order.
Functional KPIs in OTC
If you’re beginning to think that order-to-cash cycle measurement sounds incredibly complicated, you can relax a little, because it need not be that hard. For one thing, a made-to-measure (see what I did there?) KPI exists that’s relevant to pretty much any type of supply chain operation. It’s a composite KPI called perfect order, and it incorporates functional measurements for all stages of the OTC process.
You can use the perfect order KPI to track OTC performance by breaking it into its components and applying the metrics according to their relevance for the different functions in your supply chain.
The breakdown should look something like this:
- Sales function: Percentage of orders captured accurately (reliant on customer feedback)
- Warehouse function: Percentage of orders picked in full
- Transport function: Percentage of orders delivered in full; Percentage of on-time deliveries
- Finance function: Percentage of orders billed correctly
- All functions: Percentage of orders with correct and accurate documentation
The functional KPIs mentioned above are the highest level of metrics that you will use. They will likely need breaking down further to maximize identification of performance issues and aid in solution planning—remembering, of course, to keep things simple by only holding people responsible for the KPIs they can directly affect.
Let’s take a warehouse operation as an example. Here, the percentage of orders picked in full might be broken down into…
- Percentage of orders picked with errors – incorrect quantity
- Percentage of orders picked with errors – incorrect product
- Percentage of order lines picked with errors – incorrect quantity
- Percentage of order lines picked with errors – incorrect product
At this level of granularity, the picking-performance measurement will allow you to see trends and patterns in picking accuracy. You might notice, for example, that a significant number of orders are picked with minor errors, or that a small number of orders contains many errors.
Furthermore, by applying codes to highlight the exact nature of each error, you will gain an even higher level of visibility. You might notice, for instance, that a particular product is affected more than others by picking errors and then determine if the problem lies with its markings, labels, storage location, or proximity to a similar product in the slotting plan.
Purchase to Pay
You might have noticed that in discussing end-to-end solutions for KPI setting and monitoring, order-to-cash only gives you a portion of the panorama. For a genuinely wide-angle perspective, you need to incorporate other supply chain cycles into your viewfinder, one of the most notable perhaps being purchase-to-pay (P2P).
While OTC essentially covers the outbound supply chain, P2P is the principal activity-cycle enabling your inbound flow of goods. It encompasses all the steps involved in purchasing raw materials, components, ingredients, or finished products, transporting those goods to your facilities for storage, and paying the suppliers.
Like OTC, a set of KPIs to measure the performance of each P2P step is critical to ensuring that your supply chain, and your business, run smoothly.
The Purchase to Pay Cycle: What’s Included?
The sub-processes in P2P are, in most cases, as follows:
- Generation and approval of requisitions
- Generation and approval of purchase orders
- Shipping and receiving of inbound goods
- Approval of invoices
- Payment to suppliers/vendors
Again, it’s clear that within the P2P processes lies a flow of goods, information, and money. Therefore, to measure performance, you will need some KPIs with a service focus, and others that are financially oriented.
The “Right” KPIs for P2P Performance Measurement
So what are the right KPIs for P2P performance tracking? Well, when it comes to tracking service, you’re going to be most interested in the service provided by your suppliers. That’s especially true when it comes to the process of shipping your inbound goods to your facilities.
Of course, if you use in-house assets or a 3PL logistics partner to collect products from your suppliers, you will want to track service performance there too. Given these needs, then, appropriate service KPIs for P2P might be:
- In-full delivery from supplier
- On-time delivery from supplier
- Supplier delivery on time and in full (DIFOT)
- Supplier rejection percentage (by order, line item, or unit)
- Supplier compliance with contract
The remainder of your P2P KPIs will probably track efficiencies, costs, and productivity within your organisation, with suitable metrics including:
- Cost per invoice
- Number of suppliers managed per full-time employee
- Average cost per order
- Account payable days
- Cost of purchasing as a % of sales
As with all the specific KPIs we’ve mentioned in this article so far, these are just suggestions representing the metrics, which, through experience, we have found to be of most value for most organisations.
You might well decide to use some different or additional ones, but try to remember the doctrine of simplicity—because if you try to monitor too many metrics, you risk getting bogged down in data and unable to gain the clarity you need.
What Makes an Effective KPI Suite?
Earlier, I mentioned that the SMART acronym might be a little too simple to use as a standard for developing KPIs. As a more practical guide, you might wish to apply the following list of golden rules when building up a suite of logistics KPIs for your company:
1) Make sure you align all KPIs with the overall business objectives of your company.
2) Ensure that each KPI has an “owner”, whether that is an individual or a group of people.
3) Design each KPI as a leading metric that can assist with the prediction of performance issues.
4) KPIs should be actionable, providing timely, accurate data that owners can interpret and utilise.
5) Each KPI should be easy for its owners to understand.
6) Each KPI should reinforce and/or balance others.
7) No KPI should contradict or undermine the others.
8) Each KPI should have a target or threshold indicating a minimum acceptable level of performance.
9) As each KPI is proved stable and effective, it should be reinforced by incentives or compensation.
10) Each KPI should be updateable, as they will lose relevance over time.
11) Try to choose KPIs that are commonly used in your commercial sector, so you can easily use them to benchmark performance against other companies’ operations.
The one caveat I would add here, concerning golden rule #9, is that it’s essential to incentivise only behaviours that do not jeopardise health and safety or regulatory compliance, or otherwise put the reputation of your business at risk.
Success With Supply Chain KPIs: A Brief Case Study
In the early years of this century, a British division of a global brewing company decided to diversify into contract distribution to increase utilization and reduce costs across its national warehousing and logistics operation. The company’s customers mainly comprised pubs and restaurants, which were either under individual ownership, or owned by the brewing company.
However, the traditional model for licensed alcohol sales was on the wane. Most of the major brewers were disposing of their estates following freshly implemented laws to curb what the government saw as a barrier to fair competition in the industry.
As a result of these changes, several large pub companies sprang up, and the brewing company (the subject of this study) determined to sell distribution services to these entities. It won a porterage contract with one of the largest pubcos and suddenly found itself with one customer representing more than 50% of its business revenue.
Threats and Measures: A Catalyst for Change
It wasn’t long before problems arose, with the customer threatening to exit the contract under a service-level clause. Fortunately, the pubco’s director was an ex-logistics guy who proposed an alternative solution.
The customer and the supplier would work together to develop KPIs that would highlight why many pubs were receiving deliveries with incorrect product quantities, and why even more deliveries were arriving late.
The partners developed a KPI suite, which, although hardly simple in the way this article advocates, effectively highlighted some severe issues in the supplier’s warehouse and transportation functions.
The list of KPIs included delivery on time and in-full (DIFOT). The in-full KPI was broken down into factors such as:
- Incorrect product quantity
- Incorrect product quality (wrong products)
- Deliveries with broken products/packaging
These KPIs were then cascaded to even more detailed levels of granularity, using error codes to identify where and how delivery errors were originating.
How Supply Chain KPIs Opened Eyes
Over time, the KPIs revealed various issues, including picking errors, a lack of checks during vehicle loading, unsafe loading practices, unsafe driving, and insufficient load-restraining measures. These problems were all carry-overs from an earlier era when the logistics operation primarily served an internal supply chain.
Quite simply, the logistics functions had not adapted to a new environment in which retail outlets were no longer “tied” to the brewery. Instead, customers could choose to take their business where they wished, which was precisely the pub group’s intention if delivery performance did not improve.
However, given the visibility provided by the new logistics KPIs, it did improve dramatically. Within a year, the brewer’s logistics operation was meeting initial “perfect order” targets agreed with the customer and working towards a raised set of service-level objectives.
The Outcomes Were Significant
Improvement in the brewing company’s service provision was made possible because the KPIs had enabled the partners to identify specific issues, and then agree and implement plans to address them.
As a result, the brewing company not only averted the loss of its biggest customer, but went on to achieve a reputation for excellent distribution services, enabling it to acquire contracts with other major pub groups and become known as a leading beverage logistics provider.
In turn, this success helped to strengthen the brand’s presence in the pubs of the groups it served, and raise its profile in the British beer market.
Remember the Headline I Began With?
This case study highlights how, as I mentioned at the beginning of this article, THE RIGHT KPIs can help you drive substantial improvements in your supply chain.
Initially, the KPIs focused on the outbound supply chain—the last mile delivery element in particular. Later, the company in question began to follow similar measurement processes in other areas, such as primary distribution (from brewery to distribution centers) and procurement.
In each case, it was the application of appropriate KPIs that made the difference. Thus, the issue was not that the company had not been measuring performance, but rather, that it had been using metrics that were no longer relevant for serving a transformed marketplace.
Need Further Assistance to Get Your KPIs Right?
Here at Logistics Bureau, we have more than two decades of experience assisting clients with supply chain KPI management and benchmarking.
With over 1,000 benchmarking projects completed, we’ve seen just about every type of supply chain, and have the expertise, data, and experience to help you…
- Select the right KPIs for the right levels of management
- Set the most suitable performance targets to use with those KPIs
- Assess the current performance of your logistics operations.
So, if you need some assistance, our consulting team is ready and waiting—and we offer 100% remote support for KPI-related assignments, sparing you the expense of consultants’ business travel and minimizing disruption to your business.
To learn more about KPI implementation and supply chain benchmarking with Logistics Bureau, please pay a visit to our supply chain benchmarking service page.
Editor’s Note: We first published this post in May 2013. It has since been revamped and updated with more comprehensive information. The most recent updates were made in April 2022.
Thanks for the above KPI’s , I need to see some KPI’s for Supply chain GM / Or Director level Specially in Food Manufacturing sector.
It will be appreciated.
I’m glad they were helpful Mohammed. If you want specific industry KPIs, you can find them over here: https://www.benchmarkingsuccess.com/online-key-performance-indicators/
I have need KPI of scf for banking operations
Could you be more specific? What functions are included?
goog morning sir can you please help to send me the KIP for a LOGISTIC ADMINISTRATION?
Could you provide 4 sample for procurement officer objectives for KPI and how it measure?.
I would be highly appreciated.
For Procurement KPIs I would think about………..
Supply In Full On Time (SIFOT) by Supplier.
Cost per Purchase Order
Procurement costs as a % of Spend
Hope that helps.
Good day, I request key performance for procurement
I would consider KPIs such as:
Supply on Time
Supply to Spec
Planned Cost reduction
Hi Rob, Can I get KPI’s for a materials issuing/oubounds officer in a warehouse system.
Is this product going out to customers?
I would use:
Order Fill rate by line
Dispatch on Time
Labour Hours per Line Dispatched
Video not available
Might be, because there is no video on that page?
Thanks for your concise evaluation but please can i get a specific kpi for fleet manager
Thanks for the clarification above, do you have any specific example of LKPI for Hospital Logistics?
I need a Transportation KPI for third party Covered van vehicle provider
Hi Abu. Do you mean a KPI or a rate?
As a KPI I could suggest:
Cost per case delivered.
% cases delivered in full on time, undamaged.
It’s really about cost and service.
could you provide 3
sample for logistics coordinator objective for KPI ?
Hi Iss. I presume the Logistics Coordinator is managing outbound delivery? In that case I would use:
DIFOT – Delivery in Full On Time.
Picking Accuracy (because it supports DIFOT)
And maybe cost per item delivered, to provide a cost reduction focus.
Thanks for the above KPI’s , I need to see some KPI’s for Warehouse manager / and Senior supervisor levels Specially in Pharmaceutical Manufacturing sector.
It will be appreciated.
I would suggest these:
Picks per man hour
Cost per order despatched
i am in tile manufacturing co and and i am the Logistics Manager. Would appreciate if you can send me a sample KPI in Logistics activity.
I don’t think your industry would be any different from others. The KPIs don’t vary that much.
It’s all about measuring the things that drive cost and service performance.
You will find plenty of examples on this Blog. (There are lots of posts on KPIs) Pick the ones that you think are meaningful to your operations and that you are actually able to measure. No good picking a KPI if you can’t get the data for it yet.
Hi, thank you for the article, it was very helpful. However, I am struggling to find KPI’s that are specific to procurement from a 3PL perspective. For instance, how do you hold the 3 PL Buyer accountable for cost/savings/performance, when they are the 3PL and not the customer specifically?
So in this case, you have a third party buying products, for you to sell to your customers.
I would try KPIs around things like:
Cost per purchase order.
Adherence to purchasing budgets.
SIFOT as an indication of good supplier management.
Maybe think about the essential elements that drive the procurement performance of the 3PL. THOSE are what you need to measure.
Hi can you help me with KPI for Supply Chain department for a diamond mining company
Hi, As with all KPIs you need to start with the end in mind.
So what parts of the operation do you want to measure? What are your key objectives? Consumables usage, parts availability, cost, machine ‘up time’?
Then think of the things that can impact those areas of performance. What things commonly degrade performance.
Start with developing KPIs for those!
why it is important for modern organisations to consider e-supply chain in their strategies!
Because most companies have an element of ecommerce now.
I would be most obliged if you could answer the following questions?
1. Should I use different KPI for each dept, for example finance dept, Marketing dept, Administrative dept, etc.
2. What is the difference between KPI & Performance Management System
3. Can I use KPI to do performance management of employees.
A prompt reply will be greatly appreciated.
Yes, you should certainly use different KPIs for each department. They should focus on the essential outcomes for that department.
So for example:
Finance KPIs. Debtor days, Cash at Bank, Current Ratio….
Marketing KPIs. Print adverts ROI. Online adverts cost per click.
Administration KPIs. Stationery cost per month, printing costs per month…
Performance management system is a very generic term and could apply to anything really. It is often used as a term for the process or ‘system’ used to manage staff performance.
You should certainly use KPIs to manage staff. But….ensure that you are measuring something that the staff member can influence. Otherwise it is not fair. For example, you can’t measure the receptionist on the profitability of the company! But you could manage the receptionist on the accuracy of directing call to the right department, first time.
I’m in the Operations Excellence section (logistics dept) which consist of several other section eg:material centre, warehouse, finished goods centre. All of this section having their own KPI.
My job basically will involve with overall dept performance & excellence, right I’m having problem to come up with specific KPI for my function as I can’t put the KPI such as delivery, transit time & quality performance as my KPI since it has been covered under specific section under Logistics Dept, Hope you can give me some advice on how to formulate specific KPI to cover overall dept performance, quality & cost
I’m an inventory manager in a fashion establishment, I need you to kindly help in formulating KIPS for effective and efficient inventory management operation.
Hi Lawal, The problem with inventory management in fashion businesses, can be the ‘end of lines’ and also the broad range of sizes and colours. This generally requires a strict policy around mark downs to clear end of season stock, as moving stock between outlets just adds to cost. Unless you are dealing with Chanel Handbags for example!
As some basic inventory KPIs I would suggest:
Stock Turns. Do this at the A, B and C item level if possible. A being fast movers, and C being slower moving continuity lines.
Inventory Value at each stage of your Supply Chain. Supplier, in transit, your warehouses, your retail outlets.
Value of stock sold as ‘mark downs’.
SIFOT (Supply In Full On Time)
I hope that helps.
Hi, I am a senior demand and supply planner and Im looking for strategy for my planning team that can be measurable (KPI).
Wondering if you are able to help with some suggestion.
Performance against the plan would be key I think
Thanks for your interest about Kpi, I am a lecture at university, I would like to learn how can I make logistics performance index for region or cities, which indicators can I use? And there are some problems to find data’s about GDP of cities, can you advice me any indicators that can evaluate the cities?
Hi. It really depends on what you are trying to measure. The competitiveness of a city, the efficiency of a city. Like all KPIs, you really need to start with the end in mind.
You might want to look at:
Number of people employed in the sector (Transport and storage)
Square metres of warehouse space
Number of trucks in local fleets
Tonnes of freight handled
Logistics ‘spend’ (transport and storge
hy, Iam an intern. I need to know how to measure and benchmark the KPIs of outbound logistics
Kindly provide me all the possible KPIs for Post Sales logistics sector.
I am Mohammed working in Well Site Services company as Logistics In charge and need to put in place KPI’s for Logistics Dept. and we deal with freight forwarder agents for our equipment’s to ship by Sea, Air & Land to project locations.
If you can help me with specific points which need to mention for KPI’s it will be great help.
I would suggest that you look at all the key areas where the process can break down, and measure those.
Correct order placed on suppliers.
Freight Forwarder informed within specified timeframe.
Product received within expected timeframe.
Confirmation from Freight Forwarder of delivery.
Number of changes made to supplier order?
I am a Logistics Executive and is handling the pre-shipment issue, like issuing the Pro-forma invoices to customer and work orders to factory for production. Also, I need to evaluate my logistics team performance. Could you please kindly provide me the examples of what KPI I should take? Thanks!
I think one of the best KPIs for production is PCQOT. Produce Correct Quantity On Time. Over or under production can bde a major problem. For the Logistics team, DIFOT is always a good measure.
Though do a search on this blog for measuring the ‘perfect order’. That is a great KPI…. The article shows you exactly how to measure it.
The information provided is very helpful. I have some doubts regarding DIFOT (delivery in full on time). While measuring performance of a 3PL warehouse, we only know whether the goods are sent on time or not, but we have no idea about the quantity until we receive any reclamation from customers informing that the quantity sent was not correct.
So, Its better to measure Deliveries on time and deliveries in Full separately, rather DIFOT.
Keen to know your feedback
Thanks and regards,
Yes, you can certainly measure Delivery In Full and Delivery on Time as two separate metrics. In fact you should. Then by multiplying the two, you get a realistic DIFOT measurement.
If in full is a problem, maybe adding in a check station in the warehouse before despatch is an idea?
I work for a Poultry company. I have been tasked to prepare KPI;s for delivery Drivers and the workshop guys. Any suggestions?
I always find that KPIs don’t need to vary too much industry to industry. First of all have a clear picture in your mind of what you would like as an outcome. What is the ‘objective’ of the delivery drivers?
For most it is DIFOT. Delivery In Full On Time.
If they are contract drivers you might also havev a cost related KPI. For example $ / unit delivered, $ per drop.
Some delivery drivers also have a role in cash collections and sales. So a suitable KPI can be used there too.
Get the idea?
Start with the end in mind…..
Many thanks mate.
Hi Rob O’Byrne,
i am import manager of confectionery company, and i want to set my KRA s for the year ahead ,which should be aggressive and measurable .
please can you help in giving me some KRAs to set .
I always suggest keeping it simple. If you are only responsible for imports, how about these:
Supply In Full On Time
Total Cost per Unit delivered (to you)
% Damages in Value
first of all THANK YOU for your articles and your answers.
I work in a company that produces automotive components and I have been given the task to find suitable KPIs for our company’s goals.
These objectives are customers oriented, and span through different departments, from production to logistic.
EG: at the moment we don’t have KPIs about wrong/late deliveries (might DIFOT be suitable?), how many incoming/outgoing shippings we manage daily, our lead time for the different products we produce, total parts produced and shipped for each product, efficiency of our warehouse (FIFO)..
Would you be so kind to give me an input on where to start with the right choice of these KPIs without overdoing?
Hi. Glad you find the KPI information useful.
I think to keep it simple, start with DIFOT. This is your own performance, Delivery In Full On Time, to YOUR customers.
Then add SIFOT. Supply In Full On Time. These are deliveries from your suppliers to YOU.
Then maybe as a productivity KPI, add the number of units, lines, cartons or whatever suits you best, that are processed out and processed in each day. That will start to give you a view of productivity.
Hope this finds you well,
I have a question on Setting Targets for Promo packs. I have set a measure to measure the WMAPE for our PP performance however since it is a new KPI, what would the best target for the measure be? would WMAPE be 20% of my Promo Pack or should be more or less? how can I determine this?
Hi Nisreen. I’m afraid you’ve ‘got me’ there! WMAPE with promo packs is not something I have any direct experience with. What figure do you use for non-promo?
Great page on KPIs. Is there an industry standard for 3PL use that would have financial penalties in not met? For example, Perfect Order = 98.5%, Inventory accu. = 98.5%, etc.
Hi Frank. There are not really ‘industry’ KPIs as such for 3PLs as these may often be specific to the type of contract. But you would normally expect to see DIFOT, damages, IRA. Though you need to be careful with financial penalties to ensure that the KPI being measured is actually under the control of the 3PL in terms of their ability to influence it. Stock outs for example, maybe be due to the client purchasing team!
I work in freight forwarding company and manage import groupage road & sea service from different countries. I have to find suitable KPI which shows condition of my service, we don’t have any KPI’s at the moment. Our company doesn’t have fleet we use 3PL only. What kind of KPI should I pick?
Hi Derek, What are the three most important aspects of your service? What three things MUST you get right? There are your KPIs….
I m much impressed. In fact u av given a whole lot idea of how to improve in my role as outbound logistics executive.
Sir please what KPI can I use for inbound logistics, managing operations vehicles (pool cars and delivery van)and packaging of finished goods.
Hi Ayo. With KPIs it’s always important to make sure that the KPI supports the outcome you seek. So for inbound Logistics you might measure cost/unit, transit time, or receipting time. Pool cars might be time utilisation, time spent in repair, kms travelled. And packaging might be units per labour hour. I hope that gives you an idea. Regards – Rob
Hey my name is ian i just joint and airconditioning company and was given the duty of a logistics manager what i would like we have like 6 cars which transport people and materials to site i need to collect data and give areport please send me atemplate of the same and how i can do my quarter report
Hi Ian, So the aim would seem to be, to measure the utilisation of the 6 car fleet?
I would measure……
Time utilisation. How long are they ‘in use’ each 24 hours.
Space utilisation. How many people or materials are carried each day.
And cost. Total operating cost and also cost per car, as some may have higher maintenance costs.
Hope that helps.
thanks for the great article, I recently joined a healthcare manufacturer as a logistics specialist, I need to create a KPI for the last mile inland delivery whether to warehouse or customer directly.
I’m also preparing a template to send it to new different vendors, should i mention the KPIs when i send my scope of work?
Hi GK. Yes, I think it’s always important to share your KPIs so that others know what is important to you and how they can support you best.
I’m Logistic Manager for automotive factory want to know KPI for my dept
Hi Julharry, When considering KPIs you always need to first consider what outcomes you are trying to achieve. Ad structure your KPIS to support those. So perhaps for you it might be …. Parts availability, picks per labour hour, cost per order processed. That would at least get you started with a KPI around each of, service, productivity and costs…
I have recently joined as Logistic Manager in a construction company..want to know the KPI of my Dept
What are your objectives? KPIs should always focus on these. But I would at least start with one that targets service and another at cost. So maybe Delivery In Full On Time (DIFOT) and cost per order delivered?
I am researching towards transport KPIs but these have to be made visible in a dashboard. Do you have a recommendation towards a software (system/tool)?
The KPIs are based on: On-time In-Full, CO2 emissions, quality etc.
Hi Joy. I’m sorry I don’t really have a KPI tool to recommend to you.
Hello Joy, currently I am working on a similar thing as you have mentioned, so here I am mentioning my mail id if you have got idea about it can you please share what it was and if not I can suggest some from my knowledge
And yes the system/tool you can use is power BI
Email : [email protected]
I am inventory & logistics executive, I want KPI for I&L.
kindly send the minimum 5 points in kpi
thank & regards
Hi Raja, Supply Chain KPIs are very specific to each industry and business, so it is not possible to be precise without further information. But I would suggest these as a starting five.
Logistics Cost as % of Sales
DIFOT (Delivery In Full On Time)
SIFOT (Supply In Full On Time)
Average Order Value
I am working as an intern in a logistics co. where Iam supposed to work on project.
“How to improve timeline for the department (Delivery/ Proof of delivery)”
As our co.is totally dependent on 3PL through which pickup and delivery is done to consignor/consignee
As here i have to analyze the problems why we are not getting POD as earlier as possible and how to improve the KPI for domestics logistics department.
Sir, if you could help me out.
I’m sorry but I don’t do student assignments for them…….
POD records are often delayed. The best way is to use electronic POD devices.
I work for a food ( chilled, Frozen and dry) distribution company as the Logistics manager, please advise which KPI’s would best suit this nature of business.
I don’t think KPIs really need to vary based on temperature control. You might want to measure % instances outside temperature allowances. Do you have temperature monitoring during delivery?
it is useful information, am working in a project to deliver high quantity and value of a product using the Air mode. as we dont need to keep our cash tied in the water for long time beside the fast sale. what KPI’s i can set to achieve my goal. and if possible to guide me to similar useful articles in this area.
I would certainly measure supplier reliability and SIFOT. Supply In Full On Time.
Please tell me what isKPI in NGO Sector regadering supply chain management
I don’t think the KPIs need to change much just because you are an NGO.
Cost of storage per unit.
Cost of distribution per unit.
and so on.
I am a customer service and handling export shipments. Could you please kindly provide me the examples of what KPI I should take? Thanks!
I think for customer service delivery or dispatch on time is always the best KPI. For more complex KPIs have a look at the Probability of the perfect order.
I am a Pull systems manager at manufacturing company, can you help inthe identification of kpis for assuring that warehouse bin levels are set accordingly at headquarters and branches. And assuring that the right stock it’s available everywhere at all time.
I presume you are using a Kan Ban system. AS for KPIs I think one should certainly be the number the number of times per day/week/ month the bin is found to be empty.
Can you suggest some KPIs for a material management department which deals with network parts that are delivered by suppliers?
Eg:Need by date vs lead time, order fill time etc.
I would suggest 2 simple KPIs.
Stock Availabilty, and
Supplier Delivery In Full on Time.
My current position is Supply Chain Manager in Automotive company dealing with foreign and local suppliers and also we serve the aftersales and whole sale for genuine parts for many brands, below areas are reported to me:
– Procurement and logistics.
– Inventory Management.
– Transporting and customer supply.
please suggest KPI for above sections
Developing the right KPIs is quite a detailed process and as you can appreciate needs to be tailored to your business needs.
But in simple terms, try these as a start point:
Procurement – Cost as % sales, and supply in Full on Time
Logistics – Cost as % of Sales
Inventory Management – Stock turns
Warehousing – Cost per order despatched
Transporting – Delivery In Full On Time
Customer supply – Probability of a perfect order.
Probability of a perfect order is one of the best KPIs ever!
It’s explained here: https://www.logisticsbureau.com/supply-chain-levers-part-5/
Would you please suggest me the KPI’s for Purchase-Import. My main responsibility is Procurement of Industrial Machinery, spare parts,raw materials. Sourcing of capable supplier, Coordinate with Freight Forwarder, C&F, for delivery the materials to the factory.
It would be highly appreciated if you replied.
Thanks in advance.
Hi Kabir, I would suggest the following KPI.
Supplied In Full On Time (SIFOT)
That will cover most of your responsibilities.
I’m currently working within a project of logistics with a new logistic supplier for health enterprise hospitals. I work within the IT area and I wonder if there should be KPI which measure for instance some of the characteristics of software and integrations between the customer ERP-system and the suppliers system, one of those characteristics are availability and performance. So if the system goes down for 1 hour then the communication will stopped and the % of accesibility becomes lower than 98 % if the SLA contract involves 98 % of accecibility. Do you know of any KPI related to ICT/IT and logistics ( the electronic communication flow from orders – confirmation orders – ASN and electronic orders). In which terms could we measure this. Any suggestions?
Thanks for your help before hand !
Hi Alexandra. IT KPIs are not really my area of expertise, but thinking about it logically…..
You need to make sure that the KPI is measurable, accurate and clearly understood.
Downtime makes sense, based on the % of a 24 hour period when access is not possible.
Or to be more strict, if the business works day time hours only, like 9-5, maybe just use a % of that time.
I’m not sure the measure of orders in the system would be that useful. As this will be unrelated to the actual downtime. For example, if most orders come in between 7am and 9am, and there is a 1 hour downtime at 8am, that has far more impact than a 1 hour downtime at 3pm.
Always think about what precisely you are trying to measure. What specific behaviour or outcome. And then what the key ‘drivers’ are that lead to that outcome….
Sorry………might not be that helpful……
Thanks for the article and all the helpful tips.
I’m a logistics manager at a food distribution company. I did manage to implement Picking speed and picking accuracy as a KPI for the warehouse as well as an incetive for the picker(they get bonuses for good performance).
I can’t however figure out a KPI that would draw more attention to the amount of faulty goods that appear as part of the operation and something that would measure the accuracy of our inventory.
Also I’m really strugling to come up with something for the fleet other than cost as a % of sales.
Any ideas would be much appreciated
When you say faulty goods in relation to food products are they really faulty or become faulty so they can be written off? We call that ‘shrinkage’…….
I would start to record reason codes for the ‘faults’ to see what pattern emerges.
For fleet KPIs you could think of things like:
Items (or weight, or orders or value) delivered per km, per hour.
Really happy to see this web.
I am belonging to Procurement Profession. So Can I request you to guide me? for understanding deep about the useful and basic, as well as deep details of “KPI” Related to Corporate Procurement, Project Procurement as well as “Strategic Sourcing”
Thanks for the article, l need to know more examples of KPI’s in Supply Market Analysis
Thanks for the article, l need to know more examples of KPI’s in Inventory Control and Wearhousing.Please sent me copy of the KPI
Hi Jacky. If you search on the Blog here you’ll find lots of examples of KPIs.
i have need KRA of operation department of Supply Chain Finance
Typical Supply Chain KPIs focussed on finance would be:
Supply Costs as a percentage of Sales.
Cost per order processed.
Cost per order delivered.
Cost per case (or other unit measure) through each core function.
Value of inventory held………
Thanks for the article!!
How do I calculate Logistics Cost as % of Sales?
Thanking You in advance.
Exactly as it sounds.
Annual Logistics Costs / Annual Sales (answer x 100 to give you a percentage)
stays on topic and states valid points. Thank you.
Thanks for the article, Im currently evaluating the delivery performance of a supplier. This supplier gives materials on time but only partial quantity, Sometimes it gives full quantity but delivery occurs late and sometimes both happen simultaneously.
Is there any specific metric which measures both quantity and time under one formula??
Thanks for the article. Can you give me some examples to monitor and improve packaging of supplied parts. ( I am link with automobile Sector)
Also what best tools can be use to reduce the needs of follow-ups in terms of supplychain.
I like this site, because so much useful stuff on here : D.
I am a logistics supervisor,my role involves warehousing,inbound and outbound logistics,transport operations what are the right KPIs for my job
Hi. When trying to work out the best KPIs for you, always start with the objective! What are the 3 or 4 clear objectives you have for the operations under your control? Share those, and then let’s talk KPIs.
Hi can you help me with 3 KPI for delivery Driver, what can come with leading & lagging on 3 kpi goals, we are lost in this. Thanks
How about some of these?
Deliveries per hour
Cases/units. KG delivered per hour
Orders delivered on time
Time taken to load
what about a conserve logistics KPI’s, i’m so confused i have instored several KPI’s but until now i’m not able to convince my superiors that i’m doing the right one’s all i need is to compare ‘my’ KPI’s to the world standards but i don’t have these standards for now.
Always pick KPIs that focus on the outcomes you require!
Sadly World standards on KPIs are not easy to find. WE have them, but they are very valuable IP and cost a lot to buy.
Sir we are doing Supply chain Strategy we are in level 2 it’s means that we are in the phase to create KPI for our Supply chain department so what will be the KPI for the department will be and our organization ICT (Telecomunication) provider company.
Well done. Just use the search box on this Blog. You’ll find a lot more information about KPIs.
I work for supply chain department.what KPI would you think would be auitable in food industry,95% of the products are import..
I would think suitable KPIs might include quality compliance, temperature compliance, along wit all the regular KPIs like DIFOT and SIFOT.
My objectives is Improve Performance efficiency of SCM delivery and quality.
What will be the KPI of above objective.
what is necessity of KPI being used when we have a congested logistic road system ferry public passengers. Can KPI be used for better logistic and supply system. Advice.
Could you explain this a bit more please?
Are you looking for KPIs for ferries?
Or what type of business?
It was a pleasure reading this article on KPI and gives a very good insight on the topic particularly from the logistics perspective.
Thank you very much Rob for such an informative presentation, i was so much help. My question is, can i tier KPI for Marketing and Logistics together?
It really depends on what you are trying to measure. Remember, that KPIs should be selected to measure specific business objectives or outcomes. So in some cases marketing and logistics KPIs could interface. If a new service offer was being promoted for example.
Just came across your brilliant and very useful article about KPI’s, and just wanted to thank you for the precise and concise insight you bring.
Truly amazed how you answer everyone despite the specific requests! It takes lots of experience to do that and I value the added effort beyond writing the post.
Best of luck!
Happy to help where we can Malik.
Your article is very clear and usefull.
In your opinion, which are the main Supply Chain KPIs to take into account in a medium expanding firm?
The company works in the electronic envirnment.
Another dubt is how a company can correctly monotoring the accuracy of its data? (always supply chain perspective)
Looking forward to hear from you.
KPIs don’t really change just because of business size.
You’ll find lots of articles on KPIs on our blog that should help.
Data accuracy is another matter of course.
This requires an ongoing program to bring it all up to date. Be that inventory record accuracy, product descriptions, pack sizes or simply the way you record KPIs.
Pick one important area first, and make a start.
Thanks a lot for your reply.
I will take a look at your blog, i’m sure it will help me too.
Hi Rob, this is one of the most detailed articles I have ever come across on SC KPIs. Very impressive. Thank you so much.
Glad it helped. Supply Chain KPIs can get confusing at times. Best to keep it simple!
One of the customer wanted to set up KPI for on-time delivery and follow by financial penalties if KPI is not meet. KPIs must follow up by financial penalties? Is there another way to follow up with KPI instead of Financial penalties? If so, is there an example?
Thanks a lot!
Financial penalties are common.
Agree and set KPI targets with a minimum acceptable limit.
Then for example, if the minimum level is not reached for 3 periods in a row, a penalty might apply.
Often this will be a loss of margin, so still allowing costs to be recovered.
Rob well explained and I read all of them. Very rear to find knowledgeable people like you. Well said
Good to know about some much-needed KPI’s of logistics, how to implement them to achieve relevant results.
Thank you for sharing…
When it comes to supply chains, it’s important to identify the major KPI’s. One of the main issues is that companies often have too many, and this can cause confusion when it comes to measuring results.
I want to seek your help on how to compute KPI’s for evaluating agent performance.
Could you expand on your question a bit and I’ll see if I can help.
What type of agent?
Hi Rob, I am trying to find templates to structure SLA’s for the below type of 3PL providers. Can you assist?
Wharf Transport Providers
Shipping Agents & Clearance Partners
Hi Mathew, I don’t think you’ll find those things available for download anywhere. There is a lot of work and IP involved in creating them.
Thanks Rob. What would be your advice?
Give me a call and we can discuss. See this link for Sydney office details. My PA Rose can schedule call. https://www.logisticsbureau.com/contact-us/
I seek some financial or cost KPIs for the automotive industry. Can you please help me in this way?
Can be more specific? In what part of the business do you nee the KPIs? Logistics?
Yes in the supply chain management
I would be thinking of some KPIs like:
Cost per purchase order on suppliers
Cost per order line processed/delivered by 3PL inbound
Inventory value on hand
Order lines picked per hour
Cost per order line picked
I’m looking for some logistics KPIs in the mining sector. Could you help me?
Happy to share some thoughts. Could you be a bit more specific about the type of mine, and the areas that you want KPIs for?
Is it consumables, rotables, equipment. I presume you are after Supply Chain KPIs?
The more background you can give the better.
And also an idea of what you are trying to achieve with these KPIs. The outcome.
Rob, thanks for your reply.
I would like to know the main KPIs used in supply chain, we wanna build dashboards to help in the decision makin process.
Hi rob , I am looking for KPI’s for sales manager and area sales manager for a food delivery service organisation vis a vis with the restaurants . Examples can be – discounts , new restaurant acquisitions . Can you help me out with more please ?
Example of companies – foodpanda, ubereats etc
We are factory logistics team, taking care of all SCM related logistics and transportation activities including packaging.
Need to set some kpi to measure service level index or customer satisfaction matrix for our internal customers
I would like to know the main
KPIs used in supply chain, we
want build dashboards/eHCMIS in the health facility/woreda HO to help
in the decision making process.
There are lots of articles on this Blog about KPIs.
This is the KPI category link: KPI Related Blog Posts
Hello Mohammed Sir , we are working on similar project, I think we can connect and make betteruse of knowledge , please you feel it is good idea please reachto me on [email protected]
First of all let me thank you for your wonderful blog. The content and the structure is very easy to understand.
Coming to my question..
I work in a firm where the supply network is now being newly designed. We have below KPIs based on the objectives
List of objectives – Low Lead Time, Low Costs, High Customer Satisfaction, Being Flexible (Ofcourse not all are possible to achive. But we want optimal values in everything)
KPIs we defined
Order fulfillment lead time for lead time
Total Supply Chain Management Costs for low costs
Perfect Order for High Customer Satisfaction
A framework to identify flexibility score based on Sourcing Flexibility, Production Flexibility, Product Development Flexibility
For lead time:
Supply Chain Cycle Time
Supplier Order Cycle time
Cash to Cash cycle time
For Customer Satisfaction
OTIF and Damage Free
Therefore, we have 2 tiers of KPIs. 2nd tier of KPIs are supporting tier-1 KPIs.
May I ask you if this approach makes sense? Am I still missing some perspective? Ofcouse, without being informed more about the company you might not be able to give a concrete answer.
However I would like to know your opinion?
Makes sense to me. You need to ensure you cover:
And you have.
Thank you for this nice Article. I work for manufacturing industries, which produce packaging for liquid Food industries.
I have to set KPIs for Supply chain on two things (1) Transportation Costs/Pack (2) Annual waste/damages.
Would you please guide me how to set these KPIs. Thanks
I could suggest…….
(1) Cost per unit delivered. What is the unit of measure? Pallet, case?
(2) Cost per order delivered.
(3) Waste cost as a % of sales
(4) Damage costs as a % of sales.
Thanks for the quality read.
I’ve found that the KISS principle is best for understanding most KPI’s and implementing them in any industry.
The only thing I’m struggling with at the moment is finding some kind of industry comparison to see how my KPI’s stack up against others. Whats your understanding with this subject?
Seeing how your KPIs stack up against others a.k.a. Benchmarking, is recognised as a valuable improvement tool. But the information is hard to gather and is therefore valuable IP. And expensive. We actually have a business that provides KPI Benchmarks. There used to be an annual report, the Controllers Report that was available for about $500. But I don’t think it’s available anymore.
Hi Rob, What can be possible KPI for supplier/vendor billings?
Depends what you are trying to measure. You mean invoices from your supplier right?
Accuracy of supplier invoice
Timeliness of providing invoice
Discounts give on invoice?
Hi Rob, What can be possible KPI for vendor billings?
Can you explain that a bit more? Who is billing who and what outcome are you seeking?
Hi Rob – working in a service processing facility. Procurement and supply function responsible for the following;
1. Sourcing packaging and supplying that to the production function.
2. Sourcing consumables used by staff in the production function (uniforms etc).
3. Sourcing mechanical parts/tools used by the maintenance team.
4. Sourcing chemicals used in the production function.
Thoughts on KPI’s?
SIFOT (Supply In Full On Time)
Cost per PO processed
Read your comments to others.All were very much informative.
Need your help to Develope KPI for me.
Currently am working as head of procurement for a pipe manufacturing company in UAE and we have import purchases from China an EU.
my job involves the overall handling of procurement and Logistics operation.
Request your support to develope the KPI for me.
I would focus on things like:
SIFOT (Supply In Full On Time)
DIFOT (Delivery In Full On Time)
i need the KPIs for Inbound and Oubound Logistics with the calculation equations for each KPI
There are many.
As with all KPIs, start with what you are trying to measure.
What is the outcome or result you are trying to improve here?
I’m in the industry of e-commerce Under operations for First Mile and Last Mile Delivery. Would like to ask What KPI is best suite to streamline deliveries, proper control of 3PL and operational cost.
That’s a big question. The short answer I think would be these KPIs:
Transport Cost per order delivered.
Warehouse Cost per order processed
Delivery cost as a % of sales
Warehouse Cost as a % of sales
can you give me good examples of Business plan & scorecard for Materials & logistics, based on our branch business & scorecard; …. To Deliver Fit for Purpose Property, Plant, Equipment, Products & Services at Right Quality, Time & Place (Safe, Efficient, Effective & Economical)
Hi, I’m happy to give brief tips here, but sadly don’t have time for long detailed answers/advice.
Great post. Do you have any other ones you can put? I dig super stuff. 🙂
As the technological advancements are taking place at a rapid pace and logistics is also absorbing the innovation and advancements. Will the use of Artificial intelligence change the KPI measurement metrics? and if so what metrics can be added or removed from present from the existing one? (No specific industry).
Do you think KPIs will change?
I’m not so sure.
I think we will always be measuring similar cost and service KPIs.
But the performance targets will keep getting higher!
I’m working in Inventory management department, It would be very helpful if you send me the KPIs for effective and efficient inventory management operation.
There are many inventory KPIs you could use. How about.
Inventory value as a % of sales
Inventory stock cover as weeks of sales.
Inventory record accuracy
Overall Inventory value.
Value of inventory with no sales in last 12 months
Hello!! My project is building a supply chain network of a Musical pillow and I am stuck up at the drivers and metrics of this product. Ca you please help me out in this. I am not able to understand where should I start from.
Always start with te customer service offer. Establish that, and every thing else follows logically.
Thank you so much.
Hello, I am working for a food production factory, they have asked us to come up with some ideas about KPI’s which we can use to measure our own performance regarding picking and packing orders, could you please give me a few examples of any we could use? Each order is different so it’s quite hard to put a time on how long it should take to do one order?
KPIs don’t differ much by industry.
picks per hour
orders per hour
You could measure it over a shift, not per order.
Then look at improving by 5% and maybe get your team to brainstorm what might improve things…
could you kindly send me the PDF of the above article.
I’m sorry we can’t provide those… But all of this information, in much more detail, and lots more resources are available in our online education program. https://www.supplychainsecrets.com/
Please I work in the Oil & Gas industry more specifically LPG distribution. I’d like to know which KPI’s of relevance you could recommend to me for use in my company.
KPIs don’t change much by industry.
I’d look at (assuming this is gas station delivery)
Cost per delivery
Cost per cubic metre / 1000 litres
Drops per run
Drops per vehicle per week
Kms per drop
That type of thing…
Is there a KPI for a selection process for new suppliers. I am setting up a new range of suppliers and I would like use a KPI to follow up the development.
Thx and regards,
You would use a KPI once they are selected and working for you.
I think prior to that it’s about have an objective set of selection critria.
Hi Rob , when a company implement a product for use in the supply chain, is KPI a good measurement for its efficiency and effectiveness?
KPIs or Key Performance Indicators, as they are widely known as are the prominent parametres in deciding the performance of a supply chain firm as it is well stated in the blog.
I am an international purchaser and I really need to come up with a KPI spreadsheet to measure our freight forwarders’ performance. Is there any pre-built spreadsheet? It would mean the world to me. I am based in Brazil working for a Chinese company. Please help!
I haven’t seen any pre built, sorry
I am a Transport Manager in a busy pharmaceutical company. i have more than sixty motorbikes and 4 vans that assist in delivery. kindly assist me in the key performance indicators in this department. thanks
I would suggest.
Deliveries per Hour
Cost per Delivery
Hello sir can you please share some KPI for project or contract based and customized order based industry, KPI which are useful for management to take business decisions
Can you give me more details about the industry?
In the context of a Sponsor (pharmaceutical company) outsourcing to a CRO their clinical trial management including clinical supplies activities, which key indicators would you recommend to assess/oversight performance of this CRO on these Clinical Supplies activities until drug kits delivery on sites?
Thanks a lot
Not my area of expertise, sorry.
Thanks for the article and all the helpful tips.
May i have Planning KPIs ?
What type of planning? What type of business? You’ll need to tell me more.
This Playlist might help. https://www.youtube.com/playlist?list=PLAI2rbd3NwK7DeHvXIESAUaXquZFl3Lk7
Thank you for the Article.
I would like to know your thoughts about the digital supply chains especially in automotive sector.
How one can assess its supply chain performance in the digital world?
Which KPIs will be crucial in the digital supply chains?
Thank you for your time.
In your mind, what is a ‘Digital Supply Chain’?
A supply chain that manages and delivers digital products?
or a Supply Chain that is ‘managed’ digitally?
In either case I’m not sure the KPIs differ that much…….
Thanks, Ashlea! Glad you enjoyed it.
Thank you for the Article.
I would like to know KPIs in Parts Operations Department .
My job title is : Parts Operations -Team Leader
Accountability and Responsibility for:
1-Parts Operations -Ordering
2- Inventory Management
3-Clearance and logistics
4-Counter Sales Representative
5-Prts Service Coordinator .
Always think about the outcome you require. That determines the KPI. For example #4. Sales $ per hour, sales order per hour, number of customers v number of sales. (how many bought nothing)
Thanks, Rob for the informative article.
Can you provide some detailed KPIs for the transportation sector as I’m handling the control tower in a logistics company and I need to measure the performance of our operational fleet with some advanced detailed KPIs?
Appreciate your feedback.
With KPIs, always start with the outcome that you are seeking, and structure KPIs to measure that. For transport, it will be cost and service. So take cost as a start. What will impact the cost? Vehicle time and capacity utilisation. Running time loaded v unloaded. Vehicle uptime (availability). Get the idea?
Yes, got your idea.
Hi Rob, great article, thank you!
What 3 KPIs would you recommend for managing the supply chain for a new wine startup selling online and then eventually B2B?
DIFOT would be one. Then maybe stock availability and cost per case delivered?
Hi Rob, many thanks for the article, I would like to know what % of erros are acceptable in a logistic operation regarding food industry, specifically for alcohol drinks.
Maybe ¼ to ½ of a percent! With well documented reasons.
The content on blog is helpful and so easy to understand. However I have one question about possible KPI’s in “mixed” transport team, which will be universal for all of us. Our team deals with inbound, outbound and domestic transport. That’s 3 diffrent types of work, that need to be based on the same KPIs. How should we deal with it? Is it possible to create common KPIs ? We thought about KPIs created on base on sales or transport price, but it depending on the type of transport that each person is responsible for…
Why does it need to be the same KPI? These are quite different transport operations so it might not be fair to compare the results. Kind of comparing Apples and Oranges. But the same ‘measure’ could apply of course. Something like transport cost as a % of Sales, % of COGS, per unit, per pallet?
Glad you found it helpful!
I manage a Wine distribution warehouse.
We are a contract warehouse and own none of the product. We have over 200 customers how store wine for us to dispatch for them.
I want a better reporting figure to measure through put daily.
Currently recording the number of orders picked a day. Average day being 500 orders.
This figure is not enough as it doesn’t explain how much work is in each order. One order can be 1 case of wine taking 5mins to pick, another order being a complex mixed pallet order taking several hours to pick.
What is a better way to report the performance of the picking teams work daily?
KPIs need to match the operation, so orders per day might not work for you as you indicate. How about cases, bottles, layers, lines? Maybe ‘eaches’ (bottles) would be best? If you don’t do split case picking, then I’d use cases.
I need set KPI for Export shipment, could you please advise and suggest, thanks
Without knowing more it would be hard to advise. But maybe I can suggest things like, Ready for container loading in full on time, containers despatch on time, demurrage charges, cost per TEU at various stages….
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Hi Rob, great article! May I know what would you suggest for procurement operation leading indicators?
Hi @Wynn, thanks for your comment and your question. It really depends on what the business is trying to achieve or wants to improve. However some common Procurement KPIs are: Contract Management Cycle Time, On Contract Spend, Pre-Approved Spend, Invoice Approval Cycle Time, On Time Payment, and Supplier Management Meeting Adherence Rate. There are many more metrics, but these will give you an overall health check on your Procurement function.