Measuring Logistics Success: Key Performance Indicators

Whether your logistics business sells products, offers services, or both; having a clear picture of how you’re doing provides priceless insight. Data can help you measure how efficiently you’re fulfilling customer orders and managing costs. Even better, tracking key success metrics can help you develop better business strategies and scale your operations.

In the logistics industry, measuring success requires focusing on the strengths and weaknesses of your supply chain. Ultimately, you want to be able to measure if individual departments are meeting quotas or if they’re missing the mark. To gather the right data to do this successfully, you first have to identify the right key performance indicators (KPIs).

Understanding KPIs

KPIs are metrics that businesses use to get a current snapshot of how a certain department or process is performing. These indicators measure data and give you a consistent view into changes over time, both positive and negative. This analysis allows your company to evaluate whether each department is missing, meeting, or exceeding predetermined goals.

Logistics KPIs

KPIs vary a lot by industry. What is relevant to one type of business may be completely irrelevant to another. For example, a car dealership may measure:

  • how many cars each rep sells in a predetermined time frame
  • total vehicles sold each week, month, and year
  • number of leased vehicles versus sold vehicles

To contrast, a logistics company may measure things like:

  • overall delivery satisfaction
  • how many deliveries were made on time and in full
  • how long current inventory sits before being sold

Determining appropriate metrics to measure is a vital step to making effective operational changes. Some of the most common KPIs used in the logistics and supply chain industry include:

  • Inventory Stock Turn:
    lets you to track the amount of inventory available, and the number of days it will last based on the current sales rate.
  • Selling Costs at Percentage of Sales Generated:
    an effeciency metric that allows you to evaluate how effectively money is being spent on inventory and operations.
  • Delivery on Time:
    track whether shipments are consistently being delivered to end users on time.
  • Delivery in Full: evaluate whether or not customers are receiving their full product shipment upon delivery.

Selecting Your Logistics KPIs

It’s a good rule of thumb to focus on KPIs that can realistically be measured and analyzed on an ongoing basis. Trying to analyze too many KPIs can lead to analysis paralysis, as gathering excessive data that isn’t properly analyzed is not a useful way to measure success.

Focus on selecting KPIs that best align with your business growth goals and use the data you track to make changes that ultimately help make your processes more efficient.

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