Logistics KPIs: What to Measure and Why—Executive Brief

Every shipper worth their salt knows that great supply chains are built on a foundation of solid data. It’s only by continuously monitoring, analyzing, and acting on their data that companies can improve their logistics operations to become—and remain—best in class. This is especially true when it comes to key performance indicators (KPIs), which, when used effectively, serve as meaningful markers along a strategic path. But some shippers aren’t sure which logistics KPIs they should be measuring, or how they tie into their overarching goals.

The best logistics KPIs are specific, realistic, and actionable. If you can’t consistently track data relating to a particular KPI or are unable to influence it one way or the other, it may not be worth the effort of monitoring it. On the other hand, if a KPI can help you rapidly respond to a negative trend (say, a dramatic dip in carrier performance or a sudden spike in costs) or eliminate guesswork from the decision-making process, it’s absolutely worth keeping an eye on.

Monitoring too few KPIs can leave you with glaring blind spots while monitoring too many can make it difficult to hone in on what really matters. To help you strike the right balance, here are a few core logistics KPIs that every shipper can benefit from tracking.

On-time delivery (OTD)

Improving their OTD rate should be top of most shippers’ to-do lists. This metric can not only help companies identify bottlenecks in their supply chains that are delaying shipments but also allows helps them to keep a pulse on how well they are meeting customer expectations.

A low OTD rating indicates a significant need to tighten processes, while a high rating that is nonetheless less than 100% leaves room for improvement. Late shipments can lead to all manner of problems, from angry customers to escalating late fees. And when the issue was caused by a delay at the loading dock, carriers may miss delivery windows for future orders, making them less likely to want to work with your company again.

Perfect order

The perfect order rate, or order accuracy rate, should go hand in hand with the OTD rate. If orders are arriving on time, but goods are frequently incorrect or damaged, customer needs aren’t being met, and the chances of repeat business plummet.

A consistently low perfect order rate could suggest that something is going wrong in your warehouse that needs to be addressed. Or, it could be a sign that your carrier has grown sloppy and isn’t treating your freight with due care and attention, resulting in damaged goods.

Transportation costs

Every shipper wants to bring their transportation costs down—but that’s only possible if you know what you’re paying.

This metric doesn’t just cover what the carrier charges but encompasses all expenses related to the processing and fulfillment of an order. You could have the best, most cost-effective carrier in the world, but if you’re spending a fortune in administrative costs to process each order, you still have an opportunity to bring costs down.

Freight payment accuracy

Freight payment accuracy is a measurement of how often your company is charged what it should be for shipments. If one carrier, in particular, is repeatedly overcharging you—missing agreed-upon discounts, erroneously billing for accessorial charges, or duplicating invoices—this is something you need to know about.

Regular freight auditing is essential for measuring this KPI, resolving issues quickly, and keeping costs in check. Some companies are shocked to discover how frequently they are overcharged when they implement this KPI for the first time.

Measure and improve the logistics KPIs that matter most to your business

Keeping a handle on your KPIs is only possible with the right tools.

CTSI-Global’s robust business intelligence capabilities allow you to organize, visualize, and analyze your data, making it easy to stay on top of the metrics that matter most to your business. We’ll help you develop customized KPI dashboards for different uses, like providing executive-level insights or a global overview). That way, it’s easy for users to assess performance at a glance—or drill down for deeper insights.

Measure what matters. Contact us today.

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