Looking to stay ahead of the logistics game in 2024? We have you covered! Despite challenges, the logistics industry is expected to go from strength to strength and is forecast to grow by more than 71 billion dollars USD between 2022 and 2026. Rapidly changing market conditions require faster decision-making and adaptation to changes. That’s why we compiled the 15 most needed logistics KPI examples, you need to track for success!
Importance of monitoring logistics KPIs in 2024
Monitoring logistics KPIs is not just good practice but essential for success. Logistics KPIs are essential for optimizing, measuring, and tracking performance in critical areas such as customer service, efficiency, reducing costs, and taking proactive steps. Additionally, KPIs can be used for benchmarking, and setting up sales targets. So, if you want to stay ahead of the competition, don’t neglect KPIs for warehouse and logistics!
Setting up your logistics KPIs
The success of your company does not only depend on blindly setting up your logistics KPIs. For successfully setting up the right logistics KPIs follow these tips:
- Identify your business objectives: this should be aligned with your company’s vision and mission statements, which helps in strategy development.
- Perform industry benchmarking: compare your activity against other companies, so you can get an understanding of what performance levels you should aim for.
- Analyze existing data: analyze your current performance. For example, how many orders you are handling, how much time it takes to deliver items, availability of capacity, delivery rates, and transportation costs.
- Collect customer feedback: analyze or ask for feedback and satisfaction levels of your customers.
- Ask your employees for feedback: get input from your employees and managers about needed improvements in operations.
15 logistics KPIs you need to track in 2024
Logistics is a complex process that involves different processes and requires well-made decisions. Logistics operations can be divided into 5 different stages, and for each stage different KPIs can be defined:
- Order Management
- Order Cycle Time
- Order Accuracy
- Number of Shipments
- Supply chain management
- Lead Time
- Stockouts Rate
- Sustainability metrics
- Inventory management
- Inventory Turnover
- Carrying Cost Inventory
- Customer Backorder Rate
- Distribution
- Transit Time
- Warehousing Cost
- Sales Lost
- Delivery
- Cost Per Delivery
- On-Time Delivery
- First-Time Delivery
In this article, we will dive deeper into these logistics KPIs, explaining what each KPI can track and how it can benefit your business operations!
Order management KPIs
Order Cycle Time
This is one of the most essential logistic KPIs. It measures the average time it takes to deliver the product from the time the order was made up until the actual delivery. By tracking this logistic KPI, you will be able to identify ways to increase customer satisfaction, optimize operations and reduce costs. By improvig this KPI, you will be able to improve inventory turnover, and your revenue.
Order Accuracy
This KPI measures the percentage of orders that were shipped without any errors, for example: ensuring the correct delivery address, the correct number of items, and sending the correct order to the recipient. A high Order Accuracy rate helps lower the number of returns and is an essential component in maintaining high customer satisfaction levels.
Number of Shipments
The following KPI shows how many orders your company has sent in a given time. As a result, tracking this KPI helps identify trends and changes, in turn optimizing your inventory levels, warehouse capacity, and transportation costs.
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Supply chain management KPIs
Lead Time
This KPI measures the average time for a supplier to have goods ready for delivery. It is not easy to optimize this metric, because Lead Time depends on several factors including supplier location, shipping method, and available inventory levels. To optimize the Lead Time requires a combination of continously investing in the latest technology as well as maintaining a close collaboration with suppliers It’s a big challenge, but if you are capable of optimizing this KPI, you can improve efficiency, reduce costs and ensure faster deliveries to customers!
Stockouts Rate
Don’t leave your customers empty-handed! You can avoid this by counting the Stockouts Rate. This measures the percentage of time that inventory is out of stock for a given item. By tracking this KPI, you can identify trends, and improve inventory management by forecasting inventory levels and maintaining relationships with suppliers.
Sustainability Metrics
Increasing government regulations and customer awareness of the environment and climate change has s lead many businesses to re-evaluate their impact on the environment. This is particularly relevant for the logistics industry. By tracking Sustainability Metrics, you can reduce your environmental footprint, including water waste, CO2 emissions, electricity, and natural gas, which would promote Sustainable Supply Chain Management (SSCM). Some of the most common sustainability metrics are:
- Carbon Emissions
- Generated Waste
- Energy Use
- Supplier Sustainability
Inventory management KPIs
Inventory Turnover
We will continue our list of example logistics KPIs with Inventory Turnover. This KPI shows the efficiency of your inventory management. A higher turnover shows that products have been sold fastly, which also leads to higher revenues. By tracking this KPI you can improve efficiency, reduce waste and take proactive actions to optimize inventory.
Carrying Cost Inventory
Don’t let inventory costs weigh you down! CCI rate counts the total costs, which business spends holding inventory for a set period of time. Keep track of your CCI and reduce lead times, improving order accuracy, and optimizing inventory levels. As a result, it will reduce inventory costs and meet customer demands.
Customer Backorder Rate
This KPI measures the percentage of how many orders can’t be filled at the time due to inventory stockouts or other internal factors. A high CBR rate indicates that the company has poor inventory management, which can affect customer satisfaction and loyalty.
Distribution KPIs
Transit Time
This KPI measures the time how much it takes goods to move from one location to another. By tracking the TT metrics, companies can identify delays in transit and take proactive actions to improve shipping times.
Warehousing Cost
Warehousing Cost shows the total amount of operating and maintenance costs of the warehouse. This includes all the related costs, such as rent, labour, utilities, equipment and security. This metric shares insights into how inventory operations can be optimized, so finding warehousing services near you can lead to cost savings due to reduced transportation expenses and improved logistics efficiency.
Sales Lost
Avoid frustration and costly mistakes, by counting Sales Lost KPI! This KPI counts the percentage of total lost sales due to out-of-stock products. By tracking this KPI, you can make data-driven decisions to optimize inventory and prevent future sales loss. It’s a key KPI company's brand image and keep your loyal customers!
Delivery KPIs
Cost Per Delivery
This is an excellent KPI for measuring the average costs of delivering an order from the warehouse to the customer. By monitoring, this KPI logistics companies can identify areas where costs can be reduced or delivery routes optimized.
On-Time Delivery
This KPI shows the percentage of shipments that are delivered on or before the delivery date. A high OTD rate indicates efficient logistics operations and service.
First-Time Delivery Rate
The last one on our logistics KPIs examples is the First-Time Delivery Rate. This KPI measures the percentage of orders that are successfully delivered at the first attempt. Failing to deliver from the first time, it can cause customer dissatisfaction, increased costs and delayed operations, which will distract all the chain.
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It's not enough just to have logistics KPIs - though they can be used as a powerful tool for enhancing company success! A highly competitive environment requires quick and effective decisions. So, say goodbye to manual tracking and hello to data-driven decisions with Plecto logistics KPI dashboards!
By integrating your CRM data, you can easily build a logistics KPI dashboard with justa few clicks! You can identify trends, risks, and take proactive actions to run your logistics operations smoothly. Plecto dashboards provide the real-time insights you need to optimize your operations and improve your company’s bottom line.
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