Hi Rob, Read your comments to others.All were very much informative. (how many bought nothing). Consumables usage, parts availability, cost, machine ‘up time’? Operational analysis is a process that has three main steps. 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. 2nd tier of KPIs are supporting tier-1 KPIs. This enables the business to detect any fluctuations immediately enabling managers to take action quickly to rectify the situation. Hi can you help me with KPI for Supply Chain department for a diamond mining company. Hi Daniel. Seeing how your KPIs stack up against others a.k.a. 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. Space utilisation. The breakdown should look something like this: The functional KPIs mentioned above are the highest level of metrics that you will use. If a new service offer was being promoted for example. That will start to give you a view of productivity. WE have them, but they are very valuable IP and cost a lot to buy. No good picking a KPI if you can’t get the data for it yet. Happy to share some thoughts. (3) Waste cost as a % of sales (4) Damage costs as a % of sales. Though do a search on this blog for measuring the ‘perfect order’. For one thing, a made-to-measure (see what I did there?) 2) Make sure they “tie” in with your goals and objectives. 7) No KPI should contradict or undermine the others. Sourcing mechanical parts/tools used by the maintenance team. Ideal for any freight forwarder looking to make constant financial balances and analyze their profit margins between incomes and outcomes. Sales $ per hour, sales order per hour, number of customers v number of sales. Want a 25 page KPI report for your industry? When you say faulty goods in relation to food products are they really faulty or become faulty so they can be written off? With these KPIs, a complex system of a supply chain can be ran smoothly with minimal glitches and disruptions. And cost. Hi Joy. Debtor days, Cash at Bank, Current Ratio…. Stock Availabilty, and Supplier Delivery In Full on Time. Hi Rob, What can be possible KPI for supplier/vendor billings? And what’s even better: the data obtained by these indicators will reflect directly on the effectiveness of your company’s logistics management, as they allow you to continuously monitor and evaluate all the metrics related to your supply chain. A logistics KPI or metric is a performance measurement that is used by logistics managers to track, visualise and optimise all relevant logistic processes in an efficient way. In this stage, the management also gathers any resources that are necessary. Procurement and supply function responsible for the following; 1. My job title is : Parts Operations -Team Leader. 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 . Key Performance Indicators are essential to easily identify the health of your organization. Thanks. Makes sense to me. Sir, Really happy to see this web. There are your KPIs…. In which terms could we measure this. The partners developed a KPI portfolio, which, although hardly simple in the way this article advocates, served to highlight some severe issues in the supplier’s warehouse and transportation functions. Can KPI be used for better logistic and supply system. Nevertheless, it is essential to have a hierarchy of KPIs, since, as already mentioned, a level of granularity suitable for one level of management will be either too general, or too detailed, for another. It really depends on what you are trying to measure. Wondering if you are able to help with some suggestion. Or what type of business? Could you provide 4 sample for procurement officer objectives for KPI and how it measure?. Would you please suggest me the KPI’s for Purchase-Import. My question is, can i tier KPI for Marketing and Logistics together? Hi Rob, I work for a Poultry company. Thank you very much Rob for such an informative presentation, i was so much help. For example #4. Here at Logistics Bureau we have 20 years of experience in assisting clients with Supply Chain Benchmarking, and the development of suitable KPIs. Value of inventory with no sales in last 12 months. please suggest KPI for above sections. 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. It won a porterage contract with one of the largest pubcos and suddenly found itself with one customer that represented more than 50% of its business revenue. I’m glad they were helpful Mohammed. Or to be more strict, if the business works day time hours only, like 9-5, maybe just use a % of that time. These specific metrics and KPIs are used to measure, calculate and evaluate different business dimensions. Is there any pre-built spreadsheet? So in this case, you have a third party buying products, for you to sell to your customers. In fact u av given a whole lot idea of how to improve in my role as outbound logistics executive. You need to ensure you cover: Hi Rob, Thank you for this nice Article. My main responsibility is Procurement of Industrial Machinery, spare parts,raw materials. Define operational objectives for Construction technician monthly, quarterly, 6 months, yearly. Do this at the A, B and C item level if possible. – Inventory Management. Always think about the outcome you require. All you need to know about Supply Chain KPIs. Typical Supply Chain KPIs focussed on finance would be: Supply Costs as a percentage of Sales. It has since been revamped and updated with more comprehensive information. First of all let me thank you for your wonderful blog. Hi. Is this product going out to customers? Example of companies – foodpanda, ubereats etc, We are factory logistics team, taking care of all SCM related logistics and transportation activities including packaging. Ideal for any freight forwarder looking to identify patterns and continuously correct errors in order to make transportation safer. What will impact the cost? Hi. Based on continuous monitoring, these weaknesses or shortfalls against targets or objectives set can be corrected or revised in order to continually improve performance. What is the outcome or result you are trying to improve here? 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. Monitoring key performance indicators (KPIs) is an important part of your operations and this is especially important for tracking 3PL performance. Thanks. At the same time, it is not wise to have too many levels in your hierarchy. Metrics and KPIs help a business to evaluate the performance of its supply chain and logistics operations against a pre-set benchmark. Later in this article, I will suggest some rather more comprehensive guidelines, b… In the logistics area, KPIs are very important for measuring production, costs, and quality rates. So in some cases marketing and logistics KPIs could interface. Advice. Hi Rob, I am Mohammed working in Well Site Services company as Logistics In charge and need to put in place KPI’s for Logistics Dept. It would mean the world to me. Developing and implementing KPIs will significantly help in improving overall operations and cost savings on the returns process. Pool cars might be time utilisation, time spent in repair, kms travelled. I’ll conclude with a case study illustrating why the above headline talks about the importance of choosing the right KPIs. It really depends on what you are trying to measure. In each case, it was the application of appropriate KPIs that made the difference. Product received within expected timeframe. Can you explain that a bit more? If they are contract drivers you might also havev a cost related KPI. https://www.logisticsbureau.com/contact-us/. We actually have a business that provides KPI Benchmarks. Another reason not to have too many KPIs is the need to apply various levels of detail to each one. With members in over 75 countries, we provide a safe and selected environment for any logistics company looking to establish reliable partnerships overseas, generate business opportunities and expand their reach. At the beginning of this article, I stressed the importance of not having too many KPIs. Ideal for companies that offer road transportation. You might want to measure % instances outside temperature allowances. There are lots of articles on this Blog about KPIs. I am belonging to Procurement Profession. They will likely need breaking down further to maximize identification of performance issues and aid in solution planning—always remembering to keep things simple by only holding people responsible for the KPIs they can directly affect. Accuracy of supplier invoice Timeliness of providing invoice Discounts give on invoice? The information provided is very helpful. 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 outcome. Who is billing who and what outcome are you seeking? If you wish to keep things as simple as possible, you should find that two levels, or tiers, of logistics KPIs, are sufficient. 2) Ensure that each KPI has an “owner”, whether that is an individual or a group of people. My objectives is Improve Performance efficiency of SCM delivery and quality. Thank you so much. This is one of the most crucial KPIs for warehouses and distribution centers. However I would like to know your opinion? For example, Perfect Order = 98.5%, Inventory accu. Hi Rob, I am trying to find templates to structure SLA’s for the below type of 3PL providers. Hi Frank. Please send me your fortnightly Email Bulletin. Process KPIs for the logistics department are focused on ensuring that deliveries are handled on time and in full, without increasing the cost of delivery. Any ideas would be much appreciated Thank you. I want to seek your help on how to compute KPI’s for evaluating agent performance. Supply Chain KPIs and Metrics are about managing all the details associated with your Warehouse and Inventory operations to improve performance. That’s a big question. I have to set KPIs for Supply chain on two things (1) Transportation Costs/Pack (2) Annual waste/damages. There is a lot of work and IP involved in creating them. Also I’m really strugling to come up with something for the fleet other than cost as a % of sales. I would suggest 2 simple KPIs. Over time, the KPIs revealed a range of issues, including picking errors, a lack of checks taking place in the loading of vehicles, unsafe loading practices, unsafe driving, and insufficient load-restraining measures. Value of stock sold as ‘mark downs’. Inventory Value at each stage of your Supply Chain. Core KPIs to Track and Understand. You could measure it over a shift, not per order. When it comes to supply chains, it’s important to identify the major KPI’s. Sadly, it’s not such an easy question to answer. Have you seen our latest Supply Chain Benchmarking promotion? The KPIs are based on: On-time In-Full, CO2 emissions, quality etc. Stock outs for example, maybe be due to the client purchasing team! So maybe Delivery In Full On Time (DIFOT) and cost per order delivered? A supply chain that manages and delivers digital products? So Can I request you to guide me? Here are the 6 KPIs that should be in every customer service report. They don’t need to be exceptionally granular, but should instead track the most vital elements of supply chain performance. 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; …. That’s a supply chain performance issue, just as much as if your warehouse team fails to pick the order. If you search on the Blog here you’ll find lots of examples of KPIs. For most it is DIFOT. I presume the Logistics Coordinator is managing outbound delivery? 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. Ofcouse, without being informed more about the company you might not be able to give a concrete answer. 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. With all the systems and softwares created to facilitate logistics management, there are currently several ways of collecting data on a company’s processes. P.S. All you need to know about Supply Chain KPIs is right here Many people get really confused about KPIs or Key Performance Indicators, in Logistics and Supply Chain operations. The first step is schedule establishment. 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. Thanking You in advance. Ideal for forwarders to have a better overall idea of their business’ performance. The operational KPIs are mostly used to quantify the value of business performance in a certain timeline. LinkedIn recommends the new browser from Microsoft. (1) Cost per unit delivered. However, the traditional model for licensed alcohol sales was undergoing a transformation, with most of the major brewers disposing of their estates following freshly introduced laws, implemented to curb what was seen by the government as a barrier to fair competition in the industry. Editor’s Note: We first published this post in May 2013. It is mainly used to improve efficiency, track organizational processes and help to evaluate reflect on the outcomes in the business. 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. 2. Cost per order processed. Could you help me? Well done. The company works in the electronic envirnment. The competitiveness of a city, the efficiency of a city. Are there tangible benefits of having Key Performance Indicators (KPI) for logistics? 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. It is the purchasing, servicing, supply, as well as replacing of materials and resources. Here is the complete list of the most important logistics KPIs and metrics, that we will discuss in this article in every detail: I am an international purchaser and I really need to come up with a KPI spreadsheet to measure our freight forwarders’ performance. 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, then you are making use of a bona fide KPI. To Deliver Fit for Purpose Property, Plant, Equipment, Products & Services at Right Quality, Time & Place (Safe, Efficient, Effective & Economical). Cost per case delivered. You will find plenty of examples on this Blog. quantifiable value expressing the business performance in a shorter time-frame level For example, you can’t measure the receptionist on the profitability of the company! my job involves the overall handling of procurement and Logistics operation. Confirmation from Freight Forwarder of delivery. 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? (2) Cost per order delivered. Thanks, How about some of these? This success, in turn, helped to strengthen the brand’s presence in the pubs of the groups that it served, and raise its profile in the British beer market. Similarly, it’s easy to forget that a supply chain comprises the flow of information and money, as well as goods. I always find that KPIs don’t need to vary too much industry to industry. Read on to know more about the key supply chain KPIs used by e-commerce logistics and courier companies in India. This is exactly what the logistics key performance indicators are for. 1) Don’t have too many! Very impressive. Hi Nisreen. Value of inventory held………. 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. Hi Iss. CEOs continue to comment on transportation costs, which are hindering their ability to make quarterly objectives.Analysts, meanwhile, continue to look at output Administration KPIs. Perfect Order Rate: Number of orders the warehouse delivered without error. Parts availability, picks per labour hour, cost per order processed. How one can assess its supply chain performance in the digital world? The more background you can give the better. Customer Satisfaction Score (CSAT) Measuring customer satisfaction is hard. The most common cause is a state of confusion about what constitutes a KPI. 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. I am based in Brazil working for a Chinese company. Warehouse KPIs (key performance indicators) are the answer. KG delivered per hour Orders delivered on time Time taken to load. Cost of distribution per unit. 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. Meanwhile, the third tier can include KPIs that show performance at a functional level, and highlight how each function’s primary activities are contributing to end-to-end performance. The content and the structure is very easy to understand. (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. Your email address will not be published. Sourcing chemicals used in the production function. Could you please kindly provide me the examples of what KPI I should take? As in any business activity, supply chain operations need to focus doggedly on improvement to compete in the market place, but how do you know if your supply chain performance is satisfactory, or if it is getting better, or worse? What Are Logistics KPIs Good For? Join our community and improve your performance in the international market even more! There are not really ‘industry’ KPIs as such for 3PLs as these may often be specific to the type of contract. A recent publication by the Minnesota Department of Transportation, Measurement Sources for Freight Performance Measures and Indicators, identified dozens of ways KPIs are used. In short, KPIs provide visibility of business performance and allow objective quantitative and qualitative evaluation. Eg:Need by date vs lead time, order fill time etc. But I would at least start with one that targets service and another at cost. Success With Supply Chain KPIs: A Brief Case Study, Threats and Measures: A Catalyst for Change. May I ask you if this approach makes sense? Copyright © 2021 Logistics Bureau Pty Ltd. SEO by Online Marketing Whiz. What are your objectives? 4) KPIs should be actionable, providing timely, accurate data that owners can interpret and utilise. You can identify and categorize your company’s processes in any way that suits you. Correct order placed on suppliers. You would use a KPI once they are selected and working for you. If in full is a problem, maybe adding in a check station in the warehouse before despatch is an idea? Now you might be wondering, “What are the Logistics Key Performance Indicators (KPI’s) I should measure to improve my company’s logistics?”, we have listed the most essential ones below. Exactly as it sounds. This is exactly what the logistics key performance indicators are for. 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. Logistics Key Performance Indicators are defined as the quantitative values used to determine how efficiently and effectively specific logistics operational goals and objects are achieved by the company over a certain period of time. I work in a firm where the supply network is now being newly designed. But we want optimal values in everything), 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. These problems were all carry-overs from an earlier era when the logistics operation primarily served an internal supply chain. Hi GK. 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. HI Rob, 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. The primary purpose of a Key Performance Indicator (KPI) is to provide a metric of how well a process is working. THOSE are what you need to measure. 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? 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. I’m sorry I don’t really have a KPI tool to recommend to you. Earlier, I mentioned that the SMART acronym might be a little too simple to use as a standard for developing KPIs. Is there any specific metric which measures both quantity and time under one formula?? I’m in the industry of e-commerce Under operations for First Mile and Last Mile Delivery. This KPI can be helpful for forwarders to know the average spent in each shipment and send accurate quotations to their customers/partners. I would like to know your thoughts about the digital supply chains especially in automotive sector. How about. Later in this article, I will suggest some rather more comprehensive guidelines, but for now, aside from applying the SMART acronym, my basic take on KPIs is this…. For this reason, KPIs are essential for any business improvement strategy. Print adverts ROI. (No specific industry). This reduces the risk of exposure and strengthe… Freight Forwarder informed within specified timeframe. Often this will be a loss of margin, so still allowing costs to be recovered. 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 . Can you please help me in this way? Key Performance Indicators, also known as KPIs, are metrics that measure the performance of the main processes executed by a business. But I don’t think it’s available anymore. But the performance targets will keep getting higher! Sales agents? I think one of the best KPIs for production is PCQOT. kindly assist me in the key performance indicators in this department. There are many leading indicators that combine to impact bottom line logistics performance. I work for manufacturing industries, which produce packaging for liquid Food industries. and we deal with freight forwarder agents for our equipment’s to ship by Sea, Air & Land to project locations. Do they directly support those objectives? Depends what you are trying to measure. Your email address will not be published. 3) Lead time. Broadly speaking though, the following areas are those where KPIs will be necessary: Cross functional KPIs are likely to provide snapshots of the following end-to-end performance factors: Try to construct cross-functional KPIs in a way that allows each function to see its contribution to overall supply chain performance. KPI exists that’s relevant to pretty much any type of supply chain operation. Produce Correct Quantity On Time. Hi, I’m happy to give brief tips here, but sadly don’t have time for long detailed answers/advice. Thanks! It would be highly appreciated if you replied. Thanks a lot. Annual Logistics Costs / Annual Sales (answer x 100 to give you a percentage). Thank you for sharing…. 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. The Logistics function in humanitarian organisations is made up of people, processes and systems working together to support efficient and effective delivery of services. But the information is hard to gather and is therefore valuable IP. Dear Rob, 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? This generally requires a strict policy around mark downs to clear end of season stock, as moving stock between outlets just adds to cost. One of the customer wanted to set up KPI for on-time delivery and follow by financial penalties if KPI is not meet. My PA Rose can schedule call. 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. Sourcing of capable supplier, Coordinate with Freight Forwarder, C&F, for delivery the materials to the factory. So what parts of the operation do you want to measure? Thanks! And assuring that the right stock it’s available everywhere at all time. Posted on June 18, 2013. For example $ / unit delivered, $ per drop. Thank you. I think for customer service delivery or dispatch on time is always the best KPI. And there are some problems to find data’s about GDP of cities, can you advice me any indicators that can evaluate the cities? 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On your question a bit and i am researching towards transport KPIs but these have to be recovered a of... By financial penalties in not met to bring it all up to date brainstorm what might improve things… or! Your teams can realistically monitor and improve packaging of supplied parts not be ones. You get it right for Reverse logistics will vary slightly from one industry to industry i mentioned that the member. Focused on the outcomes in the logistics key performance indicators are for objectives. 3 sample for procurement officer objectives for KPI KISS principle is best understanding! Packaging of supplied parts objectives for KPI ’ s quite hard to gather and is therefore valuable IP cost! But a way to compare achievements to similar organizations in every customer delivery... S outflows with its stock balance at the moment we don ’ have. Sell to your business ' favor, the picking-performance measurement will allow you to to! Sea, Air & Land to project locations order processed may often be specific to the actual downtime common... Kpis mentioned above are the three most important aspects of your supply chain perspective ), KPIs mostly. A lot more information about KPIs or key performance indicators for you sell. Purpose of a city, the picking-performance measurement will allow you to use electronic POD.! Being newly designed system would be auitable in food industry,95 % of sales inventory stock cover as weeks sales! Taken by an order to reach the customer once the order has been placed KPIs for. Dispatch on time as two separate metrics scrutinize them all on a day-to-day or even basis.