With all the systems and software created to facilitate logistics management, there are currently several ways of collecting data on a company’s processes. But the real question is: are you using this data in your business’ favor? This is exactly what each KPI logistics is for.
Key Performance Indicators, also known as KPIs, are metrics that measure the performance of the main processes executed by a business. KPIs are mostly used so that employees of a particular organization are able to apply constant improvements to their procedures, which can result in better productivity and profit margins.
Why is each logistics KPI important?
Logistics KPI’s are very important for measuring production, costs, and quality rates. 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.
Now you might be wondering, “What KPI logistics companies should measure to improve their processes?”, we have listed the most essential KPI for logistics department below. Check it out!
The most essential KPI logistics
1) Order accuracy
Monitors the degree of incidents from the placement of the order to the delivery of a shipment. Ideal for any freight forwarder looking to identify patterns and continuously correct errors in order to make transportation safer.
2) On Time In Full
This logistics key performance indicator, also known as OTIF, measures the percentage of orders delivered within the stipulated time, without any problems or documentation issues. It is ideal for any freight forwarder committed to providing punctual and safe deliveries.
3) Lead time
Lead Time is a KPI that tracks how long your company’s processes/operations last, from start to finish. Ideal for freight forwarders to know the amount of time spent in each stage of the supply chain and identify strategies to optimize this time.
4) Stock rotation
KPI that does an average between a company’s outflows with its stock balance at the warehouse. Ideal for forwarders that offer warehousing services as part of their logistics solutions.
5) Warehousing Costs
Also ideal for the freight forwarders that offer warehousing services, this KPI monitors the expenses involved in the management of your logistics company’s warehouse facilities.
6) Truck Turning
This transportation logistics KPI measures the truck’s turntable, that is, the average time spent between the exit for collect/delivery and the return of the vehicle to your company. Ideal for companies that offer road transportation.
7) Capacity utilization
Performance indicator that measures the utilization of the load capacity of a vehicle during road transport or a container during sea freight. Ideal for freight forwarders that offer these services.
This logistics key performance measures your company employees’ production rate (workforce/labor hours/productivity). Ideal for forwarders to have a better overall idea of their business’ performance.
9) Transportation Costs
Measures all costs related to each logistics operation developed by your company, from order placement to final delivery. This KPI logistics can be helpful for forwarders to know the average spent in each shipment and send accurate quotations to their customers/partners.
10) Number of shipments
Evaluates the average of cargoes handled by your company at a stipulated period of time (weekly/monthly/yearly). Ideal for any freight forwarder looking to make constant financial balances and analyze their profit margins between incomes and outcomes.
In addition to the logistics key performance indicators mentioned above, there are many other logistics KPI that can measure the performance and productivity of your business as a whole. However, in order to use the right indicators, the first step is to define what kind of data you consider relevant to analyze in order to improve your processes.
From there, you simply need to adopt the indicators that will provide you with this data. Then, you will be all set to recognize operational issues and create strategies that will not only solve them but optimize your business’ entire supply chain.
About Twig Logistics Network
Twig Logistics Network is a group that gathers the most reliable freight forwarders in the world. 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.
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