Measuring logistics performance plays an essential role in running a successful eCommerce business. There are several metric tools to help you measure the performance of a courier company.
Quantifiable metrics and detailed insights can help assess a company’s success in achieving its goals. Managing moving parts of the supply chain can be difficult, especially without a central dashboard that provides key performance indicators (KPIs). There are several ways to collect data about a company’s processes using different systems and software to facilitate logistics management.
KPIs measure the performance of key processes run by a company. This improves productivity and profitability in the long run. To compete and scale up in today’s global markets, supply chain indicators are a necessary part of doing business.
Top 10 Logistics Metrics to Focus
1. Shipping measurement
Sometimes referred to as perfect order measurement, this KPI can be heard of in most discussions about supply chain metrics. Measure the percentage of error-free orders and calculate the ‘zero defect’ shipping variable to improve processes by gradually finding and eliminating defects until the number is zero. Perfect shipping measurements try to identify and understand what percentage of jobs are error-free and determine the cause of the error.
2. On-time shipping
Product delivery is a major function of the logistics industry, and on-time shipping plays a very important role in this. It processes all items that enter and leave the warehouse. Even a slight delay in shipping can affect the overall functionality. Compliance with on-time delivery is especially important for retailers, as carriers can lose margins if they do not deliver the goods on time.
On-time shipping can also be changed or split into smaller metrics:
On-time pickup rate
By monitoring on-time collections, shippers can track the carrier’s punctuality and how this affects delivery schedules. Measuring unacceptable pickup times helps identify problems early and prevents freight carriers’ untimely behavior from affecting product delivery.
The OTIF metric is a combination of On Time and Perfect Order that measures how often customers get what they need, when they need it. Many retailers use this metric to evaluate their suppliers and determine if their relationships are working effectively or not.
3. Warehouse capacity
Storage capacity measurement is one of the most important logistics metrics. It monitors inventory and tracks all items. Determining storage capacity is very important because it not only provides ideas for existing items but also helps assess load times. You can therefore enhance or mitigate the space accordingly. These days, there are a lot of software applications and digital gadgets to check the storage capacity, but you can also check it manually.
4. Freight or cargo payment accuracy
By measuring the additional charges on your cargo invoice, you can identify problems, false billing errors, or add-ons that may go unnoticed without your attention. This metric focuses on these charges and helps identify the recurrence of significant incidents.
You can quickly monitor and resolve problems, avoid unnecessary charges, and ultimately reduce shipping costs. Robust and stringent compliance can help you save a lot of money. The more error-free your freight invoices and payments are, the more savings you will have, and the more your net income will be reflected in your revenue.
5. Order fulfillment
The success of eCommerce logistics depends on correct order processing. Logistics efficiency and fulfilling the right order for the right person at the right time play an important role in measuring success.
Logistics needs to analyze the speed of operation after an order is placed. Time management and the right shipping process work together to ensure successful order fulfillment and handle minor considerations that can lead to business losses. Manual data processing can be error-prone and confusing. This metric also ensures that your order is delivered successfully without damage or misplacement.
6. Average cost per order
This metric includes all the hidden costs associated with logistics costs and average transportation per order. If the cost is high, it can explain upward spending. You can then take immediate action to fix the cause.
7. Transit time to distance
This measures the transit time to distance for delivery. Long transit times can affect the abilities of drivers and shippers to move such cargo due to the intent of optimizing limits and capacity.
8. Peak season management
Another important indicator of logistics is the ability to function smoothly during peak hours. This is the area where logistics is most lagging. If orders are not processed during peak hours, most of the logistics will fail, leading to huge capital losses.
9. Total or individual cycle times
Proper logistics performance measurements depend on total and individual cycle times. Circulation patterns are used to ensure that the warehouse is running smoothly. It covers the entire product channel. The product is monitored until it is sold. This is done at individual distribution centers. The entire process is carried out through a detailed audit.
10. Other criteria
- Truck turning is the average time between departure for pickup/delivery and return of the vehicle to the company.
- Occupancy performance indicators measure the utilization of vehicles’ load capacity for road transport or that of containers for sea freight.
- Productivity: This logistics metric measures the productivity of employees in a company.
- Transportation costs: This measures all costs associated with all the logistics operations your company develops, from orders to final deliveries.
- Shipments: This evaluates the average load processed by the company over the specified period.
- This includes handling of damaged products and adaptation to changes in weather.
Several indicators can help you measure your company’s overall performance and productivity. However, the first thing you need to do is use the metrics that you consider relevant to your analysis to improve your process. That way, you can not only identify and resolve operational issues but also develop strategies to optimize your company’s entire supply chain. Considering these metrics is a wise approach to improving your overall logistics results.