KPIs or Key Performance Indicators, as they are widely known as are the prominent parametres in deciding the performance of a supply chain firm as it is well stated in the blog. I will take a look at your blog, i’m sure it will help me too. Check it out! Still, it’s worth briefly discussing, as an example, one of the process cycles commonly used when monitoring supply chain performance. Would you please guide me how to set these KPIs. Agree and set KPI targets with a minimum acceptable limit. This is exactly what the logistics key performance indicators are for. However I would like to know your opinion? We have benchmarked almost 1,000 Supply Chains! Like all KPIs, you really need to start with the end in mind. The issue was not that the company had not been measuring performance, but rather, that it had been using metrics that were no longer relevant for serving a transformed marketplace. 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. Go to this page: To build KPI system for this position, you can follow the steps below: 2. The outcome. Consumables usage, parts availability, cost, machine ‘up time’? As a result, the brewing company not only averted the loss of its biggest customer, but went on to achieve a reputation for excellent distribution services, enabling it to acquire contracts with other major pub groups and become known as a leading beverage logistics provider. These sample KPIs reflect common metrics for both departments and industries. 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. Then add SIFOT. Just use the search box on this Blog. i have need KRA of operation department of Supply Chain Finance. I would suggest that you look at all the key areas where the process can break down, and measure those. Ideal for any freight forwarder looking to identify patterns and continuously correct errors in order to make transportation safer. Improvement in the brewing company’s service provision was made possible because the KPIs had enabled the partners to identify specific issues, and then agree and implement plans to address them. At this level of granularity, the picking-performance measurement will allow you to see trends and patterns in picking accuracy. Rob, thanks for your reply. Typical Supply Chain KPIs focussed on finance would be: Supply Costs as a percentage of Sales. Identify tasks list. Should I use different KPI for each dept, for example finance dept, Marketing dept, Administrative dept, etc. First though, let’s walk through why KPIs are important, and some of the principles for applying them successfully. Can you give me some examples to monitor and improve packaging of supplied parts. Print adverts ROI. 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. Logistics involves the significantly sophisticated data, communication as well as management systems needed in the modern business ecosystem. Initially, the KPIs were focused on the outbound supply chain, or more specifically, the last mile. Can you please help me in this way? Thank you for sharing…. That necessarily implies a need for financial functions to be measured if you want a full picture of end-to-end supply chain performance. Service level agreements, in particular, will be monitored through KPIs agreed between an enterprise and its customer, with the probable application of penalties should performance fall below agreed levels. This generally requires a strict policy around mark downs to clear end of season stock, as moving stock between outlets just adds to cost. That cycle typically goes under the heading of order-to-cash. Pool cars might be time utilisation, time spent in repair, kms travelled. Dear sir, I am a customer service and handling export shipments. 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. Your email address will not be published. 1. This KPI can be helpful for forwarders to know the average spent in each shipment and send accurate quotations to their customers/partners. Benchmarking, is recognised as a valuable improvement tool. And there are some problems to find data’s about GDP of cities, can you advice me any indicators that can evaluate the cities? Establish that, and every thing else follows logically. CEOs continue to comment on transportation costs, which are hindering their ability to make quarterly objectives.Analysts, meanwhile, continue to look at output Is this product going out to customers? Thanks! It is ideal for any freight forwarder committed to providing punctual and safe deliveries. 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. Measures all costs related to each logistics operation developed by your company, from order placement to final delivery. The KPIs required for Reverse Logistics will vary slightly from one industry to another, but some indicators remain standard across the board. Our company doesn’t have fleet we use 3PL only. Rob well explained and I read all of them. Hi I’m Logistic Manager for automotive factory want to know KPI for my dept, Hi Julharry, When considering KPIs you always need to first consider what outcomes you are trying to achieve. Hi Rob , when a company implement a product for use in the supply chain, is KPI a good measurement for its efficiency and effectiveness? Hi Eddie. Sadly World standards on KPIs are not easy to find. Number of changes made to supplier order? Highly customizable reporting automation tool. With these KPIs, a complex system of a supply chain can be ran smoothly with minimal glitches and disruptions. Read on to know more about the key supply chain KPIs used by e-commerce logistics and courier companies in India. Always think about the outcome you require. 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? Leveraging new technologies and freight forecasting platforms make the best decisions possible for freight broker profit gains and net value across all segments. 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. I presume the Logistics Coordinator is managing outbound delivery? This logistics key performance measures your company employees’ production rate (workforce/labor hours/productivity). Key Performance Indicators, also known as KPIs, are metrics that measure the performance of the main processes executed by a business. The Most Important Logistics KPIs In the logistics area, KPIs are very important for measuring production, costs, and quality rates. What specific behaviour or outcome. So in some cases marketing and logistics KPIs could interface. Could you be more specific? We actually have a business that provides KPI Benchmarks. Cost of storage per unit. Accuracy of supplier invoice Timeliness of providing invoice Discounts give on invoice? In a single overview, they show how far you have reached your goals … I would focus on things like: SIFOT (Supply In Full On Time) Quality DIFOT (Delivery In Full On Time), i need the KPIs for Inbound and Oubound Logistics with the calculation equations for each KPI. May I ask you if this approach makes sense? It really depends on what you are trying to measure. = 98.5%, etc. | Logistics Bureau, Supply Chain Training: Knowledge Gaps It Really Should Close, 4 Tips to Help You Choose Distribution Centre Locations, The What, Why, How of Supply Chain Benchmarking, KPI Key Performance Indicators in Supply Chain & Logistics, Cost as a percentage of sales (Logistics or Supply Chain), Against a required standard of performance, Perfect order (the degree of accuracy to which customers’ requirements are being met), Source-to-deliver cycle time (the time from sourcing raw materials to delivery of finished goods), Dispatching, shipping, and delivering the order, Receiving and recording the customer’s payment, Percentage of orders picked with errors – incorrect quantity, Percentage of orders picked with errors – incorrect product, Percentage of order lines picked with errors – incorrect quantity, Percentage of order lines picked with errors – incorrect product, Incorrect product quality (wrong products), Deliveries with broken products/packaging. 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 . For example $ / unit delivered, $ per drop. Would appreciate if you can send me a sample KPI in Logistics activity. The competitiveness of a city, the efficiency of a city. stays on topic and states valid points. Glad you find the KPI information useful. Examples can be – discounts , new restaurant acquisitions . I am not able to understand where should I start from. could you kindly send me the PDF of the above article. Hi, I’m happy to give brief tips here, but sadly don’t have time for long detailed answers/advice. AS for KPIs I think one should certainly be the number the number of times per day/week/ month the bin is found to be empty. 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. Good day. Why Klips. So what parts of the operation do you want to measure? I don’t think your industry would be any different from others. Unfortunately, even these most basic standards imply that many of your supply chain KPIs may not be stock-standard ones. Confirmation from Freight Forwarder of delivery. That determines the KPI. EG: at the moment we don’t have KPIs about wrong/late deliveries (might DIFOT be suitable? These are deliveries from your suppliers to YOU. When trying to work out the best KPIs for you, always start with the objective! They should focus on the essential outcomes for that department. 22. 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? Value of inventory with no sales in last 12 months. I hope that gives you an idea. There are lots of articles on this Blog about KPIs. 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. Stock outs for example, maybe be due to the client purchasing team! 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? Then for example, if the minimum level is not reached for 3 periods in a row, a penalty might apply. At the same time, it is not wise to have too many levels in your hierarchy. For example, Perfect Order = 98.5%, Inventory accu. Value of inventory held………. One of the customer wanted to set up KPI for on-time delivery and follow by financial penalties if KPI is not meet. I have to find suitable KPI which shows condition of my service, we don’t have any KPI’s at the moment. Or to be more strict, if the business works day time hours only, like 9-5, maybe just use a % of that time. Hi Rob, what about a conserve logistics KPI’s, i’m so confused i have instored several KPI’s but until now i’m not able to convince my superiors that i’m doing the right one’s all i need is to compare ‘my’ KPI’s to the world standards but i don’t have these standards for now. Sir please what KPI can I use for inbound logistics, managing operations vehicles (pool cars and delivery van)and packaging of finished goods. Wondering if you are able to help with some suggestion. 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. You’ll find lots of articles on KPIs on our blog that should help. Order Lead Time: The average time taken by an order to reach the customer once the order has been placed. With KPIs, always start with the outcome that you are seeking, and structure KPIs to measure that. Hi Joy. Eg:Need by date vs lead time, order fill time etc. These KPIs were then cascaded to even greater levels of granularity, with the use of error codes to identify where and how delivery errors were originating. So for inbound Logistics you might measure cost/unit, transit time, or receipting time. Often this will be a loss of margin, so still allowing costs to be recovered. 5. Give me a call and we can discuss. In fact u av given a whole lot idea of how to improve in my role as outbound logistics executive. Can I use KPI to do performance management of employees. Administration KPIs. You could measure it over a shift, not per order. There are your KPIs…. So if the system goes down for 1 hour then the communication will stopped and the % of accesibility becomes lower than 98 % if the SLA contract involves 98 % of accecibility. WMAPE with promo packs is not something I have any direct experience with. Thanks! If you want specific industry KPIs, you can find them over here:, I have need KPI of scf for banking operations. You might want to look at: Number of people employed in the sector (Transport and storage) Square metres of warehouse space Number of trucks in local fleets Tonnes of freight handled Logistics ‘spend’ (transport and storge, hy, Iam an intern. I am based in Brazil working for a Chinese company. Will the use of Artificial intelligence change the KPI measurement metrics? For instance, how do you hold the 3 PL Buyer accountable for cost/savings/performance, when they are the 3PL and not the customer specifically? I am belonging to Procurement Profession. Controls are normally put in place to monitor weaknesses, poor designs in projects and improper implementation of programs. Dear Rob, Thanks for the article and all the helpful tips. SIFOT as an indication of good supplier management. Among others, these measurements refer to transportation, warehouse and supply chain aspects. Get the idea? 4) KPIs should be actionable, providing timely, accurate data that owners can interpret and utilise. Share those, and then let’s talk KPIs. Regards – Rob, Hey my name is ian i just joint and airconditioning company and was given the duty of a logistics manager what i would like we have like 6 cars which transport people and materials to site i need to collect data and give areport please send me atemplate of the same and how i can do my quarter report. What is the unit of measure? Transportation and Warehousing KPIs. This is the KPI category link: KPI Related Blog Posts, Hello Mohammed Sir , we are working on similar project, I think we can connect and make betteruse of knowledge , please you feel it is good idea please reachto me on [email protected]. I would think suitable KPIs might include quality compliance, temperature compliance, along wit all the regular KPIs like DIFOT and SIFOT. Inventory Value at each stage of your Supply Chain. Please help! You mean invoices from your supplier right? I work in a firm where the supply network is now being newly designed. Cost per Purchase Order Procurement costs as a % of Spend Supplier Compliance, Good day, I request key performance for procurement, I would consider KPIs such as: Supply on Time Supply to Spec Planned Cost reduction. Vehicle uptime (availability). What three things MUST you get right? I would certainly measure supplier reliability and SIFOT. i have more than sixty motorbikes and 4 vans that assist in delivery. ), how many incoming/outgoing shippings we manage daily, our lead time for the different products we produce, total parts produced and shipped for each product, efficiency of our warehouse (FIFO).. Would you be so kind to give me an input on where to start with the right choice of these KPIs without overdoing? I always suggest keeping it simple. You can use the perfect order KPI to track OTC performance, by breaking it into its components and applying the metrics as relevant to the different functions in your supply chain. Inventory Turns Logistics Cost as % of Sales DIFOT (Delivery In Full On Time) SIFOT (Supply In Full On Time) Average Order Value. Marketing KPIs. I could suggest……. And expensive. In each case, it was the application of appropriate KPIs that made the difference. 3) Design each KPI as a leading metric, able to assist with the prediction of performance issues. Thx and regards, Cees. Hello!! For one thing, a made-to-measure (see what I did there?) I work for manufacturing industries, which produce packaging for liquid Food industries. Cost per purchase order. Hi, thank you for the article, it was very helpful. I would like to know the main KPIs used in supply chain, we want build dashboards/eHCMIS in the health facility/woreda HO to help in the decision making process. goog morning sir can you please help to send me the KIP for a LOGISTIC ADMINISTRATION? and if possible to guide me to similar useful articles in this area. Accountability and Responsibility for: 1-Parts Operations -Ordering 2- Inventory Management 3-Clearance and logistics 4-Counter Sales Representative 5-Prts Service Coordinator . kindly assist me in the key performance indicators in this department. 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. Example of companies – foodpanda, ubereats etc, We are factory logistics team, taking care of all SCM related logistics and transportation activities including packaging. They don’t need to be exceptionally granular, but should instead track the most vital elements of supply chain performance. If you can help me with specific points which need to mention for KPI’s it will be great help. I think for customer service delivery or dispatch on time is always the best KPI. That makes fluctuations immediately visible, and if performance moves in the wrong direction, you can quickly respond. Here are the 6 KPIs that should be in every customer service report. It’s explained here: It has since been revamped and updated with more comprehensive information. These problems were all carry-overs from an earlier era when the logistics operation primarily served an internal supply chain. Thank you very much Rob for such an informative presentation, i was so much help. Improve Logistics Performance with Ready-to-use Metrics Efficient and accurate supply chain metrics empowers logistics organizations to make more informed business solutions. I am inventory & logistics executive, I want KPI for I&L. Therefore, we have 2 tiers of KPIs. Your email address will not be published. These objectives are customers oriented, and span through different departments, from production to logistic. Need to set some kpi to measure service level index or customer satisfaction matrix for our internal customers. Which ones to use?… How many to use?Sadly, it’s not such an easy question to answer.Of course, they 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. What type of business? KPI that does an average between a company’s outflows with its stock balance at the warehouse. Cost per purchase order on suppliers Cost per order line processed/delivered by 3PL inbound Inventory value on hand Stock turns Order lines picked per hour Cost per order line picked. Please tell me what isKPI in NGO Sector regadering supply chain management. You will use a KPI in the same way as your car’s speedometer. So take cost as a start. That will start to give you a view of productivity. Financial penalties are common. Over or under production can bde a major problem. (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. 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? Time utilisation. I presume you are after Supply Chain KPIs? Hi Ayo. Pick one important area first, and make a start. Ideal for freight forwarders that offer these services. why it is important for modern organisations to consider e-supply chain in their strategies! Because there is no record of payment, the customer’s account might be put on hold in your ERP system, and the whole process of supplying that customer stops until somebody spots the problem and resolves it. With KPIs it’s always important to make sure that the KPI supports the outcome you seek. I’m an inventory manager in a fashion establishment, I need you to kindly help in formulating KIPS for effective and efficient inventory management operation. 2) Ensure that each KPI has an “owner”, whether that is an individual or a group of people. Maybe think about the essential elements that drive the procurement performance of the 3PL. Best to keep it simple! 2. Great post. Supplier, in transit, your warehouses, your retail outlets. I have a question on Setting Targets for Promo packs. Which ones to use?… How many to use? This supplier gives materials on time but only partial quantity, Sometimes it gives full quantity but delivery occurs late and sometimes both happen simultaneously. I m much impressed. Cost per order processed. Seeing how your KPIs stack up against others a.k.a. I would like to know the main KPIs used in supply chain, we wanna build dashboards to help in the decision makin process. Managers who oversee the running of departments and are responsible for Logistics and Supply Chains have a significant number of considerations to make when tracking a successful operation. Another reason not to have too many KPIs is the need to apply various levels of detail to each one. There used to be an annual report, the Controllers Report that was available for about $500. Urgent business questions that KPIs for logistics seek to answer include: However, it is beyond realistic to expect anyone to scrutinize them all on a day-to-day or even week-to-week basis. A logistics KPI or metric is a performance measurement that is used by logistics managers to track, visualize and optimize all relevant logistic processes in an efficient way. Later in this article, we’ll look at some examples of functional and cross-functional KPIs. The only thing I’m struggling with at the moment is finding some kind of industry comparison to see how my KPI’s stack up against others. Which KPIs will be crucial in the digital supply chains? please can you help in giving me some KRAs to set . 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. Based on continuous monitoring, these weaknesses or shortfalls against targets or objectives set can be corrected or revised in order to continually improve performance. My main responsibility is Procurement of Industrial Machinery, spare parts,raw materials. Hi Derek, What are the three most important aspects of your service? Steps to create KPIs of logistics operations manager 1. thanks, I would suggest. Dear Rob, As the technological advancements are taking place at a rapid pace and logistics is also absorbing the innovation and advancements. My current position is Supply Chain Manager in Automotive company dealing with foreign and local suppliers and also we serve the aftersales and whole sale for genuine parts for many brands, below areas are reported to me: – Procurement and logistics. KPIs should always focus on these. Thanks, Rob for the informative article. Quite simply, the logistics functions had not adapted to a new environment in which retail outlets were no longer “tied” to the brewery. it is useful information, am working in a project to deliver high quantity and value of a product using the Air mode. Hi, I am a senior demand and supply planner and Im looking for strategy for my planning team that can be measurable (KPI). 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. 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. Who’s Involved in Order to Cash Measurement? 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…. In the planning process, t… I presume you are using a Kan Ban system. Fortunately, the pubco’s director was an ex-logistics guy who proposed an alternative solution. Best of luck! 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. The information provided is very helpful. Thanks for the article. This Playlist might help. It’s all about measuring the things that drive cost and service performance. A being fast movers, and C being slower moving continuity lines. Hi Rob, What can be possible KPI for supplier/vendor billings? Procurement and supply function responsible for the following; 1. In this post we will see some examples of key performance indicators (KPIs) for the transportation sector, one of the most important for logistics and for the supply chains in general, since its cost has a direct impact on the bottom lines of companies and in the cost of products paid by the final consumer. But the information is hard to gather and is therefore valuable IP. Thanks. In that case I would use: DIFOT – Delivery in Full On Time. Editor’s Note: We first published this post in May 2013. Can KPI be used for better logistic and supply system. Inventory value as a % of sales Inventory stock cover as weeks of sales. Could you please kindly provide me the examples of what KPI I should take? So perhaps for you it might be …. You would use a KPI once they are selected and working for you. It’s a composite KPI called perfect order, and it incorporates functional measurements for all stages of the OTC process. As a more practical guide, you might wish to apply the following list of golden rules when building up a suite of logistics KPIs for your company: 1) Make sure you align all KPIs with the overall business objectives of your company. Do this at the A, B and C item level if possible. Is there any specific metric which measures both quantity and time under one formula?? Thanks for the article, Im currently evaluating the delivery performance of a supplier. In your mind, what is a ‘Digital Supply Chain’? Lead Time is a KPI that tracks how long your company’s processes/operations last, from start to finish. I would start to record reason codes for the ‘faults’ to see what pattern emerges. Adherence to purchasing budgets. IT KPIs are not really my area of expertise, but thinking about it logically….. You need to make sure that the KPI is measurable, accurate and clearly understood. KPIs not only provide an organization with a focus for strategic and operational improvement, but a way to compare achievements to similar organizations. I am a Pull systems manager at manufacturing company, can you help inthe identification of kpis for assuring that warehouse bin levels are set accordingly at headquarters and branches. i am in tile manufacturing co and and i am the Logistics Manager. Exactly how many is hard to say and will, in any case, vary from business to business, but frankly, if you are tempted to ask if you have too many KPIs, you probably do. Join our community and improve your performance in the international market even more! Twig Logistics Network is a group that gathers the most reliable freight forwarders in the world. What functions are included? Furthermore, by applying codes to highlight the exact nature of each error, you will gain an even higher level of visibility. But you could manage the receptionist on the accuracy of directing call to the right department, first time. Brief case study, Threats and measures: a brief case study, Threats and measures a... Warehouse delivered without error collections and sales not to have too many, variability... There tangible benefits of having key performance indicators are for it over a,! Supply, as well as replacing of materials and resources to mention for KPI ’ s in. A state of confusion about what constitutes a KPI if you are trying to achieve relevant.... There too KPI tool to recommend to you delivery or dispatch on time ) provide metric! Drive the procurement performance of the customer ’ s of logistics with a minimum limit. Suppliers and i am Setting up a new range of suppliers and i ’ m not sure KPIs. Kpis provide visibility of business performance in the production function identify patterns and continuously correct errors in order reach! To another, but they are selected and working for a Chinese company their business favor! Enables the business, thank you for your industry would be these KPIs OTC process a complex system of city. So maybe delivery in Full and delivery on time, cost, and C being moving! Answer i think prior to that outcome… change just because of business performance in the warehouse delivered error. The “ primary tier, ” and the structure is very easy to find report instantly here about deliveries. S explained here: https: // pool cars might be time,! And outcomes that provides KPI Benchmarks auitable in food industry,95 % of.! And distribution centers of its data support to develope the KPI measurement metrics a busy company. Very easy to understand supplier invoice Timeliness of providing invoice discounts give on invoice the needs follow-ups... Or undermine the others note of how well a process that has three main steps made September... 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Logistics executive for managing your third party buying products, for example finance dept, Marketing dept, Administrative,.