8 Big Picture Logistics KPIs to Monitor (1.29.24)

KPIs can keep you on track, help you cut costs and take your business to the next level — especially when it comes to logistics. 

Business goals are often discussed in the abstract. Managers call meetings to talk about improving customer service, trimming excess costs, increasing ROI and streamlining production. Oftentimes, these goals — while admirable — can get lost due to lack of specificity. This is where the idea of key performance indicators (KPIs) comes in. 

KPIs turn abstract concepts like “improve productivity” into concrete goals through measurable outcomes. KPIs work by isolating certain aspects of a business to determine what is and is not working. They can indicate departments that need improvement, budget lines that can be eliminated, and areas where productivity is thriving. A KPI sets the terms for measuring progress toward a goal. 

With logistics often dominating a large percentage of an organization’s budget, this is one area that benefits greatly from monitoring KPIs. Oftentimes, businesses get so caught up in measuring as much as they can that they fail to choose the right metrics to focus on. In order to prevent you from making that all too common mistake, we have created this introductory guide as a reference for worthwhile KPIs to monitor when it comes to logistics and the supply chain side of your organization. These most important KPIs include:

• Warehouse costs

• Capacity

• Inventory turnover

• Labor

• Safety

• Accuracy

• Timeliness

• Customer service 

We will also discuss how Resource Logistics Group can further help with your KPI strategy and logistics budgetary goals.

Warehouse costs

When tracking KPIs, the warehouse is a good place to start. Every organization should take the time to determine if a warehouse is on pace with revenue. Measure specific costs associated with warehousing, such as storage space, equipment, insurance, and labor. The latter includes not only the warehouse employees who are actually on the floor handling fulfillment, but also administrative employees. Are you utilizing all the storage space available? Is your labor equal to your productivity demands? 

Capacity

This KPI is related to what happens once a product leaves a warehouse. Load capacity is a KPI that can save your business money if handled correctly. This speaks to the idea of efficiency, and it is especially important to track if you transport via ocean freight. Measure how much capacity is being utilized in order to avoid leaving money on the table. This can either be a weight or a cubic footage measurement, or both.  

Inventory turnover

Inventory turnover is one of the simplest KPIs and one of the easiest to measure. Inventory turnover translates to how quickly inventory sells out and is replaced. The faster, the better. Measure this KPI to determine revenue growth and identify supply and demand. This may unlock periods of heavy demand that were previously unknown to you.

Labor

Labor is a KPI that includes hours balanced against productivity. This is key in helping businesses gain a view of how much they are spending in overhead versus how much they gain as a result.

Safety

Safety in the warehouse and on the road costs a business more than lost miles and lost deliveries; it also costs money. Worker safety is paramount, especially during a pandemic like COVID-19 when employees are demanding hazard pay and increased safety. Defining safety standards clearly and measuring adherence to them is a KPI that will deliver by reducing workplace accidents and labor disputes. By keeping employees safe, your business will be better able to meet its goals.

Accuracy

How many issues with order accuracy do you experience on a monthly basis? Accuracy is a crucial KPI, as it directly affects customer experience and therefore customer retention. By tracking accuracy, a business can address points in the supply chain process that result in error. A business that does not rely heavily on automation may determine to increase technology if accuracy standards are not met, and it may then track accuracy standards upon automation implementation to clearly define the benefits.

Timeliness

Timeliness can refer to many things when it comes to logistics. For the sake of defining this KPI, it refers to OTIF. This stands for “On Time and In Full,” and is also often known as DIFOT, or “Delivery in Full on Time.” This KPI indicates the rate at which orders are delivered on time. Timeliness can also refer to lead time, which more broadly tracks the entire process of an operation from fulfillment to delivery. 

Customer service

Tracking customer service is as simple as sending out a survey. This is a powerful KPI that is measured through a clear rating system that includes both qualitative and quantitative feedback. 

If you are determining your KPIs and have questions about how improving your logistics might factor in, Resource Logistics Group is a trusted ally that can help you build the right strategy and implement it without taking over day-to-day operations. Contact Resource Logistics Group to learn more.