Logistics is the process of acquiring, managing and transporting goods and/or services from the place of distribution to the final customer. This process is divided into stages, allowing the measurement of key performance indicators (KPI) and the optimization of the operations of each phase.
In this article you will learn everything you need to know about KPIs in logistics and you will find a list of the most essential ones. It will also help you understand what criteria you should follow to find the most suitable logistics indicators for your company.
What are KPIs in logistics?
The KPIs or logistics metrics are indicators that will allow you to measure, supervise and optimize the logistics processes of your company. These indices will reflect the efficiency of your company's logistics management and will help you eliminate freight transport errors, reduce costs, boost profitability and improve the productivity of your workers.
These can be divided into three categories or types, which are known as:
- Utilization indicators: They measure how your company's resources are being used.
- Performance indicators: They provide valid and accurate information on compliance with the execution plans of the scheduled operations.
- Productivity indicators: They allow comparing the actual values obtained with those expected to be achieved in a given period of time.
How should your KPIs be?
There are many different Logistics Key Performance Indicators (KPIs). The most interesting KPIs to measure are those that meet the SMART . A SMART KPI is: Specific ( Specific ), Measurable ( Measurable ), Achievable ( Attainable ), Relevant ( Relevant ) and Based on Time ( Time Based ).
To ensure that the indicators you are choosing meet the SMART criteria, you can ask yourself the following questions:
- Specific: Is your KPI too broad?
The danger of having too broad a KPI is that the metric could be too imprecise, which could lead to misinterpretation. - Measurable: Is it a quantifiable metric?
Remember that you have to establish a numerical benchmark for each KPI. - Achievable: Is your KPI goal feasible?
Setting a goal that is too far out of your reach will discourage your employees. - Relevant: Does this metric answer an important question about your company's operations?
Make sure you choose KPIs that provide valuable information about your business. There are hundreds of KPIs that could be included in your program, but remember that your resources are finite. Prioritize your metrics and choose only the most important KPIs. - Time-based: How often should each metric be measured? Is there a deadline to achieve a set goal? Include the answers to these questions in the definition of all your KPIs. If you define a calendar for each metric, this step will be much easier.
With these criteria, you can ensure that you are choosing the key performance indicators (KPIs) that best suit the needs of your business.
Most used logistics indicators
Now that you know these criteria, we present the main logistics indicators that are used to measure and improve the efficiency of most companies. The most used logistics indicators are the following:
1. Order accuracy
Control the degree of incidents from placing the order to the delivery of a shipment. Ideal for any carrier looking to identify patterns and continually correct errors to make transportation safer.
2. Punctuality
This logistics key performance indicator, also known as OTIF, measures the percentage of orders delivered on time, without incidents or documentation issues.
It is ideal for any carrier who is committed to making safe and punctual deliveries.
3. Delivery time
The delivery time is a KPI that measures the time that the processes/operations of your company last, from the beginning to the end. It is ideal for carriers to understand the amount of time spent at each stage of the supply chain and identify strategies to optimize this time.
4. Stock rotation
KPI that makes an average between the outputs of a company with its balance of stock in the warehouse. Ideal for carriers that offer warehousing services as part of their logistics solutions.
5. Storage costs
Also ideal for carriers that offer warehousing services, this KPI monitors the expenses involved in managing your logistics company's warehousing facilities.
6. Capacity Utilization
Performance indicator that measures the load capacity utilization of a vehicle during road transport or a container during maritime transport. Ideal for carriers that offer these services.
7. Productivity
This logistics key performance measures the production rate of your company's employees (manpower/working hours/productivity). Ideal for carriers to have a better idea of the performance of your company.
8. Transport costs
Measure all the costs related to each logistics operation carried out by your company, from order placement to final delivery. This KPI can be useful for carriers to know the average spent on each shipment and send accurate quotes to their customers/partners.
9. Number of shipments
Evaluates the average number of loads handled by your company in a stipulated period of time (weekly/monthly/year). Ideal for any carrier looking to make ongoing financial statements and analyze their profit margins between revenue and results.
10. Truck Rotation
This KPI measures the turnover of trucks, that is, the average time elapsed between the departure for collection/delivery and the return of the vehicle to your company.
It is ideal for companies that offer road transport.
conclusion
In addition to the logistics KPIs mentioned above, there are many other KPIs that can measure the performance and productivity of your business as a whole. However, to use the right indicators, the first step is to define what type of data you consider relevant to analyze.
From there, you will only have to adopt the indicators that will provide you with this data. With them, you will be able to recognize operational problems and create strategies that will not only solve them, but also optimize your company's supply chain.
Logistics is the process of acquiring, managing and transporting goods and/or services from the place of distribution to the final customer. This process is divided into stages, allowing the measurement of key performance indicators (KPI) and the optimization of the operations of each phase.
In this article you will learn everything you need to know about KPIs in logistics and you will find a list of the most essential ones. It will also help you understand what criteria you should follow to find the most suitable logistics indicators for your company.
