n the logistics sector, KPIs are significant for estimating production, costs, and quality rates.
It includes
certain measurements that are common in the logistics sector. It can help distinguish and sort out issues
during its ordinary activity. These estimations can be viewed as elements for the improvement of the
activity in the calculated.
Logistics involve the coordination of various functions, including procurement, warehousing, order
management, and transportation, to ensure that goods flow efficiently from point-to-point to meet
customer demand and focus on measuring the practicality, proficiency, quality, and precision of
customer satisfaction.
By observing negative outcomes in the measurements, logistics can discover the perspectives that need
improvement and can recognize the regions where the business is strong. Executing these
measurements logistics area can draw up arrangements or plan to upgrade its exhibition and to make
the administration progressively compelling in doing the targets of the association.
Diagram
by Palaniappan Kavitha, DLSM (2019)
Table of Contents
Order Accuracy KPI:
On-Time in Full Delivery KPI
Inventory Accuracy KPI
Distribution KPI
Transport KPI:
Five Significant Attributes of an Efficient KPI
o 1. Simple:
o 2. Relevant:
o 3. Aligned:
o 4. Actionable:
o 5. Measurable:
Conclusion
Order Accuracy KPI:
The Perfect Order Rate is another exceptionally significant logistic metric with regards to your inventory
network effectiveness. It gauges the measure of requests that are handled, transported and delivered
without any incidents on its way. The transportation time just as the delivered time is both regarded,
the request is certainly not an off-base one and the products are not harmed.It is significant as it shows
the effectiveness of your production network and delivery, and that leads obviously to progressively
fulfilled customers that are eager to return or prescribe your administrations.
Di
agram taken from: https://www.newcastlesys.com/blog/5-ways-to-improve-warehouse-worker-
retention
On-Time in Full Delivery KPI
On-Time in Full Delivery (OTIF) is a significant proportion of the logistics effectiveness metric that
causes you to monitor how precise your delivery time. It is most important that packages should arrive
on time if it as late deliveries negatively affect customer loyalty and can cause you to lose business.
Better performance of OTIF can lead to a streamlined supply chain and greater customer satisfaction.
There’s a greater expense to not showing signs of Improvement OTIF execution be that as it may, and in
case you’re not moving in the direction of it, you’re likely losing far an unexpected result. Missing the
OTIF imprint can be unplanned and unnecessary expenses.
Inventory Accuracy KPI
Inventory is a major significant part of warehousing, and inventory accuracy is a critical KPI for
warehouses because if your stock is incorrect, your costs will increase rapidly, and your consumer
loyalty levels will plunge. If you are depending on Excel or manual processes, your stock exactness will
below, and there’s a good possibility you’ll end up reordering or reproducing parts you already have due
to the inaccuracy of stock. The expenses of transport cost an excessive amount of stock, or of rankling
customers when you don’t have stock available that you showed is available, will hurt your main
concern as well as your reputation. One solution for an inaccurate stock is picking a framework that
utilizes standardized identifications to follow stock. Some warehouses find that barcoding, RFID systems
integrate with their current Inventory management systems (IMS). These frameworks improve stock
control by giving a system to overseeing stock, supplies, and other distribution center materials.
Moreover, some IMS can have the ability for following shipments, overseeing buy requests, and
checking stock and stock levels.
Di
agram taken from: https://www.shopify.com/enterprise/inventory-management-system
Distribution KPI
Distribution center administration influences expenses and efficiency; subsequently, we should focus on
these estimation parameters such as Units prepared per square foot. We figure out this proportion
isolating the units we handled at a given period by the distribution center’s usable space.By knowing the
volume of items moved in each working hour, you will have the option to know your representatives’
productivity. Percentage of utilized space. In addition to other things, it has to do with an absence of
room where to put your crude materials or completed items; it is critical to think about the accessible
space before putting in new requests.
Transport KPI:
Measures all costs identified with every logistic activity created by your organization, from request
arrangement to definite transportation. This KPI can be useful for forwarders to realize the normal spent
on every shipment and send precise citations to their clients/accomplices. It will separate all the costs
identified with this logistic KPI as indicated by particular classifications: the request handling, the
regulatory, the stock transporting, and the warehousing lastly the real transportation costs.
In the wake of computing all these, you can assess the rate each phase of the procedure speaks to and
check whether that is extreme or in the standards. You can likewise compute the transportation costs
comparative with an item and perceive the amount one thing costs contrasted with how a lot of income
it brings you.
Di
agram taken from
https://www.logisticsmgmt.com/article/price_trends_pricing_across_the_transportation_modes
Five Significant Attributes of an Efficient KPI
1. Simple:
A KPI ought to be simple, straightforward and direct to gauge. If an objective is clear, staff can settle on
down to desired choices that lead to accomplishing the ideal result.
2. Relevant:
As important as not only the KPI to be simple and must also relevant to a specific group within an
organization. It is most important the correct decision-makers are responsible for measuring specific
KPIs — improvement likelihood of a successful outcome.
3. Aligned:
It should be consistently streaming down from the general key objectives of an association. Thus, they
should be adjusted and not inadvertently undermine one another
4. Actionable:
The most realistic goal of a KPI is should be actionable. Instead of setting large, complex goals, an
organization might want to start from a low level. By setting up the short-term goals that challenge
employees but don’t overpower them, an organization can not only track the progress of a KPI but also
adds support assurance.
5. Measurable:
It may appear glaringly evident, however, a KPI should be nothing but difficult to quantify. A successful
KPI maintains a strategic distance from summed up objectives like, “Improvement in the distribution
center.” Instead, a powerful KPI should be founded on a strong, cantered objective that can deliver
subjective and quantitative measures.
Conclusion
Choosing the right key performance indicators for the logistic industry it’s a process that requires
companies to clearly identify goals and then develop the performance indicators that allow you to track
your progress towards those goals. Regardless, the process of setting the right KPIs can’t be belittled. To
encourage enhancements across the company, information needs to not exclusively be precise, yet
helpful also. The accepted procedures of organizations with vital logistics will improve the effectiveness
of tasks, guaranteeing consumer loyalty, and increment profitability.
References
Jeff Tan Ai Keong, DLSM. (2018). “Key Performance Indicators minimising Warehouse Risks”. Retrieved
from https://sipmm.edu.sg/key-performance-indicators-minimising-warehouse-risks, accessed on
22/03/2020.
Phocas Software. (2019). “5 important characteristics of an effective KPI”. Retrieved from
https://www.phocassoftware.com/business-intelligence-blog/five-characteristics-of-an-effective-kpi,
accessed on 21/03/2020.
Premsai Sainathan. (2018). “Calculating Logistics Cost Reduction through OTIF (On-Time and In-Full)
Delivery”. Retrieved from https://blog.roambee.com/supply-chain-technology/calculating-logistics-cost-
reduction-through-otif-on-time-and-in-full-delivery, accessed on 21/03/2020.
Sam Leong Kim Foong, DLSM. (2019). “Key Performance Indicators (KPIs) for the Logistics Sector”.
Retrieved from https://sipmm.edu.sg/key-performance-indicators-kpis-logistics-sector, accessed on
15/03/2020.
Solistica. (2018). “Logistics’ more important KPIs”. Retrieved from https://blog.solistica.com/en/logistics-
more-important-kpis, accessed on 15/03/2020.
