The Essential Logistics KPIs & Metrics You Need to Track

On-Time Delivery Performance (OTD):

On-time delivery is undoubtedly the most important measure in logistics. Ultimately, the goal is timely delivery. Think about it this way: if you’re running a logistics operation and you start missing delivery deadlines, it’s like setting off a chain reaction of problems. Customers get upset, you might face hefty fines, and your whole operation starts to fail.

According to research, 97% of consumers said that while making online purchases, on-time delivery is important.

It is not difficult to track OTD. It is the proportion of timely delivered orders to all orders. The calculation is as follows: OTD = (Number of Orders Delivered on Time / Total Number of Orders) * 100

So, in the world of logistics, on-time delivery is king, and tracking your OTD rate is the compass that keeps you on course. It’s not just about meeting a number; it’s about keeping those customers smiling and your business thriving.

Order Accuracy

Order accuracy is all about making sure that when a customer places an order, it’s delivered as they expected it, with no surprises and no letdowns. And when you get this right, two fantastic things happen: customers are happy, and your return rate stays low. It’s like a win-win!

Now, how do you calculate this magical metric, order accuracy? It’s actually pretty straightforward. You take the number of orders that were shipped without any mistakes and divide it by the total number of orders you’ve handled. Then, multiply it by 100 to get a percentage. So, the formula goes like this: Order Accuracy = (Number of Accurate Orders / Total Orders) * 100.

For example, let’s say you processed 500 orders in a month, and out of those, 470 were shipped without any hiccups. You’d calculate your order accuracy like this: (470 / 500) * 100, which equals 94%. So, your order accuracy rate for that month would be 94%.

Inventory Turnover Rate

The inventory turnover rate is like the heartbeat of a logistics operation. It tells you how well you’re managing your stock. And trust me, you don’t want your inventory just sitting around, gathering dust.The inventory turnover rate measures how effectively a logistics company handles its stock. A high turnover rate signifies effective inventory control, whereas a low rate suggests stagnant stock or overstocking, which can result in higher storage costs and reduced cash flow.

So, how do you calculate it? Here’s the formula: Inventory Turnover Rate = Cost of Goods Sold / Average Inventory Value.
A logistics company should aim to find a balance between keeping enough goods on hand to meet demand and lowering carrying costs.

Transportation Cost per Unit

Keeping those transportation costs in check is like managing your monthly budget. You want to make sure you’re not overspending and finding those opportunities to save some cash.

So, how do you figure out if you’re spending wisely? Well, you calculate the cost per unit sent. It’s like checking how much each item in your grocery cart costs. To do this, you take your total transportation costs and divide them by the number of units you’re shipping.

For example, imagine a company shelled out $50,000 to ship 10,000 units. To find the cost of shipping each product, you’d do this: $50,000 / 10,000 units. That equals $5 per unit. So, it costs them five bucks to send each item.

Keeping an eye on this cost per unit sent can reveal where you might be overspending or where you’re doing great. It’s like being your financial advisor for your logistics operation!

Carrier Performance

So, what kind of metrics are we looking at here? Well, think of it as a report card for carriers. You’ve got metrics like on-time deliveries per carrier, claims rate, and cost per mile. These numbers tell you how well your carriers are doing the job.

Shipware research found that a whopping 73% of shippers choose carriers based on their performance metrics. That’s a big deal! It shows that shippers are paying attention to things like claims frequency and on-time delivery. They want to work with carriers they can rely on.

So, remember, when it comes to carrier performance metrics, it’s not just about numbers on a spreadsheet. It’s about making sure your transportation partners are delivering the goods – both literally and figuratively. In the world of logistics, dependability is key, and these metrics help you find partners you can trust.