KPIs For Logistics Success

Benchmarking logistics performance is a vital strategy that allows companies to enhance their competitiveness and increase success. Setting goals helps workers have something to work towards and feel accomplished when they achieve the goal. While it is easy to create a strategy and goals, measuring success and performance is a whole different beast.

Setting Goals

There are a few things you will need to take into consideration when setting company goals:

• What’s most important to the company? You will need to figure out your primary business goal and the best ways to work towards it. 
• What are the company’s largest issues that need to be addressed?
• What’s most important to customers? Do your customers care most about getting the lowest cost possible, or do they care most about order accuracy? Once you define the most important issue or issues, you can decide how to measure success in that area. 

You will want to ensure that any goals you are setting are SMART goals.

• Specific: This goal needs to be specific so that there are no excuses or confusion as to whether or not the goal was met. 
• Measurable: This is really where KPIs are important.You will need to have effective metrics in order to be able to tell with certainty if your goal was met or not. This is a yes or no, you either did or did not meet the measurable goal. 
• Attainable: Is this goal actually reachable? Nothing good comes from setting a goal that will never be reached.
• Relevant: Does this goal make sense for what is most important to the company? If not, this probably isn’t a relevant goal that needs to be tackled yet. 
• Timely: Did you give yourself a set time frame to complete this goal? No excuses, just a date where you can say “Yes I did” or “No I didn’t” meet the goal.

Effective Metrics and KPIs for Logistics Success

Once you have figured out the most important goals for the company and customers, you will need to figure out what “meeting the goal” looks like. You can define a few key metrics that will help achieve these goals and overcome the company’s largest issues. Strong and clear key performance indicators (KPIs) ensure that your network is operating as efficiently as possible. Making your goals SMART goals will help with this, but you still need to ensure that your KPIs are all highly centered around your main business goals and are trackable. A few examples of common logistics KPIs would be:

• On-time delivery
• Cost per shipment 
• Order accuracy 
• Returns rate

Along with your personal goals and KPIs that you are tracking, you should benchmark against industry standards. After looking at how you compare to others, you can analyze, adapt, and improve your business operations. 

Analytics and Technology

By integrating various apps and softwares, you can easily track the information you need to measure your KPIs. You will be able to pull all of your data into a single, easily viewable location. Data can be overwhelming if you are trying to track too much at once, especially if it isn’t all relevant. By creating meaningful and actionable KPIs stemming from the company’s business goals, you will be able to effectively track the progress of the goals. Analyzing this data will allow for valuable insights that show what areas the company can improve in, and what areas they are doing well. 

Having effective metrics and powerful KPIs that derive from your main business goals will promote operation excellence. Utilizing the data available will help the team evaluate overall performance and make data-driven decisions. Learn more about leveraging analytics in 3PL operations.