You might notice, for example, that a significant number of orders are picked with minor errors, or that a small number of orders contains many errors. Yes, you should certainly use different KPIs for each department. Will the use of Artificial intelligence change the KPI measurement metrics? However, in Supply Chain, you would generally expect to see the following standard set, along with those that are more specific to your business needs. Hi Rob, I am trying to find templates to structure SLA’s for the below type of 3PL providers. In either case I’m not sure the KPIs differ that much……. The competitiveness of a city, the efficiency of a city. If so, is there an example? for understanding deep about the useful and basic, as well as deep details of “KPI” Related to Corporate Procurement, Project Procurement as well as “Strategic Sourcing”, Hie Rob Thanks for the article, l need to know more examples of KPI’s in Supply Market Analysis, HiRob, Thanks for the article, l need to know more examples of KPI’s in Inventory Control and Wearhousing.Please sent me copy of the KPI. I’m in the Operations Excellence section (logistics dept) which consist of several other section eg:material centre, warehouse, finished goods centre. And what’s even better: the data obtained by these indicators will reflect directly on the effectiveness of your company’s logistics management, as they allow you to continuously monitor and evaluate all the metrics related to your supply chain. But we want optimal values in everything), Order fulfillment lead time for lead time, Total Supply Chain Management Costs for low costs, Perfect Order for High Customer Satisfaction, A framework to identify flexibility score based on Sourcing Flexibility, Production Flexibility, Product Development Flexibility. Typical Supply Chain KPIs focussed on finance would be: Supply Costs as a percentage of Sales. Perfect Order Rate: Number of orders the warehouse delivered without error. Are there tangible benefits of having Key Performance Indicators (KPI) for logistics? If you search on the Blog here you’ll find lots of examples of KPIs. Exactly how many is hard to say and will, in any case, vary from business to business, but frankly, if you are tempted to ask if you have too many KPIs, you probably do. or a Supply Chain that is ‘managed’ digitally? Pick one important area first, and make a start. 8) Each KPI should have a target or threshold indicating a minimum-acceptable level of performance. 2) Make sure they “tie” in with your goals and objectives. 2. Thanks for the above KPI’s , I need to see some KPI’s for Supply chain GM / Or Director level Specially in Food Manufacturing sector. KPIs must follow up by financial penalties? Cost per case delivered. That makes fluctuations immediately visible, and if performance moves in the wrong direction, you can quickly respond. Often this will be a loss of margin, so still allowing costs to be recovered. The article shows you exactly how to measure it. 4. Confirmation from Freight Forwarder of delivery. https://www.logisticsbureau.com/supplychainbenchmarker/, https://www.benchmarkingsuccess.com/online-key-performance-indicators/, https://www.logisticsbureau.com/supply-chain-levers-part-5/, https://www.logisticsbureau.com/contact-us/, https://www.youtube.com/playlist?list=PLAI2rbd3NwK7DeHvXIESAUaXquZFl3Lk7, Supply Chain Strategy Development - Article | Logistics Bureau Blog, Outsourcing Transport and Warehousing: How to be Successful, How are your Supply Chain KPIs or Vital Signs? Later in this article, I will suggest some rather more comprehensive guidelines, but for now, aside from applying the SMART acronym, my basic take on KPIs is this…. Jan 3, 2020 | Benchmarking, Performance Measurement - KPIs | 210 comments. The partners developed a KPI portfolio, which, although hardly simple in the way this article advocates, served to highlight some severe issues in the supplier’s warehouse and transportation functions. Dear Rob, Thanks for your interest about Kpi, I am a lecture at university, I would like to learn how can I make logistics performance index for region or cities, which indicators can I use? In which terms could we measure this. Success With Supply Chain KPIs: A Brief Case Study, Threats and Measures: A Catalyst for Change. Warehouse Cost per order processed Delivery cost as a % of sales Warehouse Cost as a % of sales, can you give me good examples of Business plan & scorecard for Materials & logistics, based on our branch business & scorecard; …. Developing the right KPIs is quite a detailed process and as you can appreciate needs to be tailored to your business needs. KPIs should comprise a handful of metrics that your teams CAN realistically monitor and react to continuously. It also helps them figure out where they stand in the market. – Warehousing – Transporting and customer supply. This is one of the most crucial KPIs for warehouses and distribution centers. Though you need to be careful with financial penalties to ensure that the KPI being measured is actually under the control of the 3PL in terms of their ability to influence it. Correct order placed on suppliers. To see if you are leading the pack or falling behind, you can buy the report instantly here. These KPIs were then cascaded to even greater levels of granularity, with the use of error codes to identify where and how delivery errors were originating. Any suggestions? But I would at least start with one that targets service and another at cost. I would like to know KPIs in Parts Operations Department . There are lots of articles on this Blog about KPIs. So a suitable KPI can be used there too. Therefore, as you might imagine, an excess of KPIs will soon have your portfolio approaching the volume of the aforementioned telephone directory, making it hard to monitor and act on the mass of data generated. Then, you will be all set to recognize operational issues and create strategies that will not only solve them but optimize your business’ entire supply chain. I would be highly appreciated. You might call the highest level the “primary tier,” and the second level the “secondary tier.”. In short, KPIs provide visibility of business performance and allow objective quantitative and qualitative evaluation. For instance, how do you hold the 3 PL Buyer accountable for cost/savings/performance, when they are the 3PL and not the customer specifically? Thx and regards, Cees. I’m glad they were helpful Mohammed. Accountability and Responsibility for: 1-Parts Operations -Ordering 2- Inventory Management 3-Clearance and logistics 4-Counter Sales Representative 5-Prts Service Coordinator . It is mainly used to improve efficiency, track organizational processes and help to evaluate reflect on the outcomes in the business. Ad structure your KPIS to support those. How long are they ‘in use’ each 24 hours. Which KPIs will be crucial in the digital supply chains? Top 10 Operational Metrics for Logistics Leaders to Improve Warehousing Performance Published: 13 November 2019 ID: G00441482 Analyst(s): Sean Hurley Summary Logistics leaders responsible for warehousing often struggle to identify the most impactful KPIs. Another reason not to have too many KPIs is the need to apply various levels of detail to each one. Can you assist? Do you have temperature monitoring during delivery? = 98.5%, etc. What functions are included? You should certainly use KPIs to manage staff. That’s a supply chain performance issue, just as much as if your warehouse team fails to pick the order. I’m a logistics manager at a food distribution company. I am a Logistics Executive and is handling the pre-shipment issue, like issuing the Pro-forma invoices to customer and work orders to factory for production. it is useful information, am working in a project to deliver high quantity and value of a product using the Air mode. For this reason, KPIs are essential for any business improvement strategy. You’ll find a lot more information about KPIs. I work for supply chain department.what KPI would you think would be auitable in food industry,95% of the products are import.. KG delivered per hour Orders delivered on time Time taken to load. 4. In your mind, what is a ‘Digital Supply Chain’? You could measure it over a shift, not per order. No good picking a KPI if you can’t get the data for it yet. A logistics KPI or metric is a performance measurement that is used by logistics managers to track, visualise and optimise all relevant logistic processes in an efficient way. THOSE are what you need to measure. Maybe think about the essential elements that drive the procurement performance of the 3PL. KPI that does an average between a company’s outflows with its stock balance at the warehouse. From there, you simply need to adopt the indicators that will provide you with this data. KPI exists that’s relevant to pretty much any type of supply chain operation. Ideal for any freight forwarder looking to identify patterns and continuously correct errors in order to make transportation safer. The use of our Supply Chain and Logistics KPI Dashboard programme will help you maintain an overall measure and give you a view of which activities need your attention. So for inbound Logistics you might measure cost/unit, transit time, or receipting time. Truly amazed how you answer everyone despite the specific requests! regards, Kamel, Picks per man hour Cost per order despatched Picking accuracy. Managers who oversee the running of departments and are responsible for Logistics and Supply Chains have a significant number of considerations to make when tracking a successful operation. Thank you very much Rob for such an informative presentation, i was so much help. Remember what the K stands for! could you provide 3 sample for logistics coordinator objective for KPI ? There are many leading indicators that combine to impact bottom line logistics performance. Which ones to use?… How many to use? You will use a KPI in the same way as your car’s speedometer. Then add SIFOT. Great post. Hi Rob, Read your comments to others.All were very much informative. Whats your understanding with this subject? But the performance targets will keep getting higher! First of all have a clear picture in your mind of what you would like as an outcome. My job basically will involve with overall dept performance & excellence, right I’m having problem to come up with specific KPI for my function as I can’t put the KPI such as delivery, transit time & quality performance as my KPI since it has been covered under specific section under Logistics Dept, Hope you can give me some advice on how to formulate specific KPI to cover overall dept performance, quality & cost. Thank you. The most common cause is a state of confusion about what constitutes a KPI. Could you expand on your question a bit and I’ll see if I can help. In this post we will see some examples of key performance indicators (KPIs) for the transportation sector, one of the most important for logistics and for the supply chains in general, since its cost has a direct impact on the bottom lines of companies and in the cost of products paid by the final consumer. A three-tier KPI solution is a little more involved, with the top two tiers comprising end-to-end supply chain metrics with Tier 2 being more granular than Tier 1. Time utilisation. Good day. Cost per case (or other unit measure) through each core function. You will drive a little faster if your speedometer needle drops below 50KPH or you will slow down if it climbs above the required speed. Quite simply, the logistics functions had not adapted to a new environment in which retail outlets were no longer “tied” to the brewery. “How to improve timeline for the department (Delivery/ Proof of delivery)” As our co.is totally dependent on 3PL through which pickup and delivery is done to consignor/consignee As here i have to analyze the problems why we are not getting POD as earlier as possible and how to improve the KPI for domestics logistics department. All you need to know about Supply Chain KPIs is right here Many people get really confused about KPIs or Key Performance Indicators, in Logistics and Supply Chain operations. Today, much of the focus in earnings calls is transportation-related. Notify me of followup comments via e-mail. Hello, I am working for a food production factory, they have asked us to come up with some ideas about KPI’s which we can use to measure our own performance regarding picking and packing orders, could you please give me a few examples of any we could use? Ideal for companies that offer road transportation. Hi GK. So Can I request you to guide me? You can identify and categorize your company’s processes in any way that suits you. The first step is schedule establishment. Sourcing packaging and supplying that to the production function. I would certainly measure supplier reliability and SIFOT. For transport, it will be cost and service. It has since been revamped and updated with more comprehensive information. I work for a food ( chilled, Frozen and dry) distribution company as the Logistics manager, please advise which KPI’s would best suit this nature of business. Then maybe as a productivity KPI, add the number of units, lines, cartons or whatever suits you best, that are processed out and processed in each day. I’ll conclude with a case study illustrating why the above headline talks about the importance of choosing the right KPIs. When measuring the effectiveness and cost of your supply chain, you will need to set up and monitor KPIs that give visibility of cross-functional activity as well as those applicable to individual supply chain components. Supply In Full On Time. Ca you please help me out in this. Still, in this article, I will try to help you evaluate the need for supply chain and logistics KPIs in your organization, and to identify which types of measurement might be most appropriate. It will be appreciated. What type of planning? Best to keep it simple! You’ll find lots of articles on KPIs on our blog that should help. My objectives is Improve Performance efficiency of SCM delivery and quality. I am an international purchaser and I really need to come up with a KPI spreadsheet to measure our freight forwarders’ performance. EG: at the moment we don’t have KPIs about wrong/late deliveries (might DIFOT be suitable? Otherwise it is not fair. Dear sir, I am a customer service and handling export shipments. I seek some financial or cost KPIs for the automotive industry. I am a Pull systems manager at manufacturing company, can you help inthe identification of kpis for assuring that warehouse bin levels are set accordingly at headquarters and branches. I work in a company that produces automotive components and I have been given the task to find suitable KPIs for our company’s goals. Improvement in the brewing company’s service provision was made possible because the KPIs had enabled the partners to identify specific issues, and then agree and implement plans to address them. I am belonging to Procurement Profession. Thanks a lot. I’m not so sure. There are many. These are deliveries from your suppliers to YOU. I m much impressed. Hi Rob, Can I get KPI’s for a materials issuing/oubounds officer in a warehouse system. Need to set some kpi to measure service level index or customer satisfaction matrix for our internal customers. Remember, that KPIs should be selected to measure specific business objectives or outcomes. You could be shipping orders out to customers quicker and more efficiently. This enables the business to detect any fluctuations immediately enabling managers to take action quickly to rectify the situation. The logistics value chain begins with demand planning and ends with final delivery – and each link in the chain can have a domino-like effect on others. Identify tasks list. Financial penalties are common. KPIs don’t change much by industry. Broadly speaking though, the following areas are those where KPIs will be necessary: Cross functional KPIs are likely to provide snapshots of the following end-to-end performance factors: Try to construct cross-functional KPIs in a way that allows each function to see its contribution to overall supply chain performance. Monitors the degree of incidents from the placement of the order to the delivery of a shipment. For example, Perfect Order = 98.5%, Inventory accu. I’m an inventory manager in a fashion establishment, I need you to kindly help in formulating KIPS for effective and efficient inventory management operation. The only thing I’m struggling with at the moment is finding some kind of industry comparison to see how my KPI’s stack up against others. Hi, I am a senior demand and supply planner and Im looking for strategy for my planning team that can be measurable (KPI). Or what type of business? Could you please kindly provide me the examples of what KPI I should take? Hi Ayo. Later, the company in question began to follow similar measurement processes in other areas, such as primary distribution (from brewery to distribution centers) and procurement. So take cost as a start. 7) No KPI should contradict or undermine the others. I hope that gives you an idea. Hello!! KPIs should always focus on these. That necessarily implies a need for financial functions to be measured if you want a full picture of end-to-end supply chain performance. Product received within expected timeframe. Urgent business questions that KPIs for logistics seek to answer include: What specific behaviour or outcome. Examples can be – discounts , new restaurant acquisitions . Hi Rob, What can be possible KPI for vendor billings? Stationery cost per month, printing costs per month…. Lead Time is a KPI that tracks how long your company’s processes/operations last, from start to finish. I need a Transportation KPI for third party Covered van vehicle provider. There are many inventory KPIs you could use. Accuracy of supplier invoice Timeliness of providing invoice Discounts give on invoice? 3) Lead time. Thank you for sharing…. Hi Rob, I am Mohammed working in Well Site Services company as Logistics In charge and need to put in place KPI’s for Logistics Dept. So maybe Delivery In Full On Time (DIFOT) and cost per order delivered? Over or under production can bde a major problem. You might want to measure % instances outside temperature allowances. You need to ensure you cover: Hi Rob, Thank you for this nice Article. You can use the perfect order KPI to track OTC performance, by breaking it into its components and applying the metrics as relevant to the different functions in your supply chain. If the customer makes frequent purchases, receipt of payment for the previous delivery might not be recorded before the customer places a fresh order. At the same time, it is not wise to have too many levels in your hierarchy. 1) Don’t have too many! These metrics are directly related to operational performance and include time, cost, and variability data. We can help you: So if you need some assistance, just contact me. Picking Accuracy (because it supports DIFOT) And maybe cost per item delivered, to provide a cost reduction focus. These problems were all carry-overs from an earlier era when the logistics operation primarily served an internal supply chain. I would start to record reason codes for the ‘faults’ to see what pattern emerges. Also what best tools can be use to reduce the needs of follow-ups in terms of supplychain. what KPI’s i can set to achieve my goal. That will start to give you a view of productivity. However, it is beyond realistic to expect anyone to scrutinize them all on a day-to-day or even week-to-week basis. Well said, Good to know about some much-needed KPI’s of logistics, how to implement them to achieve relevant results. Logistics conference: make your attendance…. Ideal for freight forwarders to know the amount of time spent in each stage of the supply chain and identify strategies to optimize this time. In the planning process, t… I would focus on things like: SIFOT (Supply In Full On Time) Quality DIFOT (Delivery In Full On Time), i need the KPIs for Inbound and Oubound Logistics with the calculation equations for each KPI. ) and maybe get your team to brainstorm what might improve things… each! 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