{"id":105,"date":"2022-10-26T20:31:36","date_gmt":"2022-10-26T20:31:36","guid":{"rendered":"http:\/\/supplychaintechnology.co.uk\/?p=105"},"modified":"2022-10-26T20:31:36","modified_gmt":"2022-10-26T20:31:36","slug":"6-logistics-kpis-attributes-that-are-essential","status":"publish","type":"post","link":"https:\/\/supplychaintechnology.co.uk\/?p=105","title":{"rendered":"6 Logistics KPIs Attributes That are Essential"},"content":{"rendered":"

Logistics KPIs (Key Performance Indicators) measure how well an organization logistics function is performing. They\u2019re used to evaluate the effectiveness of operations and identify areas for improvement. Logistics KPIs examples can vary from Basic 5 Logistics KPIs<\/a> to a detailed list of 47<\/a>, which you can get from here.<\/p>\n

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Logistics is the central system that controls physical inventory flow in a supply chain. Logistics allows businesses to perform value-added services and deliver valuable products to the end consumer.<\/p>\n

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Whether it be retailers, wholesalers, e-commerce, or SMEs, every player in the market requires Logistics, whether private, semi-private, or public. Experts wrote many articles emphasizing the importance of Logistics<\/a>, Logistics optimization, Logistics planning, and Logistics space optimization<\/a>. One of the articles on Logistics space optimization can be found here.<\/a><\/p>\n

What we will cover in this blog<\/p>\n

Key Performing Indicators<\/strong>
\nAttribute 1 \u2013 Productivity related Logistics KPIs<\/strong>
\nAttribute 2 \u2013 Time-related Logistics KPIs<\/strong>
\nAttribute 3 \u2013 Cost related Logistics KPIs<\/strong>
\nAttribute 4 \u2013 Quality related Logistics KPIs<\/strong>
\nAttribute 5 \u2013 Safety related Logistics KPIs<\/strong>
\nAttribute 6 \u2013 Cultural related Logistics KPIs<\/strong>
\nConclusion<\/strong><\/p>\n

<\/a>Key Performing Indicators<\/h2>\n

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Key performance indicators (KPIs) are a group of numerical indicators that may assess how well a firm performs over time. They enable us to track the organization\u2019s effectiveness in attaining its objectives in particular.<\/p>\n

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Similarly, Logistics KPIs indicate the logistics\u2019 total efficiency and direct the managers to carry out operations optimally.<\/p>\n

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Key performing attributes signify and monitor the Logistics functioning and create a visibility pattern in the supply chain. These indicators can be monitored weekly, monthly, or half-yearly basis. For example, one of the leading furniture retailers, IKEA, monitors these KPIs every week as Logistics is the core competence of IKEA.<\/p>\n

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While understanding the Logistics performance attributes, let us classify them in PACT.<\/p>\n

PACT stands for Purposeful, Actionable, Continuous, and Trackable.<\/strong><\/p>\n

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To implement these recommended Logistics KPIs in your company, you should use our Logistics KPIs Dashbaord which we have designed with through research.<\/p>\n

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<\/a><\/p>\n

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<\/a>Attribute 1 \u2013 Productivity related Logistics KPIs<\/h2>\n

Productivity attribute signifies the Logistics\u2019 day-to-day operational efficiency. Productivity attribute is trackable and continuous.<\/p>\n

The productivity attribute includes the processes and their impact on the supply chain. Every business has different productivity KPIs depending on the type of business, supply chain model\/design, and consumer base.<\/p>\n

Productivity Logistics KPIs Example:<\/strong><\/p>\n

Picking Order productivity = Total number of order lines picked per month \/ total labour hours available for picking activity<\/p>\n

Shipping Productivity = Total order lines shipped per month \/ total labour hours available<\/p>\n

Delivery Productivity = Total order delivered per month \/ total wh labour hours available for delivery activity<\/p>\n

Warehouse Space Utilization = Total warehouse ares occupied by activities \/ total warehouse capacity floor (m2) * 100<\/p>\n

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Benefits<\/strong><\/h4>\n

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This attribute focuses on labour productivity, good in-flow productivity, storage\/replenishment productivity rate, throughput productivity, and many others. For example, throughput productivity will define the total amount of orders leaving the Logistics in a day or an hour.
\nIt helps draw a line between efficient performers and inefficient performers.<\/p>\n

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<\/a>Attribute 2 \u2013 Time-related Logistics KPIs<\/strong><\/h2>\n

One of the purposeful & trackable key performing attributes. The time attribute is calculations of different lead times. In this attribute, managers focus on the time required to complete a single operation.<\/p>\n

The Logistics space optimization depends on the time taken by different KPIs mentioned in the dashboard. The time attribute includes \u2013 receiving operation time, dock to stock time, replenishment time, equipment downtime, and many more.<\/p>\n

Time- related Logistics KPIs Example:<\/strong><\/p>\n

Order to Delivery Lead Time = Actual delivery date \u2013 purchase order creation date<\/p>\n

Receiving operation time = Total time taken \/ time taken to unload each pallet<\/p>\n

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Order picking time = No.of Picks \/ Time taken by each pick<\/p>\n

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Putaway time = Time between available storing & effective storing \/ number of pallets stored per month<\/p>\n

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Benefits<\/strong><\/h4>\n

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Perform lean with Logistics activities.
\nIdentifying the right SLIDs (Sales Location ID) for the right product
\nHelps in scrutinizing which inventory management method to adopt.<\/p>\n

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<\/a>Attribute 3 \u2013 Cost related Logistics KPIs<\/strong><\/h2>\n

One of the essential attributes would be the cost and related KPIs. Cost-related KPIs are pragmatic and fall at the intersection of PACT columns. Cost KPIs enable managers, directors, and senior leaders to understand companies\u2019 spending. Cost KPIs have some significant indicators like \u2013 Inventory Costs, Labor Costs, order processing costs, 3PL supplier spend costs and many more, which contribute to the smooth functioning of a logistics operation.<\/p>\n

One drawback of Cost KPIs is that it is inversely proportionate to Quality KPIs.<\/p>\n

Cost Logistics KPIs Example:<\/strong><\/p>\n

Order Processing Costs = Total of office and employee cost to process an order \/ number of order per month<\/p>\n

Warehouse Maintenance Cost = Total cost to maintain the building warehouse + Total equipment maintenance cost + Others<\/p>\n

Out of Stock costs = Total lost sales per month \/ total order received per month<\/p>\n

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Labor Costs = Salary + Charges + Bonuses + others<\/p>\n

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3PL Suppliers Spend = Sum of 3PL Suppliers Invoices in a given month<\/p>\n

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Benefits<\/strong><\/h4>\n

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Helps to analyze if the company is functioning on the allocated budget.
\nBifurcates high-cost functions to low costs functions.
\nCost KPIs help managers know profit margins in each activity and can allocate a sufficient amount in the next FY.<\/p>\n

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<\/a>Attribute 4 \u2013 Quality related Logistics KPIs<\/strong><\/h2>\n

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We might call the Quality KPIs the efficiency rate determining if standard operating procedures are functioning effectively. Quality KPIs are measured with a purpose and action in mind. While some of the KPIs are trackable, some are not; hence, we would not put Quality KPIs in the trackable matrix.<\/p>\n

Quality-related Logistics KPIs are measured through every step of logistics. We should also note that there is a thin line between quality KPI and productivity KPI. Some of the most important KPIs present in Quality are \u2013 Order Fill rate, Stockout rate, Picking accuracy, Replenishment accuracy, and Customer Satisfaction Rate. They all have different formulas, which can be found in the Logistics KPI Dashboard on the SCMDOJO website.<\/p>\n

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Quality Logistics KPIs Example:<\/strong><\/p>\n

Receiving Accuracy = Total number of pallets unloaded per month correctly \/ total pallets unloaded per month * 100<\/p>\n

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Storage Accuracy = Number of pallets stored correctly \/ number of pallets unloaded * 100<\/p>\n

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Picking Accuracy = Orderlines picked correctly \/ total orderlines picked * 100<\/p>\n

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Delivery Accuracy = Total order delivery correctly \/ total order delivered * 100<\/p>\n

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Fill Rate = (Number of Ship From Stock Orders Shipped within 24 Hours after Order Release\/ Total Number of Ship from Stock Orders) x 100<\/p>\n

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Perfect Order Fulfillment = (Number of Perfect Order \/ Total Number of Orders Delivered) x 100<\/p>\n

Benefits<\/h4>\n

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Function according to Industry standards.
\nIdentify the bottlenecks in the logistics process.
\nHelps improve profitability and customer satisfaction<\/p>\n

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<\/a>Attribute 5 \u2013 Safety related Logistics KPIs<\/strong><\/h2>\n

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One of the most underrated Logistics KPIs would be Safety and Security. We have seen many incidents causing business and human losses due to unhealthy and unsafe working conditions. Operating low-quality forklifts\/high-reach trucks, hazardous communications, unsafe wiring, less number of exits, etc., are some examples of low safety standards. Data published in 2018 claims that the cost of work injuries is close to 57.6 billion USD.<\/p>\n

Safety-related Logistics KPIs help identify the incidents occurring time, accidents rate, cause of accidents, addition or removal of some SOP to avoid accidents, and damage rate. Companies are focusing more on these aspects to attain employee confidence in a logistics warehouse.<\/p>\n

Safety Logistics KPIs Example:<\/strong><\/p>\n

Time Lost Due to Injury = (Lost Time in Hours Due to Accidents) \/ (Total Number of Hours Worked)<\/p>\n

Safety \u2013 Near Miss Reports = Number of near misses reported each month<\/p>\n

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Safety- Accidents Records = Number of days since last reportable incident<\/p>\n

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Total Recordable Incidents rate = (Number of Recorded Injuries in a Year \u00d7 200,000)) \/ (Number of Hours Worked in a Year)<\/p>\n

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Benefits<\/strong><\/h4>\n

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Correct SOP to reduce the accident rate.
\nOne of the KPIs of Safety Attributes is TCIR. TCIR stands for Total case incidence rate. TCIR helps identify incidents that are happening per 100 employees. The less the score, the better the operations in a warehouse or logistics process.<\/p>\n

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<\/a>Attribute 6 \u2013 Cultural related Logistics KPIs<\/strong><\/h2>\n

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Cultural-related Logistics KPIs are new in the group of attributes and fall purposeful and continuous matrix of the PACT. The cultural KPIs include stability of the workforce within the warehouse; more the rate, less the performance. Moreover, we also have cultural entropy score as one of the cultural logistics KPIs, which decides the time and energy spent on unproductive & unnecessary work.<\/p>\n

Besides the two mentioned, we have a manager satisfaction score and an employee net promoter score.<\/p>\n

Cultural Logistics KPIs Example:<\/strong><\/p>\n

Employee Turnover Rate = (Employees Who Have Left) \/ (Average Number of Employees) \u00d7 100 = Employee Turnover Rate (%)<\/p>\n

Employee Net Promoter Score \u2013 Not likely, Neutral, Likely<\/p>\n

Benefits<\/h4>\n

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Helps managers understand the workforce\u2019s stability because people move the supply chain.
\nImprove engagement at the workplace.
\nHelps understand key lagging areas.<\/p>\n

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<\/a>To conclude..<\/strong><\/h3>\n

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Supply Chain KPIs<\/a>, Logistics KPIs<\/a>, Procurement KPIs<\/a>, and other tools help managers evaluate the current chain and move towards betterment in every way possible. The finest supply chain management will produce successful long-term outcomes.<\/p>\n

Any kind of business development and expansion will benefit over time. It might be challenging to guarantee the efficient operation of intricate systems like supply chain management. There are several groups involved, each with their own objectives and procedures. A few crucial areas that need special attention include tracking shipments and keeping an eye on inventory levels to guarantee efficient order processing.<\/p>\n

Therefore, a logistics study is crucial. Numerous KPIs and indicators may be used by businesses to assess the effectiveness of their supply chain management system and identify areas for improvement.<\/p>\n

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<\/a>References<\/h3>\n

Hedler, F., 2015. Global warehouse management: a methodology to determine an integrated performance measurement. HAL Open Science, [online] pp.96 \u2013 105.\u00a0<\/em><\/p>\n

Essential Business Guides. n.d. 21 Essential Warehouse KPIs to Measure Performance \u2013 Zoho Inventory.<\/em><\/p>\n

LEGACY Supply Chain Services. 2015. Top Warehouse Performance KPIs | LEGACY Supply Chain.<\/em><\/p>","protected":false},"excerpt":{"rendered":"

Logistics KPIs (Key Performance Indicators) measure how well an organization logistics function is performing. They\u2019re…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false}}},"categories":[1],"tags":[],"class_list":["post-105","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"jetpack_publicize_connections":[],"yoast_head":"\n6 Logistics KPIs Attributes That are Essential - Supply Chain Technology<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.supplychaintechnology.co.uk\/?p=105\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"6 Logistics KPIs Attributes That are Essential - Supply Chain Technology\" \/>\n<meta property=\"og:description\" content=\"Logistics KPIs (Key Performance Indicators) measure how well an organization logistics function is performing. 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