The concept of key performance indicators (KPI) became popular in the 1980s, when companies understood the need for total quality in their operations.
And this is the idea of using the KPI in logistics management, which is so complex and fundamental in terms of delivering a product with quality and customer satisfaction.
If you want to improve this issue in your company, get to know 7 essential performance indicators for logistics here.
Get to know 7 logistics performance indicators
In order to choose the best logistical performance indicators, managers must think about the strategic points to stand out from the competition.
In order to help you with this, we have selected 7 examples of KPIs in logistics that are worth studying.
1. On-Time Delivery -OTD
The OTD indicator measures the percentage of orders that were delivered within the deadline informed by the company at the time of purchase.
Optimizing delivery routes and the practice of scheduling deliveries are aspects that can improve this indicator.
2. Transport Costs
The objective of this KPI is to assess whether the costs of transporting the products have been greater than the profits that the company obtains from sales.
It is possible to analyze whether it is better to have a fixed fleet or to outsource this service with this information.
3. Order Cycle Time (OCT)
Order Cycle Time – OCT, measures the performance of the total time between the date of receipt of the order and the product delivery date.
The OCT helps you understand what factors have caused delays in delivery.
4. On time in full – OTIF
On Time in full is linked to customer satisfaction.
It analyzes the company’s efficiency in terms of on-time deliveries with orders delivered without error (in full).
5. Storage Cost
It is a logistical performance indicator that analyzes movement and storage costs in relation to sales revenues.
Expenses involve labor, location, shipping or delivery, equipment and fixed bills: water, electricity among others.
6. Inventory Accuracy
It helps to keep track of items in stock according to system registration. A high percentage in the result represents the quality of consistency in the count.
7. Order Fill Rate – OFR
It monitors the company’s internal performance when processing orders, that is, the company’s ability to meet demands.
It is the ratio of the total number of orders served divided by the total orders shipped.
These KPIs are able to show the consistency of the data informed with the company’s reality and the quality of operations performance.
There are dozens of indicators related to production, stock, service, quality, customers, among others that are of paramount importance for analysis. However, experts suggest choosing few KPIs to monitor.
That’s why we only covered 7 logistical performance indicators, now it’s up to you to get to know them better.