What are logistics KPIs?
Logistics key performance indicators (KPIs) are predefined logistics metrics that let you measure and compare performance and processes over a period of time. They provide transparency and inform decision-making. This is done by defining indicators that can be calculated from available data. KPIs make it possible to opimise logistics processes:
- Determination of KPIs
- Definition of targets
- Evaluation of actual status versus KPIs
- Definition of measures for achieving the target status
- Re-evaluation after a certain period of time
- Maintenance or renewed optimisation of the results
Types of logistics KPIs
Different logistics service providers use different KPIs to analyse and improve their processes, depending on their core business segment. They include:
- Inventory value
- Turnaround time
- On-time delivery
- Picking accuracy
- Cost of raw materials
- Transport or delivery costs
- Storage costs
- Shipment volume
- Turnover rate
Use of KPIs in logistics
Logistics providers need to know the "real" numbers if they want to optimise their delivery, storage or transport processes in any significant, lasting way. For example, they can define the lead time as the time between receiving and issuing goods. If the packages are recorded in every process step, a data warehouse can be used to output and analyse the throughput time over various time periods and make appropriate changes to the process. After changes have been made to the processes, they are re-analysed and compared to the previous period. The overriding goal that is supported by faster throughput times is a reduction in the capacity and capital tied up in the warehouse. Multiple KPIs can also be used to achieve a single goal. For example, cost reduction in the warehouse can be achieved by looking at inventory turnover and order picking. KPIs and targets also help employees because they know exactly what needs to be achieved and how.
How can software help with analysis?
In short, a logistics provider uses KPIs to make its goals and processes measurable. If only one KPI is associated with a given target, a manual analysis may still be acceptable. However, things can quickly get out of hand if there are several targets and multiple KPIs for each target. These situations are best managed with business intelligence systems such as Power BI. Employees and managers can see changes at a glance on the software dashboard.