Supply Chain is a complex system that constantly reacts to the business. An organization’s supply chain is the supply of its products or services, the distribution of those products or services, and the logistics involved in any of those. In the digital age, global companies are under increasing pressure to become more agile and efficient in the supply chain. And supply chain leaders should prioritize KPIs to improve performance.
1. Metrics that Matter
This metric ranks second to reliability in terms of the significance of the metrics to track. The delayed total deliveries are the sum of all deliveries that have gone through over the past few days.
By how much the number tells the performance as well as the overall satisfaction of the carrier that the company operates. This metric provides insights into variances by customer segment (large, medium, small) and geographies. To achieve that, you must clearly define and adhere to an absolute TAT for each lane of each mode of transit. The local factors such as road quality, driver performance, and costs must also be evaluated concerning each other.
2. Transport Cost Per Unit
This metric is much more significant than the algorithm used for calculating the metric, which is dividing total freight costs by the number of units shipped. As the business expands, it becomes increasingly useful to understand the unit cost of logistics to better understand the anticipated costs involved with shipping different types of products or to different destinations.
There are a variety of other metrics that the transport team may also be looking at such as freight cost/ton, freight cost/ton/km, freight cost/order, and others. Depending on the nature of the shipping business and the type of items being shipped, it is important to map relevant metrics that can provide a complete view of the transport costs.
3. Transport Costs as a percentage of sales
This key performance indicator can be used to calculate metrics like hourly margins, product segmentation, and product mix. By continuing to dissect this metric and analyze the metrics it provides, you’ll find margins by product, region, client, and cost when servicing certain kinds of businesses.
Transportation expenses can range anywhere from 8% to 12% depending on the size of the enterprise, items being transported, and the dispatch team’s efficiency. It is an antique fact that smaller businesses struggle with high levels of transport expenses, and this is due to larger organizations’ ability to negotiate better prices.
4. Transit Time
It is usually determined by the time when the shipping was finished by the resting place or the manufacturer to reach the destination or manufacturing unit. With automated freight carriers, it becomes simple to monitor the information without having to count on the consigner to submit the same. This metric can also be used as a bargaining tool, where one of the parties offers a more detailed delivery date in exchange for better pricing.
5. Transport Invoice Accuracy
To reduce the number of incorrect invoices, employees must make sure that all invoices are accurate and punctually pay off customers to speed up payments and improve customer satisfaction. It’s also vital to take into consideration aspects like the particular contract that might have an impact on the cost and the general price for the accounting of the invoice as well.
A lot of companies have been embracing the use of Top KPIs for supply chain heads to improve performance with the help of Elite Logistics Australia. This is evident from the number of companies that have been investing heavily in implementing the use of these metrics.