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December 12, 2022

4 Best Practice KPI's Your Operations Should Monitor for Your Supply Chain

Your supply chain is the backbone of your shipping operation. If your supply chain lacks structure, vision, efficiency, or any combination of the above, you can run into serious issues with your fulfillment strategy. Your operations efficiency and growth can falter unless you have clearly defined goals.

This is why creating and monitoring key performance indicators (KPIs) is a must. Defining your goals early and consistently tracking your services to ensure you're hitting them throughout the year is the best way to keep your business on track to grow. You should leverage the supply chain data collected by your warehouse management system (WMS) to create KPIs that work for your company. KPIs act as benchmarks to help you track the operational efficiency of your fulfillment and monitor how accurately you're meeting your targets.  

Best Practice KPIs

Every KPI will look different for your supply chain operation, as each organization has its own unique set of goals to achieve. However, there are several KPIs you should be monitoring to determine your organizational goals for the year.

Order Delivery Metrics

Arguably the most critical metric for measuring an effective supply chain is the one that gives you insight into your fulfillment process. Some of the most common components of tracking orders include:

  • On-time delivery — Use this metric to determine the percentage of sales orders that are made on time.
  • Damage-free delivery — This metric calculates the number of sales orders that arrived in perfect condition. 
  • Accurate delivery documentation — This metric measures the percentage of sales orders that were delivered with accurate documentation. This typically includes commercial invoices, labels, packing lists, etc. 

Calculating these percentages helps you gauge your customer satisfaction rate and give you actionable steps to improving your processes. For example, if you have a low percentage of on-time or damage-free deliveries, it will likely show your customers are not satisfied and will push you to take another look at your fulfillment process.

Freight Billing Accuracy

Monitoring your cash flow is just as vital as your fulfillment process. Shipping your inventory from factory to warehouse to customer is a must for a smooth and efficient shipping service. 

Calculating how many successful shipments you deliver will show how accurately you are meeting your customers' expectations while identifying any negative trends in your billing operations. From there, you can take action to remove any negativity in your process.

Inventory Turnover and Velocity

Inventory turnover and velocity are two key inventory-level indicators that you should always monitor.

Inventory turnover gives you insights into how much your inventory is sold over a specific period. This can help you measure the efficiency of your order fulfillment, marketing and sales operations, and production processes. 

Inventory velocity shows you the speed at which products move from the sourcing of raw materials and components to customer delivery and returns. This measurement will help you monitor customer demand for certain products.

These two KPIs can categorize your inventory as fast-moving, slow-moving, or continuously moving through monthly sales, benchmarks, and customer demand. By tracking the SKUs that are bestsellers vs the ones that are not, you can make more robust and profitable investments in your inventory.

Return on Investment

When you make large investments for your operation, you want to ensure they're worth the money. Monitoring your gross margin ROIs will show you the exact amount of money made from a specified amount of inventory investment. 

Monitoring gross revenue will help track the levels of your inventory in your locations, identify any slow-moving items, and enables you to improve on planning, production, and warehousing operations. Calculating this number can also be used outside of just inventory; for example, warehouse technology can prove to be a costly expense. By investing in a smoothly operating WMS, you can gather all of these insights and formulate your own KPIs with ease.

Setting Goals with the Right WMS

Creating KPIs hinges on having the proper technology. Your WMS is the beating heart of your operation and provides you with key indicators on how to optimize your current practice. If you don't have solid data to build your predictions, your KPIs will be thrown out of proportion and won't be reachable. 

With Infoplus, you receive full visibility into your fulfillment process. As a cloud-based operating system, you can see updates on your inventory in real-time. When you manage multi-channel operations with complex orders, you need a program with the flexibility to match your own.

Additionally, Infoplus forecasts your future with key pieces of data collected and delivers them to you in digestible, easy-to-read reports. With these reports in hand,  you can better understand the trends in your warehouse and predict the KPIs for your next year.

As a true 3PL partner and an extension of your business, Materialogic is here to help you define your goals and reach them. Our team knows that when you succeed, we succeed. To learn more about Infoplus and how working with Materialogic can help you gain a better understanding of the metrics in your warehouse, reach out to our team.


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Tag(s): Blog , Inventory , Reporting

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