Managing an entire supply chain or distribution channel network including a 3PL logistics provider and carriers is a challenge. The sheer number of moving parts, variables and constraints that impact the performance of each partner as well as the overall performance of the system as a whole can be maddening. The amount of performance data about the health of a supply chain and/or distribution channel network and the fact that all potential partners need to be sifted through can be equally overwhelming. These can include 3PL logistics providers, carriers, suppliers or distributors and/or retail outlets. That’s all in addition to a companies internal operational teams.
Today’s automated tools including WMS, TMS and ERP systems among others can provide a wealth of information. The key is being able to focus in on the most useful metrics. the key performance indicators (KPIs) that can help businesses improve productivity, reduce costs and raise customer satisfaction.
Here are four critical KPIs you should be tracking as part of your continual improvement efforts related to supply chain management and/or distribution channel network management.
Perfect Order Rate – This KPI is a measure of the ability to provide a “perfect” order entering the order correctly, picking the order correctly, shipping the order without damage, delivering the order on time and invoicing the order correctly.
Inventory Turnover Rate – This metric is a measurement of the number of times inventory is sold or used in a period of time, usually a year. Low inventory turnover may indicate overstocking, product or marketing deficiencies or obsolescence. A high turnover rate may signal inadequate inventory and an increased potential for stockouts that could halt production in a supply chain scenario or lost sales revenue in a distribution channel scenario. Benchmarks for high, low and optimum inventory turnover rates will typically vary by industry.
Inventory Accuracy – This KPI measures the accuracy of accounting versus the actual, physical inventory. Keeping books in order is essential for optimum utilization of modern warehouse management systems (WMS) and proper accounting practices more broadly. In addition, a pick team searching through the warehouse for inventory that isn’t there just wastes time and increases costs. A high inventory accuracy rate also enhances credibility with your customers
Percentage of Out of Stock Items – This metric measures the percentage of items that are currently out of stock. It indicates which goods need to be restocked and it can be used as a gauge of which products are most in demand. Most typically this KPS is used in distribution channel management.
FW Warehousing is based in the St. Louis metropolitan area in Sauget, Illinois, and operates warehouse distribution centers in three Midwest states, Missouri, Illinois and Indiana, totaling more than four million square feet. Founded in 1949 with a focus on food-grade storage, the firm later broadened its services to include cold storage, general warehousing and chemical storage. In addition, FW has more than 60 years experience in 3PL logistics, and has been ranked in the top 100 Third Party Logistic Companies in the country by Inbound Logistics magazine.
For more information about the full range of 3PL logistics services with FW Warehousing, visit the FW Warehousing website.