Top Supply Chain Performance Metrics You Need to Consider

Managing a supply chain is a lot like juggling if one ball gets out of sync it can affect everything else in motion.

As a supply chain manager, it is your job to make sure every aspect of your supply chain stays in motion and continues to perform efficiently – which is not always an easy task.   

Luckily, there are a variety of metrics that allow supply chain managers to track and measure the effectiveness of their supply chain.

 

However, not all performance metrics are created equal. The challenge faced by many managers is identifying performance measures and metrics that highlight the correct aspect of their business.  Highlighting the correct metrics allows you to make the right decisions to improve your effectiveness and organizational competitiveness. We talk more about identifying the right performance metrics here.

The set of metrics tracked by a company can – and should- vary based on the specific function being done in order to measure those particular aspects of effectiveness. For instance, a trucking company, whose core focus is transporting goods would want to measure things like transit time, shipment visibility and on-time final delivery.

To help you find the right performance metrics for you, we’ve created a list of the top supply chain performance metrics.

 

Supply Chain Performance Metrics

 

Transportation Metrics

On Time Final Delivery

On Time Delivery or On Time Arrival is one of the most obvious metrics when it comes to supply chain management. Put simply, customers expect their packages within the scheduled arrival window.  The quickest way to lose money and acquire unnecessary added fees is by failing to deliver packages on time. If your percentage for On Time Final Deliveries is less than 90%, you need to look for any potential inefficiencies and areas to improve.

How to calculate:
(Number of Orders Delivered On Time / Total Number of Orders Delivered) x 100

Total Delivered Cost

This is more of a high-level performance metric that is the sum of all your transportation costs over a specified period of time. It can be helpful to break this metric down by variable, like the type of vehicle, carrier, route, fuel cost, tire or maintenance costs, freight bills, etc., allowing you to monitor specific fluctuations in cost.

Average Vehicle Loading/ Unloading Time

Unfortunately, this metric is not as often accounted for but is extremely important in measuring transport and distribution system efficiencies. The longer it takes a vehicle to get loaded/unloaded, the less time drivers have to make order deliveries. The best way to acquire this data is through specific vehicle/driver logs and voucher receipts.

How to measure:
Total Amount of Time Spent Loading / Unloading / Number of Shipments

 

 

Supplier Metrics

Order Compliance

A necessary metric for supply chain professionals, Order Compliance allows managers to measure supplier accuracy. This metric measures the percentage of orders that correctly meet previously set specifications. For instance, the correct amount of products, delivered on time, within the correct quantity, with the indicated packaging, without damages.

How to measure:
The Sum of Orders Meeting All Criteria \ Total Numbers of Orders x 100

Shipping Accuracy

Shipping accuracy is a simple metric that measures the amount of products shipped without error.

How to measure:
Number of products shipped without errors / total number of products shipped x 100

 

Warehouse Metrics

Storage Space Utilization
When it comes to managing a supply chain, every inch matters. Storage space utilization is an excellent metric that allows managers to assess the effectiveness of their warehouse storage facilities. This metric can help determine whether to change the layout, size or product flow of the warehouse.

How to calculate:
Storage Space Utilization = Total storage space being used / Total storage space that’s available

Inventory Accuracy

Being able to have a clear picture of your inventory is crucial. In an ideal world, you’d have a full picture of your inventory without any inconsistency, but that’s not always realistic – especially in a large warehouse.  However, ensuring your physical inventory is depicted correctly in your database, helps to avoid high back order volumes, customer dissatisfaction and order accuracy issues.

How to calculate:
Compare your physical inventory with your database inventory count.

Perfect Order Rate

Your perfect order rate is the measurement of orders that are error-free. These orders are shipped and delivered without default, mistakes or returns. A high perfect order rate means you have a high organizational efficiency and have had a small amount of inaccurate orders, late shipments, returned items or damaged goods.

How to calculate:
Perfect Order Rate = Orders Fulfilled Without Error / Total Orders x 100

Back Order Rate

Back Order Rate is an important metric to measure because it can have a detrimental impact on customer satisfaction and retention. By monitoring Back Order Rate you are able to measure how many orders are unable to be filled at the time of purchase. Your Back Order Rate is the best metric to use to analyze successful order forecasting and planning. A consistent increase in your Back Order Rate indicates poor planning.

How to calculate:
Back Order Rate = Orders Unfilled / Total Orders Placed

 

The Important Metrics

These are just a few of the many types of performance metrics that are necessary to measure the effectiveness of your supply chain. To truly get the most out of each metric, it’s important to define which are most relevant to your business. Are your current metrics being used effectively? If not, it might be time to review what is currently in place!