There are a number of Key Performance Indictors (KPIs) that should be regularly monitored to ensure overall health of the shipment process, find problems you didn’t know existed, and innovate the process for optimal performance. These KPIs can all be applied throughout the supply chain. Meaning, they can be used to measure the performance of your own organization relative to your customers, but also as a way to measure how well your own suppliers are meeting your needs.
1. On time in full delivery: Unless the entire order arrives on time, it should be regarded as late. An acceptable overall average may hide problem areas that will only be revealed through the kind of deep analysis that can be time consuming to do manually. Business Intelligence gives comprehensive insight into exactly this kind of data.
2. Average days late: Measuring the average days orders are delivered late can help an organization understand the consequences late deliveries have in regard to customers. There is, after all, a vast difference between a delivery that’s a day late and one that’s a month late. Get the full picture on how many days on average were spent in the factory, in the warehouse, and en route to the customer.
3. Rate of returns due to shipment damage or shipment error: This KPI shifts the focus to the quality of the delivery: Does it actually contain what the customer ordered? Did the delivery arrive in the same condition as when it left the factory or was it damaged along the way? The quality and timeliness of the delivery are intimately connected, since a truly on-time delivery is not possible if the wrong item is delivered or the item is damaged. If the customer does not receive a correct item, it will have to be returned by the customer who must then wait for the correct item to be shipped.
4. Order picking accuracy: Delays and shipment errors can happen at any step in the process between the time an item leaves the factory and reaches the customer. The earlier the organization is able to catch errors, the smaller their downstream impact will be. The picking process is often the key to ensuring that the right product reaches the customer. Order picking errors also entail a loss of efficiency in the warehouse, since the picker will have to spend time returning the wrong product and picking the correct one instead. In order to accurately measure order picking accuracy and catch errors, the organization must have some way of verifying that the picked item corresponds to the order before it leaves the warehouse. If this verification is recorded electronically, the data can be inputted into a Business Intelligence system to provide a real-time view of picking accuracy in the warehouse.