In the field of logistics and warehousing, there is of course a lot of software that helps you with the optimal route, warehouse utilization and supply chain management. But what are the basic KPIs in this area? Whether you are a data scientist, analyst or business analyst, it is useful to understand what the individual departments actually do. What are their goals? How do they earn their money directly or indirectly? How can the success be measured? These question with their respective answers helped me to understand the key figures of the individual departments.
Sources for Data
The first question is of course where to get data for possible KPIs and further analyses. Typically, sources for such data are:
- ERP systems
- Order management systems
- Material management systems
- Route optimization systems
- and since a few years also more and more sensors by IoT
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Why the Importance in this Area will increase
Especially in times of the Corona pandemic, we saw how important it is to have reliable supply chains. To monitor and optimize these supply chains, sensors and systems are needed [1]. By making this data available, important KPIs can be defined. Only through this internal business processes become visible and measurable. The various areas can be only optimized through this way— including material management, warehousing, transport, purchasing, etc. – and the supply chain be optimized.
KPIs
Here are some KPIs in this area I came across with. Of course, this is only a small selection of KPIs, but I think some of the most important ones, as they are often found in the literature.
How reliable is your supplier?
- Reliability of Supplier = Number of goods delivered on time and in good condition / total goods
- Multiple new stock deliveries each week.
How satisfied are your Customers?
- Customer returns of good items [2].
- Customer returns of damaged items [2].
- Return to vendor stock.
Warehouse KPIs
- Warehouse utilization = Occupied area / total area
- Sum of the material outflow
- Storage duration
- Inventory cost rate = inventory cost/inventory value
Transportation KPIs
- On Time Delivery [3]
- Cost per Transport
Summary
Logistics and Warehousing key indicators are used to measure the company’s development and implement appropriate measures for continuous improvement. This collection of data, coefficients and percentages provide a solid basis for decision-making to ultimately achieve maximum logistics quality. For a deeper dive use the sources below.
Sources and Further Readings
[1] B. Sai Subrahmanya Tejesh, S. Neeraja, Warehouse inventory management system using IoT and open source framework (2018), Alexandria Engineering Journal, Volume 57, Issue 4,
[2] veeqo, 7 Essential Warehouse KPIs to Start Tracking For Optimal Performance (2020)
[3] Singapore Institute of Purchasing and Material Management, Key Performance Indicators (KPIs) for the Logistics Sector (2019)
