On Time Delivery: 5 Steps to Improve a Critical KPI for Your Business

Creating your own KPI templates from scratch is time-consuming and monotonous. Our distribution software solutions come with prebuilt KPI templates that know exactly where to find the data in your existing ERP solution. Strategy making– The strategy acts as the basic starting point for designing an effective KPI for a business.

First of all, planning the route is a critical step to making sure that drivers can get as many packages delivered as possible in minimal time. This includes making sure that the truck is packed efficiently and planning the route appropriately. If these issues are prioritized and addressed, the OTD rates will rise. In this post we’ll dive into the main issues surrounding on time delivery, and what you need to do to improve your OTD KPIs and in turn, increase customer retention.

I’m sure you have had experienced receiving boxes from online shopping looking like it had been kicked down the street the entire way from the department store to our front door. Needless to say, the products inside weren’t completely intact. In another instance, a shipment of household cleaning supplies coming from an online marketplace that I commonly purchase from wasn’t waiting for me on my front porch on the guaranteed delivery day. This vendor, however, almost always makes good on their delivery promises. Will this instance of late delivery weaken my loyalty to their brand?

Distribution is the often-forgotten little brother of manufacturing. Most people are interested in utilizing KPIs to improve their manufacturing efficiency. However, bringing your factory from ninety percent efficiency to ninety-five percent would cost exponentially more than it would to improve a highly inefficient distribution process. As such, this post will go over distribution KPI examples that cover operational, lean, and financial performance. And, as a bonus, we will also explain how you can streamline your reporting process using distribution reporting solutions.

  • Measuring each line of work separately also enables you to try different strategies for each of them and see which one is the most effective.
  • We came up with a shipping spend tracker that gives a granular breakdown of their shipping expenditure based on the most common service type, weight and consignment destination.
  • Last-mile logistics barely pay attention to tackling the costs involved in the delivery process.
  • On the one hand, we’ve all been on a project where no data of any kind was tracked, and it was hard to tell whether we’re on track for release or getting more efficient as we go along.
  • 69% of consumers are less likely to shop with a retailer in the future if a purchase is not delivered within 2 days of the date promised.
  • Almost one out of three online retail orders are returned, making the Rate of Return an important metric to track to gain insight into why customers return orders.

If you don’t meet your delivery window, making on-time shipping one of the top order management performance metrics to track. It gives you a ratio of orders shipped earlier or on the requested date versus the total number of orders shipped. You can calculate this metric by dividing orders shipped early or on time by the total number of orders shipped. You can measure the achievements of your delivery https://cryptominer.services/ service using a powerful digital logistics solution to monitor a handful of key metrics. From how accurately or timely drivers pick up or drop off deliveries, to how efficiently operations managers spend and distribute resources. Take a look at how a business can use technology, metrics, and services to improve transportation processes, which range from supplier shipping to route optimization.

Distribution KPIs measure the processes of managing product flow in a supply chain, from distributors to customers. Pick and Pack Cycle Time – Metrics are used to measure the duration of time taken by the warehouse function to pick a product and pack it for shipping. On-time, In Full Shipments– The metrics represent the number of shipments delivered according to quantity and schedule stipulated when ordered. Perfect Order– Perfect customer order rate constitutes the number of orders shipped without issues, like damage, delays, or inaccuracies. For example, for on demand delivery, you can use dispatch software that automatically selects a fleet or driver based on whoever is closest.

On Time Shipping Rate

It offers insight into the effectiveness of the supply chain network, as well as the efficiency of the planned delivery routes. Monitoring these last-mile delivery metrics is useful for vehicle management, as you can apply it across the fleet and use it to determine the profitability of your operations. One way to work around this problem is to make it easier to submit reports.

  • On time delivery is one of the key ways in which customers judge the delivery experience, and therefore a critical factor in customer retention.
  • As more and more customers are getting accustomed to same-day and next-day shipping, total order cycle time is one of the top order management performance metrics you should not ignore.
  • These warehouse KPIs help managers identify any lapses in receiving and avoid a chain reaction of inefficiencies down the process line.

Reach out to us to not just optimize your shipping costs but also sketch a winning last-mile delivery strategy for your online shoppers. Say a customer opts for a 2-day FedEx/UPS 9 best coding toys and tools for children ground shipping option. Due to inclement weather, the order is delivered 5 days later than the promised date. To top that, your customer has no mechanism to track the order.

Days Sales Outstanding

The pick & pack cycle time is a logistic KPI that tracks the amount of time it takes an employee to pick an item from a shelf to the time the packing process is done. This metric is calculated by dividing the total amount of time with the total number of items picked and packed in a set period. In the example, we see that the performance of each line is being tracked based on a target, and that line A is a bit above it. This is valuable information as it allows you to take a deeper look into the process of that line and find out what could be delaying the pick and pack. Measuring each line of work separately also enables you to try different strategies for each of them and see which one is the most effective.

shipping metrics

Logistics management controls the procurement, movement and storage of goods. The process starts at the product’s origin and ends with the consumer. Logistic management also includes order fulfillment and integrates with other business functions. When you outsource fulfillment to ShipBob, an easy way to track distribution metrics is through ShipBob’s dashboard.

Is Your eCommerce Trapped Between Delivery Delays And Voided Service Guarantees

“Increasing the number of pallets in a trailer can affect landed cost per unit by double-digit percentages,” says Lynch. Security is especially important to companies shipping cargo that might be at higher risk for theft—pharmaceuticals or consumer electronics, for example. “We spend a lot of time working with multifacility organizations to identify the optimal shipping location for each destination,” says Lynch. Out-of-network shipments originate from points that are less than optimal. He cites food processors that struggled to redirect shipments to channels that were still operating when restaurants and event venues shut down.

This metric aims to measure all cost aspects related to the picking and packing of your orders. For example, the workforce, the packaging materials, or equipment. Your final goal here should be to always keep the costs as low as possible. Therefore, monitoring this KPI will be useful to understand if you are spending more resources than needed in the entire process. The pick & pack costs can also be analyzed deeper by dividing it into products or product categories, this way you can see exactly where your costs are going up and find productive solutions for it. Tracking warehouse KPIs lets you not only monitor the efficiency of warehouse processes, but also take corrective measures to increase productivity and asset utilization.

Core Metrics & 10 Soft Metrics for Measuring Supply Chain Performance

But it’s hard to know what to lower without having some logistics metrics like shipping cost. Picking accuracy, also called order accuracy, is a KPI example of the number of orders picked accurately, without errors. The number is compared to the total number of orders and can be calculated by items returned from a customer order, or from quality assurance checks when the order is sealed and labeled for shipping. Order accuracy is important for customer service as well as operational performance.

This data shows the mistakes and how to address them, reducing costs. Logistics is the process of procuring and bringing in goods, services and information. Logistics covers everything from purchasing to warehousing to fulfillment to transportation and delivery, and how resources are managed at each of those stages. Those resources may include people, raw materials, products and equipment a business counts on to keep its operations running smoothly.

shipping metrics

This graphic shows each of the five stages for logistics for key performance indicators . There are dozens of metrics and KPIs when it comes to tracking ecommerce logistics performance. The most important metrics you focus on impact everything from your profitability to your ability to meet customer expectations. For example, a high back-order rate indicates that a warehouse or distribution center isn’t stocking the appropriate inventory volumes.

This metric measures the accuracy of your inventory by comparing physical inventory with what’s recorded in your database. Maintaining inventory accuracy can help reduce inventory carrying cost and stock outages. The second part of Drucker’s quote, “if you can’t measure it, you can’t improve it,” really brings home Best Collaboration Tools for 2022 Survey Results The Space Blog the importance of having the right set of metrics. In the field of supply chain management, we have created an abundance of metrics and key performance indicators . For the past 30 years I have been involved with multiple efforts to build a set of supply chain metrics and have learned a few things along the way.