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The supply chain is the backbone of any modern business: an ever-shifting ecosystem that ensures the smooth, efficient, and consistent delivery of products or services from a supplier to a client or customer.
Your commercial growth will suffer if your supply chain lacks structure, vision, and efficiency or is fragmented. That's why monitoring and optimizing relevant KPIs and metrics for supply chain management with pinpoint accuracy is critical.
Supply chain metrics will help you set solid benchmarks for a number of essential processes and activities. And by working with the right KPIs, you stand to make your company more productive, more intelligent, and ultimately, more profitable.
This post will cover essential supply chain KPIs and deliver insights about the 29 you should track for improved logistics processes. We will also show you how to maximize the value of these supply chain performance metrics with the help of modern KPI software to create professional supply chain dashboards.
But first, let's start with the basic definition.
What Are Supply Chain Metrics?
Supply chain metrics or KPIs are performance indicators businesses use to assess and optimize the efficiency and productivity of various supply chain processes. This visual information can be used to manage inventory, sales, shipping, suppliers, and more.
Concerning the continual growth, evolution, development, and success of your company’s supply, fulfillment, and delivery efforts, supply chain performance indicators are the most invaluable tools available at your fingertips. By collecting, curating, and analyzing key supply chain metrics (SCMs), you will be able to spot inefficiencies within your ecosystem while capitalizing on your current strengths and establishing goals that will help your supply chain scale with your company's success. While you can select numerous KPI examples for your assessment and optimization, we have focused on a list that will enable you to identify potential bottlenecks and ensure sustainable development.
Let’s review our supply chain KPI examples list to put this definition into perspective.
Remember: Today, having access to information 24/7/365 is vital. Cutting-edge online data analysis tools will give you this level of untapped data-driven access, increasing your commercial prospects in the process.
Our Top 29 Supply Chain Metrics Examples
Now that you’re familiar with the official supply chain metrics definition, we will explore a list of the top 29 KPIs for supply chain management that will help you and your organization work toward a bright and prosperous future.
1. Cash-to-Cash Time Cycle
This priceless SCM will help you calculate the length of time required to transform your resources into bonafide cash flows. Working with three core ratios – the days of inventory (DOI), the days of payables (DOP), and the days of receivables (DOR) – the cash-to-cash time cycle KPI visualizes the period required between the moment a company pays cash to its suppliers and the moment it receives cash from its customers. The shorter the conversion cycle, the better, and this invaluable insight will help you take the right measures to run your company with less money tied up in operations.
2. Freight Bill Accuracy
Shipping and freighting your items from supplier to warehouse or warehouse to the consumer is vital to the success of your entire operation, and any issue or error can prove harmful with time and investments being wasted.
Billing accuracy is critical to profitability and customer satisfaction, so tracking this metric will help you spot detrimental trends, improve your overall shipping accuracy, and, ultimately, help your organization grow. Here is how freight bill accuracy is calculated:
(error-free freight bills / total freight bills) * 100
3. Perfect Order Rate
This particular insight is one of the most critical supply chain KPIs and metrics for businesses operating in many sectors. The perfect order rate measures the success of your ability to deliver orders incident-free, which will ultimately help you iron out issues such as inaccuracies, damages, delays, and inventory losses. The higher the perfect order rate, the better because this KPI directly impacts your customer retention and loyalty levels.
4. Days Sales Outstanding (DSO)
The days sales outstanding (DSO) KPI measures how swiftly you can collect or generate revenue from your customers.
Essentially, a low or healthy DSO number means that it takes an organization fewer days to collect its accounts receivable. A higher DSO level demonstrates that a company is selling its product to customers on credit and taking longer to collect revenue in a tangible sense, which can stunt cash flow and minimize profits in the grand scheme of things. By calculating this often, you'll be able to collect revenue faster and more efficiently, which will help boost your bottom line in the long run.
5. Inventory Turnover
One of the most superbly helpful supply chain KPIs available today focuses on logistics KPIs and helps understand the number of times its entire inventory has been sold over a certain time frame. It’s an incredible indicator of efficient production planning, process strategy, fulfillment abilities, and successful marketing and sales. By calculating your on-time shipping rate and comparing it to other competitors within your industry, you can create a clear management reporting practice, see where you stand, and take the appropriate action to improve it over time. This will result in a boost in brand authority as well as an increased bottom line - so it’s important.
6. Gross Margin Return on Investment (GMROI)
Every company, regardless of service, product, or sector, strives to achieve the best return on investment (ROI) for each and every commercial activity it undertakes. Maintaining a consistently solid ROI is the bread and butter of ongoing eCommerce success.
The GMROI offers a clear representation of the gross profit gained for every AED (or $, £, €, ₺) of the average investment made in your inventory: a calculation achieved by dividing the gross profit by the average inventory investment. By tracking this KPI every month, you’ll quickly gain insight into which items in your inventory are poor performers and which are worth investing in more - gold dust in terms of business-based information.
7. Warehousing Costs
We continue our list of SCMs with the warehousing costs. The cost distribution and the management of the time and space of your inventory are critical in establishing healthy business operations. While such expenses vary from warehouse to warehouse, it's important to measure this indicator and review it regularly to identify opportunities and decrease unwanted costs. Running a warehouse facility includes various costs such as labor costs, warehouse rent, utility bills, equipment outgoings, material and information-handling systems, as well as costs related to supplies, ordering, and storing the goods.
Keeping your expenditure on the lower side of the spectrum starts with being well-informed about all the processes at the warehouse facility and how it operates. That way, you will have a better chance to reduce unnecessary overhead and introduce steps to manage operations more efficiently and adjust them when needed. Plus, if you collect your information regularly with the help of a professional online reporting tool, you will have the opportunity to rely upon your reports and make faster, more accurate decisions.
8. Supply Chain Costs
Supply chain costs can apply to planning, managing teams, sourcing, delivering, etc. Monitoring these costs will show how efficient parts of the company are. It's critical for any organization to increase its profit, and reducing costs is one of the strategies that is often applied. That way, the company can identify any room for improvement without increasing sales in the process.
However, evaluating whether the cost reduction will have any unintended impacts is essential. For example, if your transportation costs are high and you decide to push the speed and weight of trucks, you can risk accidents and potentially detrimental consequences for your organization. You may also remember that cutting your overhead in one area can increase in another, so careful analysis in this part is essential. You can perform a benchmark or compare yourself with competitors in order to know whether this KPI is steady and healthy or if you need additional adjustments to be competitive.
If you want to learn more about costs and the financial side of the company, we suggest you read our guide on financial graphs.
9. Supply Chain Costs vs. Sales
Our list of supply chain KPIs continues with additional cost analysis connected to sales. This indicator basically calculates your supply chain costs as a portion of sales, and, in essence, it will give you an indication of how much you are spending relative to a whole. By calculating such supply chain metrics, you will be able to perform a healthy spending analysis and establish processes for potential savings. Optimizing logistics means reducing costs as much as possible, but here, as we mentioned, it's important to cut costs where it makes sense and not simply do it to bring down the numbers. The reason is simple: If you cut costs that are consequently increased in another part of your company, the net result is not very impactful.
To know whether you successfully compare your outgoings with sales, you can simply research industry benchmarks or compare your company with competitors. That way, you will know whether your percentage is too low or too high. In any case, it's critical to compare your insights with the averages of the relevant industry.
10. On-Time Shipping
Created with a professional KPI tool, on-time shipping is an excellent indicator of how long you may need to ship a particular type of order to a client, customer, or partner. This visual will allow you to set a benchmark shipping time relative to each product, which, in turn, will allow you to optimize your shipping and delivery processes, reducing turnover time and boosting customer satisfaction levels.
11. Delivery Time
Delivery time is an indicator that focuses on improving service. It measures the amount of time from the moment the order is shipped to its delivery on the customer’s doorstep. The order must be correctly prepared and the destination reached within a reasonable time frame. Otherwise, your general service and impression on your customers may be tarnished. No one likes to wait days or even weeks to receive their goods.
It makes sense to reduce this supply chain KPI and better inform clients when the goods or products will be delivered. It's much better to state that the delivery will arrive in 4-5 business days than 1-5 days. Moreover, if you accurately and precisely specify the time, customers will have a better experience. You can also offer special delivery services to decrease the time and see how your customer satisfaction rises in the long run. You can even include delivery metrics in your business performance dashboard and monitor it more closely.
12. Return Reason
The return reason offers an astute insight into the various motives causing your customers and clients to return their orders – a piece of information that is priceless to the ongoing success of an eCommerce company. Presented in a digestible pie chart-style format with a key showcasing the primary reasons for return, you will be able to assess your areas of weakness and make improvements that will significantly enhance your reputation and overall level of service. By gaining this level of insight, you stand an excellent chance at decreasing returns, boosting profits, and improving cash flow as a result.
13. Inventory to Sales Ratio
One of the key supply chain metrics on our list, the inventory-to-sales ratio, is critical to track since inventory is crucial to business success. This metric measures the amount of inventory for sale compared to the actual quantity sold, expressed as a ratio. It will help you adjust your stock to increase margins and tell you how well your company deals with unexpected situations.
To keep a healthy inventory-to-sales ratio, you need to know how to balance it properly. If the ratio is too high, it could affect your inventory turnover rates, so the balancing act is essential. A modern dashboard maker can help you create an interactive inventory visualization that will update the data automatically so you can monitor the progress in real-time. Moreover, you will be able to adjust your future strategies and ensure an optimal ratio specific to your organization.
14. Inventory Velocity (IV)
A pivotal supply chain KPI, the inventory velocity, or IV, provides a visual snapshot of the percentage of inventory that's projected for consumption within the next period or quarter.
Calculated by dividing the opening stock by the sales forecast for the following period, the IV is an indicator that will help you optimize your inventory levels, give you a greater chance of meeting consumer demand, and prevent you from wasting money on excess stock levels.
15. Inventory Days of Supply
While this may not be the most panoramic or all-encompassing of supply chain measurement metrics, inventory days of supply are particularly useful as they will give you a fairly accurate calculation of the number of days it would take to run out of stock if it wasn’t replenished.
By tracking, analyzing, and understanding these streams of insights regularly, you can prepare for and avoid any stock-based calamities in an emergency, saving your reputation and cash flow.
16. Pick & Pack Cycle Time
This supply chain performance measurement will give you an accurate gauge of just how efficient (or inefficient) your fulfillment cycle is, breaking it down into specific lines. Each metric within the visual is designed to quantify the time from when an employee plucks an item from the shelf to the moment the packing process is complete.
Once you’ve set your targets and started tracking your progress, it will become clear where delays or weaknesses lie within your supply chain. As a result, you can take targeted action to nip these issues in the bud, driving down your overall cycle times in the process.
17. Fill Rate
Next on the list of supply chain management metrics is fill rate. This important metric will clearly indicate the proportion or percentage of your customers’ orders that are successfully fulfilled the first time around (or during the first shipment).
One of the most popular visuals used to measure supply chain progress is the fill rate, which is directly linked to overall brand reputation and customer satisfaction levels (significant drivers of commercial growth and evolution). You can benchmark your fill rates based on orders, lines, or individual items delivered on the first try. If you spot any discrepancies in your fill rate, you can easily uncover the exact fulfillment factor and boost your fill rate swiftly.
18. Delivered on Time and In Full (OTIF)
In terms of supply chain metrics that matter, OTIF is up there, as it will give you a panoramic insight into your delivery success over a set timeframe. Delivering your customers’ orders in full and on time is vital to the ongoing success of your business.
Based on factors such as whether the right product was delivered to the agreed quality standards, fulfilled in the right quantities, and delivered to the agreed destination, this KPI will help you consistently optimize your outcomes. If your average OTIF rates are lagging, you can use this metric to pinpoint the factors at play and make strategic decisions to tweak your internal strategy or work with more reliable suppliers.
19. Freight Cost per Unit
A data-driven supply chain is critical for making sustainable improvements, and freight cost per unit is a testament to that notion. One of the most important KPIs for supply chain management is freight cost per unit, which quantifies how economically you can ship your products.
This particular indicator in your supply chain metrics dashboard will calculate your overall freight costs divided by the number of units you’ve shipped. You can evaluate this metric using any relevant unit to your company. Any inefficient processes will cost you time, money, and customer loyalty. This KPI will help you avoid such difficulties.
20. Use of Packing Material
Next up in our rundown of supply chain KPIs is the use of packing materials. Not only do inefficient packing processes cause unnecessary waste, but they will sap your business’s budget. This scannable visual will help you confidently track the amount of packing materials used for every line in your pick & pack process.
By setting a target or benchmark for your packing usage (in this example, it’s 300g), you can stay on top of your packaging usage and nip any potential issues in the bud. By re-evaluating your packing strategies before they get out of hand, you will save money while boosting your brand reputation due to your newfound sustainability.
21. Supply Chain Cycle Time
An important metric for any scaling business, the supply chain cycle time is incredibly telling when it comes to tracking your end-to-end efficiency. Essentially, this powerful visual information presents insights into how long it would take to fulfill a customer's order if your inventory levels were at zero.
The shorter your cycle, the more agile, adaptable, and efficient your chain is across the board. By tracking this indicator frequently, you can zoom through any potential roadblocks that are slowing down your processes and take targeted action.
22. Damage-Free Delivery
Whatever goods or products you deal in, a certain level of product loss damage is inevitable. But when the situation starts spiraling out of control, budgets and customer relationships can become strained. Working with the right information is critical to keeping tabs on your delivery processes and keeping in-transit product damage to a minimum.
One of the most vital supply chain performance metrics for businesses is damage-free delivery, which will give you an accurate overview of how many packages made it to their destinations intact. You can pinpoint where the problem lies (from troublesome fulfillment partners or delivery providers to poor product packaging) and nip it in the bud using real-time and historical trend-based insights.
23. Days Sales of Inventory (DSI)
Next in our rundown of essential KPIs in supply chain management is days sales of inventory or DSI. This savvy supply chain KPI dashboard insight will help you calculate how many days your products or inventory stay in stock over a specific timeframe.
This information is valuable because it allows you to pinpoint how effective your sales and merchandising efforts are and how successful your inventory-buying processes are in relation to your customers’ needs or preferences. If you see your DSI rising, you can hone in on the reason and formulate strategies that will see your stock flying off the shelves.
24. Turn-Earn Index (TEI)
If you’re looking to get a firm grip on how well your organization uses its inventory, this most insightful of supply chain efficiency metrics is something to consider. Turn-earn index, or TEI, marries your gross margin and inventory turnover to hone in on your organization’s approach to inventory management. Here, you will discover how you utilize your inventory in relation to your ongoing profits, which is essential if you want to create long-term growth.
Tracking this insight regularly will give you a clear gauge of how high or low your inventory needs to be to generate a healthy profit, giving you the tools to tweak your processes and strategies for maximum efficiency. Here’s the official formula for your reference:
Turn-earn index = (inventory turnover ratio x gross profit percentage) x 100
As a rule of thumb, most businesses across industries set a TEI benchmark of at least 150.
25. Accurately Documented Order
Every order comes with no shortage of documentation, from safety data sheets to customer information. While the nature of these documents may vary according to the order, it’s important for all documentation to be complete, accurate, and available. Companies can measure this using the Accurately Documented Order metric, one of the most important supply chain metrics. It uses this formula:
Accurately documented order = [(total orders – orders without accurate documentation) / total orders] x 100
Companies can use this metric in conjunction with perfect order rate, on-time delivery rate, in-full delivery rate, and damage-free delivery rate to get a complete picture of their operations.
26. Months on Hand
The Months-on-hand metric indicates the number of months a business can sustain its operations without purchasing additional stock, assuming sales proceed as forecasted. It’s calculated using the following formula:
Months on hand = (average inventory for year/cost of goods sold for a year) x 12
This metric helps businesses assess their inventory strategies and plan for potential disruptions. A higher months-on-hand value suggests that a business has more inventory relative to its sales, indicating potential overstocking, while a lower value may indicate a risk of stockouts, which could fail to meet customer demand.
27. Dwell Time
Dwell Time (also called detention time) refers to the amount of time drivers have to wait to pick up or drop off orders. It can be measured in hours on a daily basis, as seen in the chart above.
This metric is important to track because it can indicate your warehouse operation’s efficiency in loading or unloading orders. Multiple factors can lead to long dwell times, such as a lack of labor, an order not being ready on time, or a complex order that requires careful loading. Knowing these extenuating circumstances can help companies come up with viable workarounds.
28. Trailer Utilization Rate
As the name implies, trailer utilization rate refers to the percentage of trailer space occupied on your deliveries. This metric is measured on a monthly basis in the example above. Every square inch matters, as any unused space could be a lost revenue opportunity.
This supply chain efficiency metric emphasizes the importance of optimizing truckload capacity to avoid excess compensation, fuel costs, and unnecessary wear and tear on the fleet. Regular monitoring helps maximize trailer potential while minimizing expenses through efficient planning. For example, evaluating logistics based on trailer utilization can reveal potential cost savings, such as realizing that only 50% of available trailers are needed during certain months, leading to significant cost reductions.
29. Transportation Costs
Monitoring costs throughout the entire order fulfillment process is essential to supply chain optimization. The Average Transportation Cost provides an overall assessment of expenses incurred from order placement to delivery.
In this example, we break down transportation costs into distinct categories: order processing, administrative, inventory carrying, warehousing, and transportation. By calculating and evaluating each stage's percentage, businesses can pinpoint excessive costs and determine if they align with industry norms. This deeper analysis of transportation costs by product may also allow for comparing the item to the revenue it generates, which can add more context to a business’s profitability.
Supply Chain Management Dashboard Examples
Thanks to modern online data visualization tools, you can create stunning supply chain management dashboards with all your needed KPIs with a few clicks. Every KPI in supply chain management works cohesively to paint a vivid picture that will propel your organization forward. Now, let’s review a few supply chain dashboard examples to bring this to light.
1. Supply Chain Management Dashboard
In the example below, we have collected insights focusing on inventory metrics, such as the inventory-to-sales ratio, which you can combine with inventory turnover and clearly see the financial stability of your business. The next KPI of this particular tool is the carrying cost of inventory, followed by inventory accuracy and out-of-stock items. The goal in this example is to avoid wasting money, retain customers, and define the stability of a business.
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There's no denying it: optimal supply chain management conducted in a continually consistent, strategic, and data-driven manner will yield incredibly fruitful long-term results - the kind that will help your business evolve and scale over time.
One of our most powerful business dashboards, the supply chain dashboard boasts a digestible, functional, and visual representation of all key areas of supply chain performance, from inventory accuracy and turnover to the inventory-to-sales ratio. By drilling down into inventory management logistics, this particular reporting tool (which can also be used as an interactive dashboard) will help you deal with unexpected situations, enhance your stock buying practices, reduce operational as well as financial inefficiencies, and a great deal more. Your stock is essential to your commercial operation, so tracking your inventory through a central nerve center will ensure that every initiative improves the way you run your business instead of hindering it.
By tracking these critical supply chain performance visuals in one intuitive tool, you will be able to implement initiatives that not only hold maximum value but will also ensure the smooth running and perpetual improvements of your supply chain processes, ensuring that every single cog in the wheel is turning to maximum efficiency.
If you want to learn how to create a supply report like this one, check out our insightful guide with examples from different industries and functions.
2. Supply Chain Costs Dashboard
Consumer goods is another important industry that relies on effective supply chain management. Especially when it comes to cost optimization, financial analysis is crucial to the bottom line. A comprehensive BI dashboard can help you automate your KPIs and ensure you focus on what really matters: the information, visuals, and insights in front of you.
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At the top of this supply chain metrics dashboard, you can see a quick overview of the total net sales, total costs, and the average cash-to-cash cycle – all important supply chain management metrics to start your presentation. On the left side are costs by category, including warehousing, transport, carrying costs of inventory, customer service, and inventory management. Below these indicators is a clear overview of the supply chain costs vs. sales. This KPI is additionally broken down by calendar week and compared to the previous period. With all of these metrics, the goal is to monitor them so that you can perform a more detailed spending analysis and adjust your strategy if needed.
On the right side of this supply chain performance dashboard is additional cost-related essential info: the cash-to-cash cycle and carrying costs of inventory. These visualizations are essential if you want to know how much cash you need to finance ongoing operations and how much profit you can make based on your inventory. You can easily create such an online dashboard with the right supply chain dashboard software.
3. Warehouse KPI Dashboard
As a busy warehouse manager trying to keep everything smooth and successful, supply chain dashboards are your friend. Working with the right supply chain management metrics will help you keep track of vital costs, shipments, and inventory, even under pressure.
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Our dynamic warehouse KPI dashboard is designed to uncover critical trends as well as essential real-time information in a completely digestible way. Here, you can monitor your on-time shipping costs, analyze total shipments according to region or country, break down key operating costs, and view your perfect order rates at a glance.
This melting pot of visual insights offers the tools to help warehouse managers make continually valuable tweaks to their operational strategies, and it’s also built to improve the decision-making process. If an issue arises, it’s possible to spot the problem within minutes, communicate with the right operatives, and respond swiftly.
Being as adaptable as possible is critical for success in supply chain management. The insights contained within this supply chain KPI dashboard make being responsive more than possible in almost every situation.
4. Supply Chain Dashboard for the COO
Organized in a scorecard format, the supply chain dashboard for the COO gives a bird’s eye view into the most essential operations metrics in four key areas: distribution & transport, order management, inventory, and financials. Each area contains essential data that compares the current, previous, and past 10 weeks to provide the real-time and historical data COOs need to make informed decisions.
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Starting with the distribution & transport section, the template, generated with a professional dashboard creator, presents data on on-time deliveries, trailer utilization rates, and related costs. Here we can see positive developments in transportation costs, but there's a concerning trend in on-time delivery over the past three weeks. Seeing these spikes and dips will capture the COO’s attention and show them where they need to direct their efforts.
Moving to the inventory section, the data reveals underperforming KPIs compared to the previous week, such as an increase in the out-of-stock rate. Seeing these metrics side by side emphasizes the interconnectedness of this data and how one area can influence another. For example, a higher out-of-stock rate could be the culprit for fewer on-time deliveries in recent weeks.
In the order management section, we see mostly positive numbers in the perfect order rate and picking accuracy, although there might be slight delays in order fulfillment. These insights translate into the financial section, where the COO can analyze the financial outcomes of the entire supply chain process. Despite a 4.8% increase in the operating ratio for the current week attributed to distribution, transportation, and inventory issues, the gross profit margin remains strong, indicating that these issues are not major.
Why Are Supply Chain Metrics Important?
Now that we’ve covered supply chain key performance indicator examples and the dashboards that bring them to life, we will reflect by answering the question: Why are they important?
For many reasons, supply chain-based metrics are vital to your company’s core fulfillment and logistics strategy. In fact, studies say that the supply chain analytics market is expected to reach a value of $16.82 billion by 2027. This is because using analytics for decision-making helps businesses improve their operational, strategic, and tactical efficiency.
Here are the main benefits and reasons why KPI tracking is so important in supply chain management:
Communication & cohesion
One of the keys to business success is communication. Once everyone involved in the process has a deeper understanding of their role while gaining access to the info required to maximize their potential, every cog in the supply chain machine will become smoother, more economical, and more reliable.
Supply chain management KPIs like this provide unified access to invaluable data - the kind that will improve communication, aid collaboration, and ensure your inventory is managed economically while every product travels from your warehouse to the end recipient without a hitch.
Focused data & supply chain insights
In the information age, fulfillment processes can become overly complicated due to the ever-growing number of sources, platforms, and touchpoints to analyze. Wading through an ever-expanding pile of data quickly becomes an uphill struggle when you're managing busy supply chains. But KPIs will allow you to focus exclusively on the insights that matter.
Supply chain-based metrics summarize what really counts from one centralized location in a digestible visual format. Working with customized visualizations will help you run your logistical operations better and identify any rising issues (gaps in inventory, a lack of inventory, bottlenecks in your delivery processes, etc.) before they snowball or spot hidden trends that will significantly improve your overall strategy.
Responsivity & adaptability
Supply chain KPI performance indicators are critical, as they will give you all of the insight you need to remain responsive and adaptable at all times. Successful supply chain management commands 100% adaptability in every situation. If something goes wrong (and when you’re talking about supply chains with several stages to consider, something almost always will at some point), you must be able to fix it immediately.
As customer demands continue to evolve and the business landscape keeps on shifting, ensuring your supply chain is robust will set you apart from the pack. Supply chain-focused metrics will give you the confidence and intelligence to make valuable strategic changes to your processes based on the landscape around you while confidently making in-the-moment decisions thanks to targeted data visualizations you can analyze at a glance. The more consistently you meet or exceed your consumer's fulfillment expectations, the more your business will grow – supply chain-based visuals will help you do just that.
By being able to make projections that offer real value and make informed choices under pressure, you will optimize your supply chain for consistent success in a competitive commercial world. This, in turn, will maximize your growth, profitability, and sustainability.
How To Take Advantage Of Professional Supply Chain Metrics & KPIs
Now that you’re up to speed with the value and practical function of supply chain KPIs and quality metrics let’s look at how you can use them to your maximum business-boosting advantage. We’ll start with taking a SMART approach to your informational choices.
1. Set SMART goals
To set the right insights for your supply chain analytics strategy, you should set SMART KPI goals. Working through this selection framework will ensure you work with the visualizations that offer genuine value to the business.
To select suitable insights through the SMART framework, you should ensure that your goals (and all associated visualizations) are:
Specific, Measurable, Attainable, Relevant & Time-Bound
Work through each goal in a collaborative environment step by step, and you will lay solid foundations for your supply chain-based analytical efforts.
2. Track everything regularly
This may sound glaringly obvious, but you’d be amazed at how many logistics managers overlook this essential detail.
As the supply chain is subject to constant change, and each process step can potentially hit roadblocks at any point, tracking your key indicators regularly is critical. Decide which real-time insights you will need to consult on a daily basis before splitting the remaining ones into weekly, bi-weekly, and monthly categories.
When it comes to identifying insights and tracking progress, consistency is key. Setting times to run evaluations will ensure everything flows smoothly and you don’t miss a beat. To remain as responsive as possible, setting up alerts based on certain benchmarks or criteria is always a good idea.
3. Integrate financial and supply chain insights
Supply chain quality and financial KPIs go hand in hand. Any process that you can improve logistically will have a positive impact on your company’s financial health. Conversely, logistical mismanagement will have a negative impact on your company’s ongoing financial health.
By merging these two sets of insights, you will discover direct correlations between how you manage your inventory or fulfill orders and fiscal progress or growth.
Spotting these links will empower you to use your data analysis tools to drive down unnecessary costs while streamlining processes for maximum financial efficiency.
4. Tie all of your insights together
To squeeze every last drop of value from your visual insights, tying them all together in one cohesive, interactive BI dashboard is the way forward.
By placing everything on one centralized platform, all of your supply chain KPIs will work in unison to deliver a wealth of insight from one interactive screen. Doing so will allow you to drill down into every essential business component and make valuable decisions in real time.
Gaining a panoramic view will give you the intelligence to see how each insight complements the other, making your analytical efforts all the more informed, powerful, and profitable.
5. Make sure everyone’s tapped into the ecosystem
Last but not least, to get the most from your metrics, it’s vital that you ensure that everyone involved with your supply chain has access to the indicators, tools, and insights to perform to the best of their abilities.
Everyone must work together to ensure every stage of the chain is well-oiled and fully optimized. If you train your personnel and give them access to the right informational tools, everyone will be on the same page.
Armed with this collective wealth of insight, you will ensure that your supply chain pushes your company ahead of the pack, one smart initiative at a time.
Supply Chain Analytics: Key Trends & Challenges
Appreciating the importance of supply chain analytics is one thing, but integrating these ideas and best practices into operations takes additional creativity and planning. To help guide you, it’s important to understand common trends and anticipate challenges that could impact how you extract the benefits of this data.
Trend 1: Consolidating supply chain data
You’ll need to integrate data from various sources and create a single source of truth to gain a full picture of your operations. Data integration helps identify patterns, trends, gaps, and opportunities across suppliers, products, customers, and markets that you might not see otherwise when data exists in silos.
Trend 2: Turning data into visuals
Data visualization refers to the process of presenting datasets in graphical formats to extract insights, facilitate collaboration, and drive business growth with data-driven decisions. By combining multiple supply chain data points into an interactive graph, chart, or dashboard, users can easily see trends and patterns, leading to a better understanding of why the data matters. This deeper understanding leads to actionable insights, prompting decision-makers to act quickly and develop a continuous improvement cycle.
Trend 3: Translating the data for improved decision-making
Organizations are increasingly investing in data driven decision making. This concept involves using data as the basis for strategic and operational decisions in the supply chain rather than gut feelings or hunches. To achieve data-driven decisions, users must have successfully integrated data and can pick out key insights and boil them down into concise summaries and visuals. In the context of the supply chain, having this ability to translate data enhances efficiency, effectiveness, and competitiveness by optimizing sourcing, procurement, inventory management, and customer responsiveness.
Challenge 1: Increasing data literacy
While data consolidation, visualization, and the resulting decisions sound powerful in theory, achieving these results isn’t always simple. One significant barrier to entry is the lack of data literacy among supply chain employees. Data literacy is understanding, interpreting, communicating, and using data effectively. To maximize the benefits of data literacy, business leaders must provide training, tools, and support to empower everyone to work with data and analytics. Gaining data literacy requires cultural changes, expanded accessibility beyond the data analyst’s desktop, and ongoing training and education on collecting, organizing, and analyzing data for decision-making.
Challenge 2: Trusting the quality of the data
Another challenge regarding supply chain data is having the ability to trust the quality of the data. Things move and change very quickly in the supply chain, which underscores the importance of having access to integrated real-time data and the ability to compare it to historical data. Without these elements, data quality may be at risk.
Data quality is a significant challenge, impacting the validity and reliability of data analysis and decision-making. Overcoming this challenge involves implementing data quality standards and documentation, specifying requirements, validating and correcting errors, and auditing data. Again, this process requires meticulous attention, a growth in data literacy, expanded access, and ongoing training and oversight to ensure users have access to data they can trust.
Challenge 3: Preserving data integrity and privacy
There’s a growing conversation about the importance of data security and privacy. The emergence of laws and standards like GDPR and the removal of third-party cookies online bolster the argument that people are more data-conscious than ever before. These sentiments spill over into the workplace, especially industries and functions like the supply chain that rely heavily on first-party and third-party data.
Data security is a challenge in supply management analytics, involving protecting data from unauthorized access, modification, or disclosure. To achieve data literacy, there needs to be expanded access so that stakeholders have the information they need. However, this also creates the potential for too much data to be shared with people who aren’t on a need-to-know basis. There’s a fine line here, and addressing this challenge requires adopting strict yet user-friendly data security and access management tools (such as a Zero Trust framework), well-defined data governance policies, and robust security techniques (like a cybersecurity mesh architecture).
Despite these challenges, the benefits of monitoring supply chain metrics and KPIs give businesses much to gain and make their implementation worthwhile.
Summary & Next Steps
Recent studies suggest that 79% of companies with high-performing supply chains earn a revenue growth greater than the average within their sector. Moreover, software usage is growing 9% year over year, showing that this clear-cut value of developing an efficient supply chain lies within modern solutions to improve a company's performance.
That's where the power of the dashboard comes into play. If you want to create a data-driven company, save countless hours in the analysis processes, and work with real-time data, dashboards are a great way to do so. And for more data-driven wisdom, check out these great dashboard designs from which you can get inspiration.
So, what are the most important supply chain metrics? Here is a summary of the top 29 supply chain KPIs we discussed in detail:
- Cash-to-Cash Time Cycle
- Freight Bill Accuracy
- Perfect Order Rate
- Days Sales Outstanding (DSO)
- Inventory Turnover
- Gross Margin Return on Investment (GMROI)
- Warehousing Costs
- Supply Chain Costs
- Supply Chain Costs vs. Sales
- On-Time Shipping
- Delivery Time
- Return Reason
- Inventory to Sales Ratio
- Inventory Velocity (IV)
- Inventory Days of Supply
- Pick & Pack Cycle Time
- Fill Rate
- On-Time and In-Full Deliveries
- Freight Cost per Unit
- Use of Packaging Material
- Supply Chain Cycle Time
- Damage-Free Delivery
- Days of Sales Inventory
- Turn Earn Index (TEI)
- Accurately Documented Order
- Months on Hand
- Dwell Time
- Trailer Utilization Rate
- Transportation Costs
“Continuous improvement is better than delayed perfection.” — Mark Twain
The only way to iron out issues and drive continuous evolution is to track, measure, and monitor the right information using the right tools and techniques. Supply chain benchmarks and KPIs will give you the power to make every single phase of your operation fluent, communicative, and built for ongoing success.
Yes, each of these essential supply chain-centric KPIs will make your organization stronger, smarter, and more economically efficient from the ground up. By making your supply chain completely cohesive from start to finish, you will accelerate your business’s growth in ways you never thought possible – and it all starts with the right insights.
Are you ready to work with the supply chain metrics that matter? If you want to track and visualize your supply chain metrics and KPIs with pinpoint accuracy and complete convenience, you can try our modern logistics analytics software for a free 14-day trial.