Supply chain metrics from supply chain experts

When it comes to understanding your operational effectiveness, some key metrics for supply chain management cannot be ignored. These are the numbers within your business that tell the story of how well you’re performing. Those should cover both your in-house operations, and your final mile delivery (which ultimately effects customer satisfaction).

There are lots of numbers that can be tracked… But, which will actually help you improve and save money? This article is aimed at helping those who want to start tracking their supply chain efficiency metrics understand exactly what's important, and how to get started.

What are supply chain metrics?

Supply chain metrics or KPIs are what we use to measure the effectiveness of your supply chain operation. Supply chain management is a complex field, and the important KPIs can vary widely depending on your sector and specific business needs. The scope of measurable metrics covers everything from sourcing goods, logistics, warehouse operations, order fulfilment, costs, and more.

If it’s measurable, it can be tracked. By understanding the most important numbers to your business, you can decide which metrics make the most sense to keep an eye on and feed into your business reporting processes.

The benefits of tracking supply chain metrics

When you understand the numbers within your operation, you can make critical decisions more confidently based on accurate data. As a business scales and introduces more complexity like new sales channels or more territories to serve it becomes more difficult for key operations staff or management to keep an overall view of the Supply Chain performance or Supply Chain health, as we like to call it.

By tracking your key metrics, you can feed that data to wherever it needs to be and give all team members the confidence of having good quality reporting to work with. We advise building a Supply Chain dashboard where performance can be seen all in one place; the most basic of dashboards can be built in Google Sheets or Excel. For those who want to build something more robust and interactive, we like using programs like Power BI or Looker Studio.

We’ve seen repeatedly how accurate metrics reporting helps streamline processes and scale operations. The key is knowing what to track so you don’t get distracted by numbers that provide little actionable insight.

Key supply chain metrics to track

Every business is different, so it’s essential to consider what's important to you. If that’s something you’re struggling with, please reach out to a member of our team who will be happy to chat with you.

As a starting point, here is IMPACT EVOLVE’s guide to metrics you should consider for your Supply Chain.

Inbound Supply Chain Metrics

• Supplier On-time In-full: Measures the percentage of deliveries from suppliers that arrive complete and on schedule.
• Purchase Order Cycle Time: The time from placing a purchase order to receiving the goods.

Measuring these will give you an understanding of lead times to getting new goods into the business. This is critical as holdups here are often out of your control and could lead to problems effecting your entire operation.

Warehouse Operations Metrics

• Quality Inspection Success Rate: Measures the percentage of goods passing initial quality inspection, indicating the effectiveness of quality control.
• Putaway Accuracy: Evaluates how accurately goods are stored in designated locations, impacting inventory accuracy and picking efficiency.
• Warehouse Utilisation: Assesses space available vs occupied in the warehouse.
• Returns Processing Efficiency: Measures the speed and accuracy in handling returns, aiming to restock, repair, or dispose of items quickly.

These metrics will help you evaluate and improve your warehousing efficiency and can help you reduce costs and improve the overall quality of service.

Fulfilment Metrics

• Order Fulfilment Cycle Time: The duration from receiving an order to delivering it to the customer.
• Fulfilment On-time In-full: Orders picked and packed on time, in full, without damage.
• Backorder Rate: The percentage of orders that cannot be immediately filled.
• Fulfilment Cost per Order: Operational cost divided by the number of orders fulfilled.
• Order Shipment Lead Time: Time taken from order placement to shipment.

Measuring fulfilment metrics helps you to understand your operational effectiveness from taking orders through to customer delivery. These are critical for improving both back-of-house efficiency and also customer satisfaction.

Inventory Metrics

• Inventory Accuracy: Measures congruence between physical stock and system records, essential for reliable inventory management.
• Inventory Availability: Evaluates how often inventory is ready for sale or use, impacting customer satisfaction and sales.
• Days of Cover (Inventory Days of Supply): Calculates days current inventory will support sales, aiding in stock level optimisation.
• Cost of Inventory: This section assesses the costs associated with holding inventory, highlighting the impacts of storage, insurance, and depreciation on financial health.
• Aged Inventory Percentage: Indicates the share of stock held beyond a set period, signalling overstock issues and clearance needs.

When you understand your stock numbers and associated supporting metrics, you will have the confidence to make important financial decisions about ordering.

Final Mile Delivery Metrics

• Delivery On-time in full: Percentage of deliveries made within the promised time frame.
• Cost per Delivery: Average cost associated with each delivery.
• Customer Satisfaction Score (CSAT) for Deliveries: Direct customer feedback on delivery service.
• First Attempt Delivery Success Rate: The rate at which deliveries are completed on the first attempt.

Measuring these final delivery metrics will help you understand the success you’re having with customer satisfaction and learn where improvements can be made.

How to get started tracking performance metrics in supply chain management

So now you understand some of the supply chain management KPIs you can (and should) track. This is not an exhaustive list and should be viewed as a starting point to give you some visibility of your overall performance.

The first thing to do is start recording your numbers. You’ll hopefully find these are already available in the business, you just need to extract them into a format and place where you can aggregate them together. For this, you can start with some simple tools like Excel. Once you get a handle on your numbers, you will want to look at a dashboarding tool to streamline the reporting and make it easier to share insights with the wider team. There are lots of options to consider here and no one size fits all solution. If you’re serious about ramping up your supply chain KPI reporting, check out our Supply Chain Analytics page for more information or reach out to a member of our team for a chat.

Your business will have lots of data available within it, that if leveraged effectively will undoubtedly help you understand how and where to make improvements. These can lead to cost savings, more satisfied customers, and a higher level of confidence in your workforce. We encourage you to think hard about the numbers that are important to your business and what your next step will be to improve their visibility.

Frequently Asked Questions about supply chain metrics

What’s the difference between KPIs and Metrics?

Key Performance Indicators or KPIs are really a subset of your overall metrics. They are the specific metrics that measure your performance. However, when talking about metrics and recording the numbers that count, we almost always look at performance. So when people ask what is a KPI in the supply chain, they are typically asking about metrics. Depending on who you talk to, the two terms may be used interchangeably, but usually refer to the same thing.

What are the key supply chain KPIs?

As mentioned above, KPIs and metrics typically refer to the same thing when talking about the supply chain. So, all the key metrics in this article can be thought about as your supply chain management KPI's too.

What is the best dashboarding tool to use?

Dashboarding tools used for monitoring your supply chain metrics will vary depending on the business size and specific needs. There are some great products available now that make aggregating data a relatively simple process. Tools like Power BI or Looker Studio can accept data in various formats and help you quickly visualise data to start gaining insights. If you’re not up building your dashboard from scratch, don't let that stop you moving forward. Getting set up with a spreadsheet on Excel or Google Sheets will still provide insight and may be an important first step to getting a handle on your numbers.

How do you use metrics and analytics in Supply Chain Management?

This is an important question - what to do once you have your metrics dashboard in place and you can see where improvements need to be made? There is no point in recording your data if you don’t do anything with it. The next step is to analyse your insights and use them to take action. You might find a good starting point is your process design as your findings may uncover critical working processes to address. Or, there could be a number of small changes to make that actually have a big impact. Remember, it's important to gather data first, analyse it, and then decide where the most effective changes can be made.

Do you really need to monitor metrics to have a good supply chain?

The short answer is yes! You might find when your business is small you can get away without it and speaking with your team on the ground gives you enough information to make decisions. As you start to scale though, that simply won’t work anymore. Having accurate information is critical to understanding operational effectiveness. Start with the basics and get some numbers on the board, then look to grow from there (your team will thank you for it).