In recent years, the transport department has ceased to be seen only as an economic bottleneck and has become a strategic area for companies. This change was responsible for the creation of work methodologies that work to monitor the results of each logistics KPI. Thus, despite its operational performance, the activities of this department directly impact the entire organization – as a result of the degree of customer satisfaction and financial management.
If you are wondering what KPI is, in simple terms, they are performance indicators – key performance indicators -, a management tool used to measure the results of a given process. They offer parameters for the production to be monitored and compared in different periods, facilitating the manager’s decision-making work and strategic planning.
What are performance indicators for?
In the logistics chain, KPIs help managers to focus on what is most relevant without having to interpret a multitude of reports. In addition, they allow for clearer communication between the leader and employees, aligning efforts to achieve the goals and results previously stipulated together quickly.
Why aren’t KPIs just metrics?
Contrary to what many people think, KPIs are absolutely different from metrics. While the latter demonstrates the gross result of operating activities – a number of trips made, for example -, KPIs express the company’s actual results based on a strategic analysis – as the average delivery time.
Therefore, KPIs are more specific than metrics and selected to accompany specific results in the exercise of the company’s activities. The more specific the greater your ability to demonstrate important data for decision-making. However, before putting this concept into practice in your business, how about we remove possible doubts about what logistics KPIs are and how they are defined?
How are performance indicators defined?
The definition of KPIs, due to their nature, is closely linked to the strategy of a business. This means that even if some indicators are fundamental for company X, they are not necessary for company Y.
Despite this, the main points for the definition of logistical KPIs are: stock, transport and cargo security. As they are the “product” of the sector, the result of these three points demonstrates the organization’s logistical efficiency.
Thus, based on these three factors, the company will be able to define the most relevant performance indicators to monitor its results, always considering the strategy adopted – if the company wants to focus on customer loyalty, for example, the average time of delivery is fundamental.
What are the most important logistics performance indicators?
Now that you have learned a little more about the logistics KPI, it is time to point out some of the main indicators to be adopted.
Freight account calculation
This is an indicator of great impact on a company’s logistical performance. It consists of the result of the sum of the total freight cost, disregarding operating expenses. Thus, it is the sum of all payment due to the carrier for the services provided.
Delivery service level
This indicator measures the fulfillment of delivery times and is one of the main logistics. It takes into account the time it took the cargo to reach the customer, from the moment the truck was released for transportation.
Order cycle time
The order cycle time indicator is slightly wider than the service level. In many cases, it is called Lead Time, as its measurement takes into account the time it takes for an order to complete. The term begins to count when it is entered into the system by the user until the moment it is received by the end customer. In other words, it covers the entire process.
Percentage of trackable loads
The calculation of this indicator takes into account the ratio between the number of loads that can be tracked and the total items that were shipped in the same period. In addition to helping to understand the degree of sophistication and automation of the conveyor, it helps to understand how reliable the service level analysis is.
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