Gathering the right data and calculating the right key performance indicators (KPI) is a no-brainer when it comes to improving fulfillment operations. KPIs help to identify bottlenecks, plan out warehouse operations, and measure overall customer satisfaction. If you partner with a third-party logistics provider (3PL) to outsource order fulfillment, they should be instrumental in helping establish relevant key performance indicators and provide you with detailed reports. Whether the goal is to improve efficiency, reduce delivery time, or increase levels of customer satisfaction, there is an appropriate metric to measure progress and performance. The next question is what specific fulfillment metrics you should put in place to enable further discussion, which is what we’ll look at next.
Customer Metrics
On-Time Shipping Percentage: This refers to the percentage of orders which are shipped on time. Because as many as 70% of customers are less likely to shop with a retailer who does not meet the promised delivery window, this is a significant number to track.
Total Order Cycle Time: This refers to the average processing time from the moment a customer places an order to the moment that it is shipped. It includes all processes that fall within that window. As customers become more and more accustomed to same- and next-day delivery options, understanding how your operation performs and how you can improve your performance matters.
Internal Order Cycle Time: This specifically refers to the amount of time that it takes for your operation to process an order internally. Measuring the moment an order is released into the warehouse for processing to the moment that it is shipped.
Perfect Order Percentage: Perfect order percentage looks at several different metrics to determine what percentage of orders damage-free, ship on-time, complete, and with correct documentation. By understanding your perfect order percentage, you can take action to improve your order accuracy and other pain-points within your operation.
Inbound Metrics
Take note of what’s coming into your warehouse—if you don’t account for what’s coming in, it’s impossible to be accurate about what’s leaving. Specific KPI’s for inbound metrics include:
Dock-to-stock cycle
Inbound orders received
Lines received
Outbound Metrics
It’s all about ensuring a quick turnaround from receiving your products to shipping them off to where their destination. This is where contract packaging services come in to play for your warehouse. Specific KPI’s for outbound metrics include:
Order fill-rate
Orders picked per hour
Lines picked per hour
Line fill-rate
Outbound order fulfillment
Financial Metrics
Taking stock of pertinent financial metrics can make all the difference when it comes to determining your long-term strategy. Make sure that you’re cutting lesser-valued services and streamlining your operations where you can. Specific KPI’s for financial metrics include:
Distribution costs (as a sales percentage and per unit shipped)
Inventory days of supply
