9 Essential Logistics KPIs

KPIs in logistics help to optimize operations, reduce costs and deliver a better customer experience.

We surveyed a panel of logistics professionals for their take on some of the most important operational KPIs for logistics teams…

1. On-Time Delivery (OTD)

The percentage of orders delivered to customers on or before the promised delivery date.

How to Measure: OTD is calculated by dividing the number of on-time deliveries by the total number of deliveries, providing insight into logistics efficiency and customer service performance.

Why It’s Useful: On-Time Delivery is a direct measure of reliability and customer satisfaction. High OTD rates indicate effective logistics planning and execution.

2. Order Picking Accuracy

The percentage of orders delivered correctly without errors in quantity, product type, or other specifications.

How to Measure: Order picking accuracy is determined by dividing the number of accurate orders by the total number of orders shipped.

Why It’s Useful: This metric helps you understand the reliability of order picking and fulfilment processes. Improving order accuracy minimizes returns, improves customer satisfaction, and reduces operational costs associated with errors.

3. Shipping Cost Per Unit

Shipping cost per unit is a logistics metric that calculates the average cost of shipping one individual item or unit of product.

How to Measure: Shipping cost per unit is determined by dividing the total shipping costs by the total number of units shipped.

Why It’s Useful: This logistics KPI helps in understanding, comparing and controlling costs, enabling more cost effective logistics operations.

4. Transit Time

The average time taken to move goods from the point of origin to the destination.

How to Measure: Transit time is measured by calculating the duration between the time a shipment is picked up and when it is delivered to its destination. This metric is typically tracked in hours or days.

Why It’s Useful: Having an accurate understanding of transit time is crucial for optimizing delivery and order schedules and improving supply chain agility.

5. Freight Cost Per Mile

Freight cost per mile is a logistics metric that represents the average cost incurred to transport goods over one mile (or kilometer).

How to Measure: Take the total freight cost divided by the number of miles (or kilometers) traveled.

Why It’s Useful: This KPI helps assess and compare the efficiency of transportation routes and cost-effectiveness of carrier services.

6. Warehouse Utilization

The percentage of warehouse space that is being used.

How to Measure: Warehouse utilization is determined by dividing the total occupied storage space by the total available storage space and then multiplying by 100.

Why It’s Useful: Maximizing warehouse utilization helps reduce storage costs and ensures that space is used efficiently.

7. Order Cycle Time

Also referred to as order dulfilmment cycle time, this refers to the total time from when an order is placed until it is delivered to the customer.

How to Measure: Order cycle time is determined by tracking the time elapsed through each stage of the customer order fulfillment process, from order receipt to fulfillment and delivery. Is is typically calculated in hours or days.

Why It’s Useful: Thanks to the Amazon effect, customers are becoming accustomed to quick order fulfilment. This trend is most prevalent in consumer goods and retail e-commerce. Shorter order cycle times improve customer satisfaction and can give a competitive advantage in markets where speed is critical.

8. Fill Rate

The percentage of customer orders that are fulfilled completely from available stock at the time of the order.

How to Measure: Fill rate is determined by dividing the number of items shipped complete by the total number of items ordered. For example, if a customer order includes seven different SKUs and six are available when the order is picked, the fill rate for that order would be 86%.

Why It’s Useful: A high fill rate indicates that the company can meet demand without delays, which is crucial for maintaining customer trust and satisfaction.

9. Damage Rate

The percentage of goods damaged during transit or handling.

How to Measure: Damage rate can be measured at the shipment or item level. It is determined by dividing the number of damaged items or shipments by the total number of items or shipments. For example, if you fulfill 100 orders and customers report damaged items in five of them, your damage rate would be 5%.

Why It’s Useful: Damage rate is useful for assessing the effectiveness of handling and packaging processes. Minimizing damage rates reduces waste, returns, and incremental shipping costs, while also improving customer satisfaction.

The importance of logistics KPIs

Taken collectively, these logistics KPIs provide a comprehensive view of logistics network performance and efficiency, enabling businesses to identify areas for improvement, reduce costs and boost customer satisfaction.