Logistics KPIs are business indicators that can be used to calculate the profitability and performance of warehouses and the logistics processes that take place there. In essence, the KPIs contain information on the extent to which a company is achieving its business objectives in terms of inventory and procurement. In this article, we explain which key figures exist, what they mean and how they can be calculated.
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In logistics, key figures can be used to determine how economical or efficient the Sites of a company is. They are used to analyze, evaluate and control logistics processes. The evaluation can focus on different aspects - for example, on the efficiency of the warehouse, the supply chain or the transport. By making the logistics processes measurable, the company can take measures for process optimization - because only those who know where things are going wrong can continuously improve.
Key figures in logistics have the following advantages:
The key figures also have the task of providing reliable forecasts of warehouse times, costs and capacity utilization, as well as future order quantities - i.e., to improve forecasting capability. In addition, the company can use the values as direct targets for its employees to motivate them to work more efficiently and increase their morale.
Important: Not all warehouse indicators are equally relevant for every company and every industry. Depending on the product range, company size and situation and purpose, the importance of the individual indicators varies.
Logistics key figures provide an insight into various complex issues by presenting extensive amounts of data in a single indicator. The following logistics indicators are important when a company wants to analyze internal performance and processes:
The key figure of delivery accuracy determines how many orders are processed in Sites without disruptions and incidents from receipt to shipment. Incomplete and incorrect deliveries, delays in shipping, damage to the goods or even a total loss of the product in transit are among these incidents. A delivery accuracy of at least 90 percent is already considered to be extraordinarily good, although 10% of deliveries still contain incidents. The aim here should therefore be to get as close to 100% as possible.
Only those who can keep their promised delivery time can hope for satisfied customers. Efficient logistics processes are therefore all about correct and punctual delivery times. This can be determined in two ways: Using the on-time shipping rate and the on-time delivery rate. While the former indicates the frequency with which the goods are dispatched on the scheduled shipping date, the on-time delivery rate is used to assess the frequency with which the product actually arrives on the actual delivery date.
The goal of every company is to keep the costs of its logistics as low as possible. Depending on the company, these are made up of various sub-areas. In addition to transport and delivery costs, these also include costs for administration, order processing and warehousing. In order to determine how high the logistics costs are, the transport costs can be calculated in relation to the product price on the one hand and the costs of the entire logistics in relation to the company's sales (logistics cost share) on the other.
Capital commitment is also an important key figure in logistics - because it provides information about the capital that is tied up within the company, i.e., which goods are at Sites and in what quantity. The higher the number of inventories, the higher the capital commitment. This is because as long as the goods from Sites are not processed or sold, they tie up the pre-financing costs and reduce the available capital - and thus the liquidity of the company.
The average stock level indicates - as the name already suggests - how many goods are on average in the Sites of the company. This key logistics figure plays an important role for the company, as it has an impact on capital commitment and storage costs. The key figure can be controlled even better if the articles are divided into ABC categories and the range of the really critical articles can thus be optimized.
In addition to the average inventory level, the average storage period can also be calculated to find out how long goods and items are stored on average. The longer goods are stored on Sites , the higher the capital commitment - because the goods are neither sold nor further processed and therefore cause higher storage costs.
If the company would like to put its warehousing costs in relation to the average inventory, it can determine the so-called warehouse cost rate (LCS). The costs for the Sites include all costs incurred in the Sites and related to warehousing. In addition to space costs for rent, depreciation, interest on loans, energy costs and insurance premiums, this also includes personnel and maintenance costs.
If the company wants to know whether the amount of the warehousing costs is in a reasonable relation to the value of the goods, it can calculate the warehousing cost rate. This logistics indicator enables the company to analyze whether its own warehousing is profitable and what quantities of goods it should optimally order in the future in order to keep warehousing costs as low as possible.
Inventory turnover is a key figure that indicates how often a certain good or product leaves Sites and is replaced by new goods. The higher the ratio, the more frequently the product is sold and reordered. The goal is to achieve the highest possible turnover rate of at least 0.5. However, the value differs from company to company in different industries. For example, it is normal for companies in retail or e-commerce to have a lower turnover rate than an industrial company.
The logistics indicator of stock range is very important for analyzing and ensuring security of supply within a period - because it indicates how long stocks will last at Sites based on average material consumption. If the key figure is too high or too low, the company can turn certain screws to optimize processes - for example, by adjusting the production plan or changing order quantities. Here, too, the analyses become more precise by dividing the articles and materials into ABC categories.
Stock interest and stock interest rate are important key figures when a company wants to determine how high the costs of the capital tied up in the average stock will be during the average storage period. For example, if the company increases its inventory turnover rate, both the inventory interest and the inventory interest rate are reduced.
As a key figure in logistics, the reorder level automatically triggers a new purchase order at Sites . The aim is to ensure that the stock level does not fall below the minimum level until a new delivery arrives and that production and manufacturing can continue without problems with sufficient available goods.
This key figure is also referred to as safety stock or iron stock. As the name suggests, the minimum stock level represents the minimum quantity of goods and merchandise that should always be in stock at Sites . Only if the safety stock is maintained can unforeseen events such as delivery delays, loss of goods or errors in stocktaking be intercepted and compensated for. In this context, the so-called safety coefficient can also be calculated as a key figure: The company can use it to determine the ratio of the minimum stock level to the average stock level.
Productivity is not a key figure with a fixed value, but can be calculated with regard to various factors - for example, in terms of machine productivity, employee labor productivity, or cost productivity. Regardless of which performance the company wants to evaluate, this logistics indicator always puts output in relation to input.
This key figure, often also referred to as "stock quality" or "stock accuracy", is perhaps the most critical parameter for depicting the quality and reliability of a warehouse. The goods digitally mapped in the merchandise management system (target) and the goods actually physically present in the Sites (actual) must necessarily be identical in order to be able to correctly control the disposition and procurement based on them. Unexpected shortage leads directly to availability and supply problems. Ideally, there is no difference between target and actual and the value is 0. Often, the reality is 70 or 80%. But realistically, this key figure must certainly be above 98%, because otherwise no secure supply can be guaranteed from the Sites .
Differences found between target and actual make elaborate Sites inventories necessary to detect and correct deviations.
In logistics, this key figure indicates how high the proportion of sold goods and merchandise is in the total inventory. By calculating the warehouse ratio, the company can determine whether there is excess inventory and, if so, how much.
Finally, a company can also calculate the so-called supplier compliance to obtain information about the reliability of its suppliers. By comparing different suppliers, a high degree of reliability and work ethic can be ensured - because if the supplier does not comply with the agreed framework conditions, the company can look for a service provider with a higher supplier compliance rate. This is important, for example, in the context of supplier management in accordance with ISO 9001.
If a company wants to calculate the various logistics ratios, it can use the following formulas to do so:
Delivery accuracy = number of orders without incidents / number of total orders x 100
Delivery time / on-time shipping rate = number of deliveries shipped at the scheduled time / number of total deliveries x 100
Delivery time: On-time delivery rate (also called on-time delivery rate) = number of deliveries arrived at the scheduled time / number of total deliveries x 100
Transport costs in relation to product price = transport costs per product / sales price per product x 100
Logistics cost ratio = logistics costs / sales x 100
Capital commitment = Average inventory x (procurement costs / order quantity)
Average stock = (opening stock + closing stock) / 2
Average storage period = 360 days x average stock / annual consumption
Storage cost rate = storage costs / average storage value x 100
Inventory cost rate = inventory cost rate + imputed interest rate
Inventory turnover = sales revenue / value of the average inventory level
Stock range = average stock (of the period) / consumption (per period)
Storage interest rate = interest rate (p.a.) x average storage period (in days) / 360 days
Stock interest = average stock x stock interest rate / 100
Reorder level = daily consumption x delivery time + minimum stock level
Minimum stock = consumption per day x delivery time
Safety coefficient = minimum stock / average stock x 100
Productivity (e.g. picks/employees) = output / input
Inventory accuracy = number of goods recorded in the ERP system - number of goods actually on hand
Inventory-turnover ratio = value of goods sold / value of goods in the Sites
Supplier compliance rate = orders received late / total orders received x 100
The aim of logistics controlling is to coordinate and optimize the logistics processes within the company. In order to achieve these goals, certain logistics key figures are required, which in turn serve as a planning tool to be able to control the planned goals. In order for these to be achieved, the Sites must operate economically and efficiently. All factors, from warehouse equipment to technology and personnel, must be coordinated. Employees must always know what they have to do, processes must run smoothly, and changes and possible optimization needs must be identified at an early stage.
Key figures are therefore of immense importance in logistics. It is crucial that employees evaluate the correct warehouse key figures, use correct data and that the analysis of key figures is carried out under consistent framework conditions. Real-time figures are indispensable for the operational and strategic control of processes - because this is the only way to ensure that, for example, the delivery quality per delivery partner is calculated correctly and can be retrieved at any time.
Paper jams, written notes, unstructured Excel spreadsheets and e-mails, on the other hand, stand in the way of such strategic control. However, these are still the prevailing standard in many logistics companies today. For example, our study showed a clear no to the question of whether the relevant logistics and warehouse key figures are available to the 100+ logistics decision-makers at all times: more than 70 percent of the companies still maintain the status of their goods receipts in paper form.
This not only leads to a high degree of potential errors and inconsistencies, but also to an immense amount of time when the company wants to determine important key figures. It is not uncommon for employees to spend days digitizing data and assigning suppliers.
The only remedy is complete transparency through supply chain collaboration tools such as TradeLink. As a central control and coordination point, the software makes it possible to assign all deliveries to an order from the time of order notification and to record relevant data points directly in the tool. Real-time analyses and reporting ensure optimal strategic control of site logistics.
An electronic Time slot management software brings all partners onto one platform and ensures transparency in communication and along the supply chain. This has many advantages for all parties involved.
Trucks remain the frontrunner and the most widely used means of transporting goods. Road freight transport has many advantages, but will encounter more and more problems in the future.
Logistics is always a race against time. And when it comes to road freight, the time factor will continue to become increasingly scarce in the future due to driver shortages and crowded roads. An optimized truckTime slot management can provide relief.