5 Shipping KPIs to Monitor & 1 That Never Works

Shipping KPIs

With more and more new businesses emerging every day and contributing to the already competitive market, it’s vital to monitor the factors that contribute to your growth and keep you accountable for your success. However, with all that you have on your plate, how are you supposed to know which aspects of your shipping and logistics to monitor and which to disregard? In this article, we’ve given you a place to start with five shipping KPIs to monitor, and one that never works.

First, what exactly are KPIs?

A KPI, also known as a key performance indicator, is a metric that measures the performance and effectiveness of an aspect of your business. This can include anything from department-specific processes, individual employee performance indicators, or even high-level business metrics. Choosing the right KPI for your logistics goals will help you measure your short-term wins and losses, and give you the data you need to create action plans for the long game, too.

5 Shipping KPIs That Keep You Competitive

Average Cost per Shipment

Let’s start with an obvious KPI: the average cost of shipping per order. Having this information on hand will give you the data you need to assess your internal processes and total cost of goods sold, as well as how efficient and cost effective your current carrier agreement is. If tracked over time, this figure can signal when it’s time to revisit your contracts and which of your carrier’s services are the best for your operation. 

Carrier Compliance

This is a KPI we’ve discussed before, and for good reason. While your name may not be on the truck of the carrier delivering your orders, your customers often equate poor shipping service to a shortfall on your end. When you closely monitor factors like driver fitness, hazardous materials compliance, vehicle maintenance consistency, service hours, and more, you can keep a close eye on your carrier’s performance. This is vital data that can be taken to the negotiating table when your carrier has breached their terms or when your agreement is up for discussion. 

Order Cycle Time

Also known as Lead Time, this metric combines two of the most important aspects of the fulfillment process into one: internal cycle time and delivery time. When you calculate how long it takes for your warehouse to receive and prepare an order, paired with how long it takes for your carrier to transport that order from your warehouse to your customer, you understand the time involved with each purchase. With this data, it’s easy to recognize when your carrier’s average shipping time or your internal process needs to be addressed.

Average Number of Shipments

There are only so many hours in the day, but optimizing your internal systems for higher volume and monitoring your carrier to make sure they’re in compliance with your agreement can give you the best chance of hitting your goals. When you look at the average number of shipments your warehouse and carrier handle each day, you have the data you need to increase your resources at just the right time, streamline your systems, and have the numbers you need in carrier agreement renegotiations.

Customer Retention

While this may not be a shipping KPI specifically, no business can properly operate without customer satisfaction at the forefront of their success measurements. This key performance metric details the percentage of your customers that come back and do business with you more than once. Repeat purchases indicate that your customers are happy with not only your product, but your shipping, too. When your customer retention begins to fall, your operational team can quickly catch it and make the necessary adjustments to set your business back on the right path.

The Shipping KPI That Isn’t Worth Your Time

Year Over Year Spending Comparison

Carriers have been consistently increasing their rates for decades (and will for the foreseeable future) to maximize profits and accommodate for inflation—this isn’t anything new. You can’t even rely on the carriers “stated” increase, since this year both carries stated a 5.9% rate increase. The 5.9% increase does not include surcharges, rule changes, or things like fuel table increases. Reveel’s analysis found the actual increase to be 12.86% for FedEx and 10.25% for UPS. Given the lack of transparency from the carriers, how can you know how much of an increase is considered good, or even acceptable? The only way to really know how you’re doing is not through a YOY comparison but to benchmark yourself against everyone else.

For another perspective on measuring your success, contact our team today for their expert insights on how Reveel can be the tool to help give you that visibility so you can save and grow. Or experience it first hand by signing up for a free account.

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