You work in e-commerce, have an online store with great products, get a lot of orders in and the delivery also works satisfactorily. Great! But have you ever thought about taking a closer look at the logistics KPIs for your company – in other words, the key performance indicators for logistics? Especially for topics such as transport, warehousing, and supply chains, it is worthwhile to analyze the key performance indicators in detail. Here you can quickly see which optimization potentials can be exploited within the processes.
In this article, we would like to give you tips on how to make logistics KPIs a valuable tool for optimizing your e-commerce activities – because if the logistics processes fit, you will achieve your goals.
For you as an e-commerce provider without brick-and-mortar retail, logistics is crucial to success. Regardless of the industry your products are relevant to, your customers expect an accurate description of the products – and don’t want to wait to receive them.
Amazon Prime shows the way: This marketplace delivers goods to customers within a day. No wonder, since this giant is backed by sophisticated controlling, coupled with sophisticated warehousing and flexible logistics, which almost always works thanks to the perfect interplay of all the resources involved.
If you control the logistics KPIs, this can decisively improve the profitability and success of your company. Because with a continuous evaluation of the logistics KPIs you create transparency. Fluctuations become visible and you can react immediately if the performance changes negatively – and ideally you achieve optimization of your costs while simultaneously increasing the service quality.
More precisely, you can use logistics metrics to quantify performance in more or less all processes, such as goods receipt, warehousing, order preparation, inventory management, shipping, delivery, transportation, or returns management.
There are really many key figures that you can examine more closely as part of the logistics KPI. However, logistics experts advise against monitoring too many logistics KPIs at the same time. Instead, they recommend defining clear questions that can be used to measure performance in the various areas.
So before you start collecting logistics metrics across the entire supply chain, formulate specific questions to approach the relevant metrics.
Let’s assume that you want to look at the deliveries in detail. In the context of the analysis, the following questions could be relevant:
Transports are crucial when considering logistics Key Performance Indicators. They are inextricably linked to everything that concerns the warehouse; accordingly, evaluations of the key performance indicators are also helpful here.
Here are some questions that can lead to the collection of warehouse metrics that are relevant to you:
For operators of an online store, customer satisfaction is crucial – and for your customer, compliance with the agreed delivery time is one of the relevant factors. The delivery time is therefore one of the most important key figures that you should keep in mind when considering the logistics key performance indicators.
The “on-time delivery rate”, i.e. the time from receipt of the order to actual arrival at the customer’s premises, is the top priority of the delivery time KPI. If you achieve a low value here, i.e. if around 20% of your products do not reach the customer within the agreed delivery period, this can be an indication that there are problems in the supply chain.
Here, it is important to analyze exactly in which phase of logistics the causes are to be found. Our recommendation for action: Base your delivery times on the benchmarks of your industry and set yourself realistic goals.
Meanwhile, there are providers for metropolitan areas and major cities like Berlin or Hamburg, which guarantee delivery within three (3!) hours. Dropp, for example. And the advantages with a focus on customer perception are obvious:
Before you now before your mind’s eye the expenditure moves with such’ an extremely fast delivery in dizzy height:
Your goal is to minimize transportation and delivery costs while maintaining high service quality. Therefore, ask yourself what costs are actually incurred within the entire delivery process.
If you want to analyze transport and delivery costs in detail, it makes sense to take a close look at all areas that are relevant in terms of costs: From the provision of product information and offers in your online store to the acceptance of an order to its receipt by the customer. The following areas are important here:
First of all, get an overview. Have you really taken all costs into account and included your working hours and those of your employees? Tasks such as order acceptance, warehouse inspection, packaging, and others must also be completed before the package can be handed over to the shipping partner and delivered.
Strictly speaking, therefore, preparation for shipment is one of the additional values that are included in the key figure for delivery costs.
For many e-commerce companies, it makes sense to take a closer look at average transportation costs in relation to product price, allowing them to make valid cost-benefit decisions – and thus improve performance.
If you take into account all costs to be included in the delivery, it becomes clear that the deliveries actually have to be calculated with a higher value.
There are guides that give you the tools to get an overview of the price structures of the various shipping provider categories. Unfortunately, they don’t give you the holistic view of the supply chain that logistics processes require.
Delivery accuracy is another key logistics metric that reflects the efficiency of your supply chain management. This metric measures the percentage of orders that were completed in full and without complications.
If more than 10% of your goods arrive delayed, incomplete, or damaged, this may indicate inefficient supply chain management.
The recommendation for action can only be: Keep a constant eye on the key figure delivery accuracy because this logistics key figure has a lasting impact on the KPIs – as well as your operating costs and customer satisfaction!
You can also achieve an improvement in your logistics metrics in this area – with Dropp on your side, the supplier compliance rate looks good.
Do you want to know why this company can support you in your processes? We’re happy to share examples of online stores whose logistics metrics are optimized thanks to dropp.
If possible, make an appointment for an online demo right away. The e-mail address is email@example.com.