The ABC of KPIs in Logistics
Measure, Analyse, Improve
Why monitor with KPI
The logistics sector is constantly evolving. Challenges like rising fuel costs and the need to transition to low CO2 emission vehicles to reduce environmental impact are everyday occurrences. Daily, a transportation company must manage these and many other challenges that require tight resolution times. However, it is crucial not to lose sight of business performance and objectives. Key Performance Indicators (KPIs) come to the rescue. KPIs are measures or metrics that allow you to assess a company’s performance and progress toward specific goals. Dashboards, pie charts, histograms, coloured arrows, and many others can be used, but the fundamental characteristic is that they must be intuitive to enable a clear understanding of business trends at a glance. Another important advantage of KPIs is that there are universal ones, but customized ones can be created based on the specific characteristics of your business and your needs.
KPIs in logistics
- Time Indicators: These measure the transit time of goods in the logistics context. Lead time is evaluated from the point of origin to the final destination of the goods, and transit time deals with the intermediate routes when the process interfaces with other entities.
- General (or Quantity) Indicators: These provide an idea of the quantity of goods to be managed. Historical data of this type can be extremely useful to identify any seasonality or to create a system for forecasting future cargo. Depending on the purpose, it is important to build these indicators based on volumes, cartons, and pieces handled. Considering volumes is essential for choosing appropriate transportation methods, understanding the number of cartons to handle can help direct warehouse activities, and it is important to know if there are hanging items, as they require special handling.
- Quality Indicators: These assess process quality and, hence, customer satisfaction. They can be seen as composite indicators, combining quantity and time indicators to indicate the percentage of goods reaching their destination within the defined transit times, as well as any responsibility for delays.
- Cost Indicators: These evaluate how sustainable the process is in terms of costs incurred. Many different cost indicators can be created, both to help the customer understand how their costs are distributed and internally to relate costs and revenues and assess the economic sustainability of the business.
KPIs are often grouped into thematic areas through interactive dashboards, allowing users to gain an immediate understanding of business trends. There are numerous software tools available for creating these views through intuitive commands without the need for in-depth programming knowledge. However, it is essential to build a robust database to support all types of analyses.
KPIs at Hub & Logistics
We continuously evaluate KPIs, both internally and with our customers. Internal analysis allows us to verify if business management performance meets predefined strategic objectives and provides objective data for making future decisions. Customer evaluation is equally crucial, as it helps us understand their real needs to provide a more customized service. Self-assessment is fundamental for us, as it enables continuous optimization of various aspects of business processes and represents an opportunity to offer customers a service tailored to their needs.
