Supply Chain Orchestration KPIs
In the past months, we've highlighted metrics your organization should be tracking regarding cold chain, transportation management, and warehouse management. This month, we're zooming out to focus on your entire operation by providing you with key KPIs you need to be tracking to achieve supply chain orchestration.
The Importance of Supply Chain Orchestration
Supply chain orchestration has become an important topic, especially over the last few years. Our team at Routeique would define supply chain orchestration as connecting your supply chain and managing it in real-time, with complete visibility.
KPIs to Help You Orchestrate Your Supply Chain
When Routeique begins work with a company, we typically survey their operation, asking questions about their supply chain needs, processes, whether their accounts are growing, and more.
In terms of orchestration, we evaluate three main categories of KPIs:
- service level
- data accuracy
In this blog, we've included examples of each type of KPI. If your team is where it should be on these metrics, you can feel confident that your customers are happy and that your organization is growing. If you're not doing so well, don't worry! We've included some insights into key hurdles and key solutions for properly orchestrating and optimizing your supply chain.
As with our previous blogs, we won't recommend specific numbers to target since every organization's situation is different. However, our team offers in-depth supply chain consulting services if you're looking for more specific metrics.
Service Level KPIs
KPIs that focus on service level let you know how well you fulfill your customer promise. These KPIs are essential for ensuring that you keep customers happy and retain them.
Perfect Order Rate
Your perfect order rate refers to the number of orders that arrive undamaged, accurate, and on time.
Causes of Low Perfect Order Rate
Many factors cause low perfect order rates, including mistakes during a manual order capture process, errors during the picking and packing, or damage during transit.
Solutions for Raising Perfect Order Rate
Online ordering solutions can reduce mistakes during the order creation and submission process.
Similarly, synchronized order and inventory management systems can ensure that inventory is up to date and reordered at the correct times and that orders are prioritized and tracked correctly. A portable WMS is also far easier for warehouse staff to use than a pen and paper.
Additionally, inefficient warehouse layout or product placement can lead to longer pick times or damaged products. A deep dive into your layout and processes can be a powerful way to increase this aspect of your warehousing.
When it comes to maintaining product integrity during transit, IoT solutions can make sure that temperature products stay in perfect condition.
Your fill rate is the percentage of product orders you can meet with your stock on hand–in other words, everything but backorders or lost sales.
Causes of a Low Fill Rate
Poor inventory management or fulfillment processes can be the culprits behind a low fill rate.
Solutions to Boost Your Fill Rate
An online order portal, integrated with an accurate inventory system, can ensure that customers are ordering products that will be available to fill.
In addition, an inventory management system can reorder items you need at regular intervals to ensure you always have what you need.
It's also possible to mitigate the effects of a stockout. For example, your team can suggest alternate products to clients if they are available. Alternatively, you can ensure that you always backorder requested items as quickly as possible to avoid any unnecessary delays.
This metric helps you determine whether your customers are happy and continue to do
business with you.
Causes of High Customer Turnover Rate
Poor communication, unreliability, or high costs can damage your customers' willingness to continue doing business with your organization.
Lowering Your Customer Turnover Rate
At Routeique, we find that digitizing routine customer service tasks, like order management and notifications by email or SMS, ensure that customers are always in the loop.
Our order portal and order management system allow your customers to place and edit orders online anytime–saving them the frustration of calling your order desk over a simple task.
Digital inventory management and route planning ensure you always have the stock you need on hand and that all of your delivery routes adhere to customers' preferred delivery windows.
Additionally, we find that automating routine tasks allows our clients to focus on their customers' more urgent or unexpected queries.
While ensuring customers are happy is essential to your business, so is monitoring your bottom line. These cost-related KPIs help you spot problems and optimize your supply chain for efficiency.
Cost to Fulfill Order
The costs to fulfill orders includes labour, picking, shipping, storage, and technology.
Causes of High Fulfillment Costs
Manual processes are one of the highest drivers of costs due to rising labour costs and shortages. High fulfillment costs can arise from inefficiencies in warehouse layout and fuel use.
Our Tips for Lowering Fulfillment Costs
Automation and technology can help reduce errors by streamlining and reporting your
data in real-time.
Technology can also help your team find the most efficient solutions when calculating them manually would take a significant toll on your team. For example, our warehouse optimization solutions allow you to digitally model and compare different warehouse layouts and picking processes.
Similarly, route optimization automatically calculates the most efficient routes–saving time for drivers and cutting wasted fuel.
Cost Per Delivery Route
Cost per delivery route factors like distance, products, fuel, and labour. Analyzing your cost per route helps determine if your routes are profitable or whether an adjustment needs to be made.
Causes of High Costs Per Delivery Route
A key cause of high costs per delivery route can include too few drops. On one hand, this may be because there is simply not enough business. However, it can also be because drops are not organized in the most efficient way for drivers to carry out, so some routes have too few stops to be profitable.
Lowering the Cost Per Delivery Route
With route optimization technology, you can easily lower the cost per route and free up your team's time. It's not enough to just optimize a single route. You need to optimize the master route plan and then each individual tour to ensure that routes are clustered & optimized efficiently.
Our route optimization system's unique process has two phases. It considers factors like delivery windows, location, drivers, and more. First, it analyzes available resources and clusters the drops into route plans. Next, it organizes the drops in the most efficient order for your drivers to tackle.
Cost Per Drop
Similar to costs per delivery route, cost per drop is impacted by the costs of elements like distance, products, fuel, and labour.
Factors Causing a Higher Cost Per Drop
A higher cost per drop can be caused by high fuel costs, inefficient routes, or missed delivery windows.
Lowering Your Cost Per Drop
Again, as with cost per route, you and your team can lower the cost per drop by using technology to optimize routes and ensure delivery windows are met. Another solution is to increase your minimum order amount if your cost per drop is too high.
Data Accuracy KPIs
Last, but certainly not least, comes data accuracy. You can't achieve supply chain optimization if you're working in the dark. Up-to-the-minute, accurate data helps you and your team make accurate business decisions, from basic things like ordering the right inventory to macro-level tasks like ensuring your business is meeting your growth targets.
In sum, inventory accuracy is how well your recorded inventory matches the inventory that you have on hand. A high level of inventory accuracy means that you know when to replenish, that your customers are placing orders based on accurate stock, and that you are effectively using your storage space.
Causes of Low Inventory Accuracy
Several factors can cause low inventory accuracy. The first is a lack of real-time visibility into your warehouse. We emphasize real-time here because, in today's fast-paced world, outdated data is almost as bad as having none in today's fast-paced world.
If receiving, restocking, claims, and other processes aren't tracked correctly, it is easy for products to become lost in the shuffle. In the worst-case scenario, your warehouse can become a disorganized "black box", but even minor inaccuracies can add up.
Another frequent cause of low inventory accuracy is a layout, racking setup, or storage density that makes it physically difficult for staff to locate and count items.
Solutions for Boosting Inventory Accuracy
To improve inventory accuracy, you need to track not only what is coming into and leaving your warehouse but every step in between.
A portable warehouse management system for staff can help monitor products' flow, while an optimized layout ensures products are always where they should be.
Additionally, technological enhancements like drones can help facilitate counting in areas of the warehouse that are difficult to access or have denser storage. Finally, processes like regular cycle counts can help make sure that your inventory is accurate and up to date.
Kickstart Your Supply Chain Optimization
Once your team knows where you are and where you want to be, you can start taking steps to optimize your supply chain.
You can browse our other blogs on this topic to learn more, or get in touch with our team by clicking below!