When you walk into a modern business linked through a supply chain or logistics department, it becomes apparent the seriousness and awareness for standard metrics performance.
The important measures often appear well documented, from on-time delivery to lead times and order confirmation processes. Yet, the efforts to keep these metrics over time produce some relative diminishing returns.
Here we offer some standard metrics within the field of logistics and supply chain that are often overlooked, yet could produce the next big lift in your business performance.
Seeking insights by using deeper standard metrics
The use of data, analytics tools, and managers skills to utilize the information for improved decisions continue to improve. Today’s modern manager can create a solid dashboard and plot information into meaningful insights. Yet, the skill to dig deeper beyond the actual metrics themselves is where the secret sauce to success is discovered.
An experienced manager will generate an overview and instinctive knowledge of some typical causes of challenges and warning signs. Some are leading measures and others more lagging metrics. Here we offer an insight into some standard metrics that the inquisitive supply chain or logistics manager can use to identify risks and improve business performance.
The context of this metrics list:
Every business is unique and different. You may already have measures in place to cover some or even all these metrics. If so, then what are you doing with the information? How can this data and insight bringing improvement and value to your business?
There are hundreds of different metrics we could propose within this list. We have decided to consolidate into a broad set of metrics that are often easy to measure for most companies yet still missing within performance reviews.
You may feel already happy with class leading performance or the performance held by your supplier. Yet, consider how do you spot the risks and potential areas for further improvement?
I suggest the use of these insights should be also shared and used with your procurement team, sales team, and quality team. Each of these important stakeholders may have new inputs, awareness or applied use of the information gathered within the body of these metrics.
We suggest these metrics are generated for your own business and also each of the companies engaged in your supply chain. They just might open the new doors for improved supply, productivity and thus mutual profit.
% of key personnel turnover
This is a powerful metric. It not only tells us the staff churn rate of a business but also provides additional insights into its potential culture, terms of employment, and risks of future supply and the strength of its organization design. No, doubt the design parameters of this metric just might impact the results significantly so take the time to agree on steps the format and scope of key personnel as a definition.
Number of undesired incidents
A service level agreement is standard amongst customer and supplier across the supply chain. Plotting and understanding the trajectory over time of undesired incidents can help a business improve performance levels and clarify expectations. So, one business may perceive an undesired incident has occurred, yet another will simply to point to an SLA (Service Level Agreement) scope to highlight the performance was within acceptable parameters. This metric therefore helps define contractional wish, wants and needs plus identify new ways to delight your customer and attain a competitive advantage over your competitors.
Number of projects handled
Day to day service is one thing, yet specific project work is another. Measuring the actual number of projects as opposed to the number of closed, open, failed, success provides the door and insight to the scale of collaboration being conducted. So, your internal logistics team might be handling too many IT transition projects which distract their attention to core business activities. This metrics is very insightful for high growth or high change business cultures. Especially during a transformation or new business phase. Managing realistic resources and expectations from this measure alone can offer swift profitable returns.
Number of contractual conflicts
Relationships between customers and suppliers are vital for sustained long-term success. A business will manage to identify its high priority challenges from SLA review, yet the actual number of conflicts can offer deeper insights into true performance. A double metric plot here is very powerful. Show the number of client known contract conflicts, then a number of actual known (internal) contract conflicts. This helps the quality, procurement and sales teams understand the true performance level and basis of relationship strains or assurances based on performed delivery.
% of environmental compatibility
A business based in one nation often operates under different regulations on environmental expectations in another. This applies all the way down to the specific city, port, and airport level (noise as one leading example). So, having measures to understand the true compatibility for your specific service all the way through its supply chain is vital in the potential choice and priority of change projects needed.
% of handling equipment that complies with noise regulations
One overlooked metric can sometimes provide deeper insights than the actual metric itself. A business using new handling equipment may still rely upon one or two old, out of date and poorly maintained equipment. These less used but equal vital items can become overlooked within a general audit. Using noise as one parameter, you ensure your handling fleet performs to regulations whilst also identifying potential maintenance or capital expenditure items.
Aircraft emissions per payload Co2 emissions per ton-kilometer
A powerful metric that plots payload to payload measures. This generates significant insights for efficiency not just at the Co2 level but significantly within the choice of aircraft and its full load utilization. This metric is a hidden gem to identify optimal routes, carrier selection and review of lead times (not bad for an emissions driven measure). The more emissions, the more waste, and more waste often equate to higher costs.
Number of navigational incidents
The definition of a navigational incident is important at the tactical level.The ability to capture this information is important for it to offer none biased insights. Once attained a business can understand the risk profile of future deliveries, training requirements and be used as an improvement tool.
Number of port inspections
Looking for reasons of sporadic delivery? Indeed this hidden number often highlights the improvements needed in logistics paperwork preparation, carrier selection, union challenges at specific ports and the actual port selection. Some smart solutions can be discovered to significantly reduce the time and therefore stock numbers and reliability of service.
% of cargo damaged or lost during handling operations
A frequently cited metric is simply the % of damaged goods. Yet, this deeper metric takes a specific root cause control step. The level this metric undergoes promotes by default higher attention to handling design, goods packaging, and operations.
Number of outstanding maintenance jobs at each supplier
The reliability and performance of a supply chain are only as good as its maintenance of equipment. Here, instead of measuring plans, actions and spare parts availability or speed of repair, there is a strong focus on the number of outstanding maintenance jobs. Care should be taken to the appropriate level of frequency this metric is taken and the actual method. The metric helps identify specific resource levels and can be monitored over time with effective dashboards in real time.
Number of improvement projects
Different than our prior metric of actual projects, here we focus on specific improvement projects. Variations can include the number of open, closed, success projects also. A key and a sometimes overlooked point behind this metric are the focus on WHY the project is deemed an improvement project. Avoid vanity projects to look good which simply add costs and offer low value. So, a high impact high-value project is the path to encourage.
Number of accidents in handling operations
Understanding the safety obligations each step has across the supply chain impacts the wealth fare of its workers, productivity, service level attained and ultimately financial cost. Generating insights to the number of site level accidents is a common metric. Yet, this standard metric is of lower potential value when considering a solutions attitude to safety. Here we identify potential risks and therefore design or procedural change to goods which translates to lower accidents and this improved service levels.
Number of hours lost due to injuries
Already common across the logistics industry is the number of days since the last incident. This metric delves deeper and retains a priority to the wealth fare of the worker and seriousness of injuries. Measuring the actual number of hours highlights the priority you place on safety. Extra Note: As a policy suggestion I advise a business that has had the unfortunate incident of loss of life, should FOREVER include the daily hour level an employee had. This is a sustained reminder of the personal and business legacy to address and never become complacent with injuries.
% of deviations from safety audits
We already have highlighted askew in this list towards safety across the supply chain and its logistics operations. The grounds for these metrics inclusion are to penetrate deeper into performance levels and identify service level and personal risks. With cost levels being a continual focus and the ever closer interaction between automated equipment and personnel, disruption due to safety is a vital management responsibility. Here we focus on the audit levels and plot the trends of safety audit deviations. Setting the frequency of such events is important as is the skills of the actual auditors for consistent measures.
Accidents per 100,000 kilometers
A great starting point for safety understanding and potential supply disruption is accidents. These highlight the management culture for employee wellbeing as well as any underlined influencing factors such as training sustained skills and maintenance. Specific routes may highlight additional risks, so this metric can be good at various levels of its supply. For instance business level, route level or regional level of your actual goods.
Accidents per 100,000 shipping hours
A variation upon the prior metric is the accidents per shipping hours. Again a similar format can be adopted to drill from business level to route or product level. For specific methods of the transportation mix, the figures will often vary considerably so consideration to the methods of shipping is vital.
Number of business process improvements validated successfully
Improvements are one thing, validated improvements is another. The power of metric highlights the abilities to scope expectations and detail each business process to an accurate level. Business analysts love this type of metric for its ability to demonstrate the volume of work being done to focus on clear process improvement steps that will sustain performance over time. A great measure of cost control and especially after a change in business model, strategy or improved resources (i.e. IT or capital equipment)
% improvement in operational efficiency
We often see measures of operational efficiency as a measure to be controlled and managed within specific tolerance bands. The benefit of this metric is the relative measure it places on a business for continual improvement. This is a great cultural reinforcement metric and certainly of use both for companies in tight management control of operational efficiency or going through a rapid need of change in this area.
% improvement in staff performance and productivity.
We have already highlighted process level improvements yet here we get to the staff level. Scope design of what is included within staff performance parameters and methods of calculating actual productivity often varies considerably from business to business. This is why I focus on the % of improvement as a key metric. The relative measure shares and shows the trajectory of the business output from its recruitment strategy, investments and bottom line improvements. A deeply insightful metric such as this is very important for the procurement team to understand cost control offsets when dealing with other fixed cost factors across the supply chain.
Number of different pricing models
A business across supply chain and logistics will often try to extend its natural reach to serve the market and loyal customer base the best. Over time this generates significant variety in its own pricing models. Specific routes might be seen as a loss leader which offers a wider service quality at unprofitable specific costs. In addition, oversimplification of pricing models may blind a business to sustained profit and wider market opportunity. So, engagement with the sales and procurement teams alike for this metric is vital to help reinforce to shape the full business model.
Number of third party partner collaborations
The use of third party Company’s is a wide reaching metric for several applications. This can simply highlight per route level the number of managed third party carriers, all the way to a tactical level of procurement supply. So, the scale of a business performing many functions in-house can offer unique practices not found in the general market. Conversely, a business using many third party services may be able to pivot, scale and benefit from best practices. So, this metric should be seen as a discovery metric to stimulate further investigation and insights.
Moving for action through meaningful metrics
A list of metrics such as this could continue almost forever. I have sought to highlight and briefly share some insights as to the reason and application benefit for each metric. Your business may have other metrics much more in need of inclusion before the ones I have proposed. Keep an open mind to your measures to provide continual customer support, value and improvement whilst retaining a keen eye upon regulations and safety.
Logistics and the supply chain departments and industry will continue to be affected by the technological change from autonomous vehicles, artificial intelligence, and ever more big data sources through the adoption of the internet of things.
The future of metrics, therefore, is secure; the need to manage metrics generated from such sources will be only truly effective if realistic benefits are generated. We already see in many areas of business that vanity metrics often seek to creep in. I have made the purpose of this list to highlight some potential benefits for you. If your business has specific areas under control and solid governance then pursue new insights to raise performance and value ever higher.
Staying ahead of your competitors, anticipating the market needs are not the responsibility of the board or marketing department. The success of the business strategy and model will only be shaped and sustained through deep insights and a curious mind to discover. I encourage any manager to seek experienced specialists within your field to share opportunities and concerns; here you just might create the base of a significant improvement that some metrics are still yet to help you discover.
JAMSO helps companies improve their performance. Please drop a comment below with any question or another metric you thin are worthy to be listed. But most importantly, do not just make the measures, make the change also.