Key Metrics for Supply Chain Performance

Supply chain planning cannot breathe without metrics. This infographic shows 7 critical metrics: # 1 - WMAPE (Weighted Mean Absolute Percentage Error) ↳ (SUM(ABS(Forecast - Actual)) / SUM(Actual)) * 100 ↳ Measures forecast accuracy. Lower = better.   # 2 – Bias ↳ (SUM(Forecast - Actual) / SUM(Actual)) * 100 ↳ Shows if forecasts over- or under-estimated demand   # 3 – OTIF ↳ (SUM(Orders Delivered On Time and In Full) / SUM(Total Orders)) * 100 ↳ Service level; orders delivered as promised   # 4 - Inventory Turnover ↳ SUM(COGS) / ((Beginning Inventory + Ending Inventory) / 2) ↳ How fast inventory is sold and replaced   # 5 Plan Attainment ↳ (SUM(Actual Output) / SUM(Planned Output)) * 100 ↳ Execution vs. plan reliability   # 6 - Cash conversion cycle (CCC) ↳ CCC = DIO + DSO – DPO ↳ DIO = (Average Inventory / SUM(COGS)) * 365 ↳ DSO = (Accounts Receivable / SUM(Revenue)) * 365 ↳ DPO = (Accounts Payable / SUM(COGS)) * 365 ↳ Days to turn cash outflows into inflows   # 7 - EBITDA ↳ Net Income + SUM(Interest) + SUM(Taxes) + SUM(Depreciation) + SUM(Amortization) ↳ Profit from core operations Any others to add?

Over the past few weeks, I've frequently been asked by the leaders I’m advising to share key performance indicators (KPIs) that organizations should consider as they embark on their supply chain digital transformation journeys. This has sparked important conversations about the necessity of aligning metrics with specific organizational goals and execution strategies. It also opened the door for candid conversations as to the need to engage staff in the process to allow for organizational enrollment which is crucial to long term success as it fosters a shared understanding of what success will look like and helps ensure that the selected metrics are tailored to your unique business context. Given the frequency of these requests, I thought it might be helpful to many to share a few common starting points for organizations to consider with the understanding that these must be tweaked for your own journey and this list is certainly not exhaustive… Digital Adoption Rate: Track the extent to which supply chain processes have been digitized, indicating progress in transformation. Order Fulfillment Rate: Track the percentage of customer orders fulfilled on time and in full. Inventory Turnover: Measure how frequently inventory is sold and replaced, highlighting efficiency in inventory management. Supply Chain Cycle Time: Assess the total time from order initiation to fulfillment, revealing areas for improvement. Perfect Order Rate: Evaluate the percentage of orders delivered on time, complete, and undamaged. Cost to Serve: Understand the total costs associated with fulfilling customer orders, including logistics and overhead. Forecast Accuracy: Monitor how closely your demand forecasts align with actual sales to enhance planning. Return on Supply Chain Investments (ROSI): Measure the financial returns from your investments in supply chain technologies and processes. Supplier Lead Time: Analyze the average time taken by suppliers to deliver goods, impacting your operations. Customer Satisfaction Score (CSAT): Gauge how satisfied customers are with product availability and order fulfillment. Curious to know what others think of this list as well…. #SupplyChain #DigitalTransformation #KPIs #Leadership #BusinessGrowth

Your dashboards are green but your problems keep getting worse. You're tracking revenue per employee, units produced, and efficiency percentages. All trending upward. But customers still complain about quality. Equipment still breaks down unexpectedly.   Operators still struggle with changeovers. Here's why most metrics miss the mark: They measure what happened yesterday. Not what will happen tomorrow. They focus on outputs. Not the inputs that create those outputs. These 8 KPIs actually predict and prevent problems: 1. OEE (Overall Equipment Effectiveness) Shows equipment reality, not just availability 2. First Pass Yield Reveals true process capability 3. Total Cost of Quality** Captures the real price of problems 4. Employee Suggestion Implementation Rate Measures engagement that drives improvement 5. Setup/Changeover Time Determines your flexibility advantage 6. Supplier Quality Performance Prevents problems at the source 7. Safety Leading Indicators Predicts incidents before they happen 8. Customer Complaint Resolution Time Shows responsiveness that builds loyalty Each metric drives specific behaviors. OEE pushes systematic waste elimination. First Pass Yield forces quality at the source. Cost of Quality makes prevention profitable. The best manufacturing teams measure fewer things. But they measure the right things. And they act on every single number. Stop measuring your past. Start predicting your future. Question for you: If you could only track one KPI for the next 90 days, which would drive the biggest change?

Most logistics consultants skip this step when optimizing small parcel services. It's the reason your ops are stuck at 80% efficiency.👇 Here's the truth: data is king in logistics optimization. But not just any data. The right data. The step most consultants miss? Comprehensive carrier performance analysis. They focus on rates, but ignore: - Actual transit times vs. promised - Damage rates by route and carrier - Exception handling efficiency - Claims resolution speed Without this intel, you're flying blind. Your optimization efforts hit a ceiling. You can't improve what you don't measure. How to fix it: 1. Implement detailed tracking for every shipment 2. Analyze patterns over 3-6 months 3. Identify weak points in your carrier mix 4. Negotiate based on real performance, not just rates 5. Continuously monitor and adjust Result? Happier customers, lower costs, smoother operations. The difference between good and great logistics is hidden in the details most overlook. Master these details, and watch your logistics transform. Optimize smarter, not harder. #LogisticsOptimization #DataDriven #CarrierPerformance #EfficiencyBoost #SupplyChainManagement #ParcelDelivery #OperationalExcellence #PerformanceAnalysis #ShipmentTracking #ContinuousImprovement

🚛 📊 Carrier scorecards are the cornerstone of measuring and improving transportation performance. They provide shippers and brokers with the data they need to make informed decisions about carrier partnerships and ensure reliable service. A Carrier Scorecard evaluates a carrier's performance based on key metrics such as On-Time Delivery (OTD), On-Time Invoicing (OTI), responsiveness, and claims ratios. This data helps freight brokers and shippers assess how well their carriers are meeting expectations, identify areas for improvement, and make decisions on which carriers to work with. How scorecards help brokers: 1. Build Trust: Clear, measurable data fosters transparency, helping brokers, shippers, and carriers build trust and strengthen their relationships. Sharing performance data allows carriers to see where they’re excelling and where they need to improve, which drives better performance on both sides. 2. Optimize Cost vs. Service: Brokerages often have to balance cost constraints with service expectations. Carrier scorecards help brokers evaluate whether it’s worth spending a little extra to work with a high-performing carrier who consistently meets deadlines or if they need to address poor performance to avoid delays. 3. Increase ROI: By identifying top-performing carriers, brokers can direct more loads their way, maximizing efficiency and reducing disruptions. When brokers have accurate performance data, they can make smarter decisions about who to partner with—ultimately leading to better service and greater profitability. 4. Gain Visibility: The deeper insights provided by carrier scorecards allow brokers to understand their supply chain’s weak spots. They can identify where delays or inefficiencies are occurring—whether it's on-time delivery issues, poor communication, or tender rejections—and take action to correct them. Current Challenges with Carrier Scorecards While carrier scorecards can unlock tremendous value, they are not without their challenges. The process is often manual, time-consuming, and prone to inconsistency. Here are some common pitfalls: 1. Data Silos: Freight brokers often work with multiple systems and spreadsheets to gather carrier data, leading to incomplete or inconsistent information. This fragmented data can make it difficult to accurately assess carrier performance. 2. Inconsistent Criteria: Scorecard criteria can vary from carrier to carrier, and shipper to shipper, which makes it hard to maintain a standardized process across the board. This can also make it challenging for brokers to compare performance consistently. 3. Limited Automation: Many brokers still rely on manual processes to track and calculate scorecard metrics, which can lead to delays in data reporting and slower decision-making. What changes do you want to see in scorecards?👇

10 metrics every Quality Manager should know like the back of their hand As a Quality Manager, you don’t just need to TRACK metrics—you need to IMPROVE them. You should know how they are calculated and when to use them. Let’s nerd it out now: 1️⃣ Deviation Rate Use: Monitoring process consistency Formula: Total deviations / Total processes or batches (within a defined time period) It’s important to categorize deviations (major, minor, critical) and understand if they stem from human error, system failures, or process gaps. 2️⃣ CAPA Effectiveness Rate Use: Ensuring corrective actions solve root causes Formula: Effective CAPAs verified / Total CAPAs closed (with evidence of root cause elimination) It’s important to measure CAPA success over time and verify outcomes with follow-up assessments, not just closure. 3️⃣ Audit Finding Rate Use: Monitoring compliance performance Formula: Total findings per category / Total audits conducted It’s important to distinguish between internal and external audit findings and categorize them (observations, minor, major). 4️⃣ Batch Failure Rate Use: Evaluating manufacturing reliability Formula: (Total Failed batches / Total batches produced) x 100 (as a %) It’s important to determine the root cause behind failures and monitor trends across production lines and suppliers. 5️⃣ Document Review Timeliness Use: Improving SOP and record efficiency Formula: (On-time reviews / Total scheduled reviews) x 100 (as a %) It’s important to track delays in updates to critical documents, as outdated SOPs can lead to compliance risks. 6️⃣ Change Control Closure Rate Use: Managing process and system changes Formula: On-time changes closed / Total change requests It’s important to ensure changes are evaluated, implemented, and validated without dragging into long timelines. 7️⃣ Training Compliance Rate Use: Ensuring employee readiness Formula: (Total Completed training / Total Required sessions) x 100 It’s important to measure training completion across critical roles and processes, as gaps can lead to human error and compliance issues. 8️⃣ Supplier Defect Rate Use: Managing supplier quality Formula: (Defective materials received / Total materials received) x 100 It’s important to monitor supplier performance consistently and address recurring issues through supplier audits or reviews. 9️⃣ First-Pass Yield (FPY) Use: Assessing production quality Formula: (Units produced without rework / Total units produced) x 100 It’s important to analyze rework causes and identify process improvements to reduce errors. 🔟 Complaint Rate Use: Monitoring product quality and customer satisfaction Formula: (Total complaints / Total products distributed) x 100 It’s important to link complaints to root causes, analyze trends, and feed insights back into quality systems for continuous improvement. It isn’t just about tracking metrics—it’s about using them to improve processes and reduce risk.

Uncomfortable Reality: You won't improve what you don't measure This goes for everything, Quality is no exception. Quality metrics serve as the foundation of operations, quality management and continuous improvement. Here are six essential quality metrics that you need to know to boost your business: 1/ Quality Rate ↳ % of products/services that meet quality standards ↳ High rate = effective processes, satisfied customers ↳ Low rate = improvement needed 2/ Defects Per Million Opportunities (DPMO) ↳ Similar to DPPM, but considers total opportunities for defects ↳ Allows organizations to assess processes holistically ↳ Helps target specific areas for improvement ↳ Comprehensive quality performance metric 3/ Rework Percentage ↳ Proportion of work that must be redone due to defects/errors ↳ High percentage signals process inefficiencies ↳ Important metric for cost reduction initiatives 4/ Process Capability ↳ Measures process within tolerances ↳ Helps organizations determine process consistency ↳ Important for customer satisfaction and management 5/ Defective Parts Per Million (DPPM) ↳ Quantifies the # of defective parts in a million produced ↳ Crucial for high volume operations ↳ Helps identify trends in defects 6/ Process Capability Index (Cpk) ↳ Takes process capability even further ↳ Helps center process performance ↳ helps decrease variability Become a great leader - measure to improve.

Other than cost per package, what KPIs do many high-volume shippers overlook, and why do they matter? Here’s a look at four: • Invoice accuracy. Small errors can balloon into hefty overcharges when you’re sending out hundreds or thousands of parcels a day. Double-check those bills to catch mistakes early. This protects your margin and prevents nasty surprises. • Damages and claims rate. Replacing damaged goods costs time and money. If you track the percentage of shipments that arrive broken, you can fine-tune your packaging or switch carriers before problems grow. Quicker resolutions also boost customer confidence. • Late delivery percentage. Even a small rate of late arrivals can upset customers who expect packages on time. Watching this number each month helps you spot patterns—like specific lanes or carriers that lag behind—so you can fix them fast. • Carrier responsiveness. When issues happen, do you wait days for a reply, or is your carrier quick on the draw? A short response time can save countless hours and reduce extra costs tied to stalled shipments. These hidden metrics show what’s truly going on. If you only follow the cost per shipment, you’ll miss the deeper insights that protect profit and keep clients happy. Keep your data up to date, measure regularly, and react fast if any indicator starts turning red. What do you think? Which KPI have you found most helpful, or which one do you plan to track next? #ParcelShipping #Logistics #InvoiceAccuracy #DamagesAndClaims #HighVolume #Ecommerce #B2BShipping #UPS #FedEx #SupplyChain

This is a follow-on to my post last week about reducing friction to reduce the chaos that results from it. One of the most common forms of friction is the quality of the work begin passed from one person or work team to another. Measuring quality every step of the way in a process is vital for seeing the truth about how processes and work systems have been designed—and where to focus one's efforts to reduce friction. %C&A is the metric we call "the little beast." It stands for "Percent Complete & Accurate." Many of you already know about this metric since I frequently reference it in all of my books, and in many posts, keynotes, and @TKMG-Academy courses. The metric is obtained by asking downstream recipients of work, whether electronic/informational or physical products, what percentage of time they can complete whatever they're supposed to do without engaging in any form of rework. The three forms of rework are: 🔸Correcting information or physical product due to error/mistake/defect 🔸Adding missing information that should/could have been supplied. 🔸Clarifying information that should/could have been clearer to begin with. Example: If someone reports that they engage in any of these three forms of rework in approximately 3 out of 10 instances of receiving work (or 30 out of 100, etc), the %C&A for the upstream process is 70%. But . . . here's where the "little beast" raises its head. VERY often, people report VERY low %C&As . . . As in 10% quality received—or 0%, meaning 100% rework! Poor quality can be coming from external customers or internal teams as you can see in the image below. The people in Step 13 said the customer never provides 100% quality and those in Step 14 (not shown) said that they have to rework 8 out of 10 "work items" (information, in this case) received from Step 13. When cross-functional teams incorporate this metric into mapping processes or value streams (it applies to both levels of scrutiny), it's game-changing. First, most people delivering work have no idea that what they're delivering doesn't meet the criteria established by the recipients of the work. Because they've never had the conversation. Second, we find the most interpersonal or interdepartmental tension isn't due to the people involved. It's typically VERY closely tied to this metric and the frustration that results from repeatedly having to do non-value-adding work that people believe were someone else's responsibility. So, while this metric is the "little beast," it's also the most healing aspect of the work we do. Eliminating low %C&A creates significantly better working relationships, reduces stress, speeds delivery, and costs less. Give it a whirl. I'm happy to answer your questions. For those of you who have incorporated this metrics into your work, please share your stories of how it's helped solve business problems and perceived people problems that are merely work design problems. I'll add my comment below.