Supply Chain KPIs

Supply Chain KPIs

What are Supply Chain KPIs?

Supply chain key performance indicators (KPIs) are used by logistics service providers and shipping companies  to assess the efficiency, effectiveness, and overall performance of their maritime operations. These metrics provide valuable insights into various aspects of the maritime supply chain, including vessel utilization, port efficiency, cargo handling, and overall cost management.

By tracking and analyzing these KPIs, maritime stakeholders can identify areas for improvement, optimize their operations, and enhance customer satisfaction. 

Maritime Supply Chain KPI Metrics

The maritime industry tracks a number of KPIs that can be used by logistics service providers while planning their supply chain. These include:

  • Vessel utilization: calculating the percentage of time a vessel actively engages in cargo transportation reflects the efficiency of vessel scheduling and route planning. A high rate indicates optimal fleet capacity usage, minimizing idle time.
  • Port efficiency: monitoring the average time for cargo loading and unloading at a port underscores the efficiency of port operations and coordination among vessels, port authorities, and stevedoring companies. Shorter port call times signify streamlined cargo handling, reduced congestion, and quicker vessel turnarounds.
  • Transshipment connectivity index measures the number of direct connections available for transshipment, indicating the port’s connectivity and accessibility.
  • Carrier performance rate assesses how well shipping carriers adhere to agreed-upon service terms and conditions. High-performance rates indicate reliable and consistent service.
  • Container dwell time: identifying the average time a container spends at a port or terminal before onward shipment reflects the efficiency of container handling processes, yard management, and coordination with trucking companies. Shorter dwell times indicate efficient container movement, reduced congestion, and faster cargo clearance.
  • Demurrage and detention costs: demurrage refers to the cost incurred when cargo remains at the port longer than allotted, and detention relates to container usage beyond the lease period. Minimizing these costs is essential for profitable operations.
  • Customer satisfaction: gauging customer satisfaction with the overall shipping experience, including delivery times, cargo condition, communication, and responsiveness to inquiries, indicates a positive customer experience, strong brand reputation, and increased customer loyalty.

5 More Important Supply Chain KPIs

  1. On-time delivery (OTD): pivotal in assessing the percentage of orders meeting or surpassing the agreed-upon delivery date, this KPI offers insights into the reliability of the supply chain, particularly in the time-sensitive maritime industry. This supply chain KPI is measured by percentage.
  2. Order cycle time: gauging the average time required for order processing, fulfillment, and delivery to the customer. This KPI plays a crucial role in enhancing the efficiency of logistics operations in maritime shipping and is measured by time passed.
  3. Inventory turnover: essential for minimizing holding costs and ensuring timely transit of goods, inventory turnover measures how frequently a company’s inventory is sold and replenished over a specific period within maritime supply chains. This KPI is measured by time passed.
  4. Lead time: the duration between order placement and goods reception is assessed by this KPI. In the realm of maritime shipping, the emphasis lies on reducing lead time to achieve faster deliveries and heightened customer satisfaction. This KPI is measured by time passed.
  5. Cost per unit shipped: calculating the expenses tied to shipping each product unit. This KPI encompasses transportation costs, handling fees, and relevant expenses. The imperative is to control and diminish the cost per unit shipped for sustained profitability in the maritime industry. This KPI is measured by cost.

Procurement KPIs

Procurement KPIs are an important factor when assessing the effectiveness of the overall supply chain. These metrics assess the effectiveness of procurement strategies in managing costs and supplier relations. 

  • Cost savings measure the reduction in expenses achieved through strategic sourcing and procurement practices, directly impacting the company’s bottom line. 
  • Supplier lead time monitors the time taken by suppliers to deliver goods or services post-order. In a sector where timely delivery is crucial, shorter lead times enhance operational efficiency and market responsiveness.
  • Supplier compliance rates measure suppliers’ adherence to agreed-upon standards and contract terms. High compliance rates are indicative of strong supplier partnerships and effective supply chain management, both vital for the smooth operation and profitability of maritime shipping enterprises. These KPIs, when regularly monitored, enable maritime companies to fine-tune their procurement processes, ensuring cost efficiency and robust supplier networks.

Logistics KPIs 

Logistics KPIs are another area that is crucial for monitoring the efficiency and effectiveness of logistics operations. 

  • Freight cost per unit measures the cost associated with transporting each unit of cargo. This KPI helps in understanding the cost-effectiveness of shipping operations and in identifying opportunities for cost reduction. 
  • Transit time tracks the duration of time taken for cargo to reach its destination from the point of origin. In the logistics industry, where timing can significantly impact customer satisfaction and supply chain efficiency, minimizing transit times is a key objective.
  • Container utilization rate assesses how efficiently space is used within shipping containers, a critical factor in maximizing revenue and reducing shipping costs.
  • The damaged goods rate measures the percentage of goods damaged during transit, reflecting on the safety and reliability of the shipping process. Low rates of damaged goods are indicative of effective cargo handling and secure transportation methods. 

Regularly monitoring these KPIs enables maritime companies to optimize their logistics operations, ensuring they are cost-effective, timely, and reliable, ultimately leading to improved customer satisfaction and business performance.

How to Track and Improve Your Supply Chain KPIs

An AI-based Ocean Freight Visibility platform can help transform how you track and improve your KPIs. By providing real-time insights and robust actionable insights, this technology significantly enhances supply chain management. From optimizing delivery timelines to leveraging predictive analytics and data-driven decision-making, organizations can improve overall efficiency, positively impacting KPIs related to cost-effectiveness and performance.

In addition to enhancing operational aspects, the platform plays a crucial role in supplier management and inventory optimization. It helps to reduce dwell time at ports, streamlines inventory processes, and contributes to a positive customer experience. This multifaceted approach ensures that the adoption of advanced technologies not only improves specific KPIs but also fortifies the organization’s competitiveness and resilience in the ever-evolving maritime industry.