What are the best metrics to use for distribution performance benchmarking?

Distribution Performance Benchmarking (DPB) is a process of evaluating and comparing the efficiency, effectiveness and overall performance of a Distribution System against Industry Best Practices. The choice of metrics depends on the specific goals and objectives of the Distribution Process and they are a) The average cost incurred to process and fulfil a single order b) The percentage of products that customers return c) The percentage of customer demand that is met from stock on hand without backorders d) The number of times Inventory is sold or used in a specific period e) The degree of variation in the time it takes to fulfil orders f) The percentage of orders delivered on or before the promised delivery date

Distribution chain management is one of the most sensitive aspects of logistics. I refer to it as the pivot in supply chain practice. One of the key matrices my team and I have adopted, was to design an efficiency in-house tracking system, where logistics receives real time requests from customers( sales) ... the tracker updates us with these key information, customers location, name , items and quantity requested. My team immediately takes steps to allocate the best fit transport system to meet the needs of clients in real time. This has reduced our cost operations, especially our fuel cost , this is because since we can capture the exact location the order is coming we are able to estimate fuel that can be used to complete that trip.

There are many types of metrics you can use to measure for distribution performance benchmarking. Here are some key ways to consider benchmarking an operation are: cost per order, initial order fill rate, inventory/process accuracy, department productivity, demand satisfaction, customer wait time, and customer satisfaction to name a few.

One key aspect of logistics management is ensuring delivery reliability. This involves consistently delivering products to customers on time and as promised. The importance of adapting to the technology today in the industry is crucial. We make sure that the planning and forecasting of logistics management rely heavily on the software being used especially if effectively automates the process which will certainly increase productivity. Having a concise and effective tracking technology will the management better insights and visibility.

Pour mesurer la performance de la distribution voici quelques KPI intéressants : 🚚 Taux de livraison dans les délais : pourcentage de commandes livrées à la date prévue 🚚 Taux de service : pourcentage de commandes satisfaites directement en stock (sans ruptures) 🚚 Précision de l’inventaire : écart entre le stock théorique et le stock réel en entrepôt 🚚 Taux de rotation des stocks : combien de fois le stock est renouvelé sur une période donnée 🚚 Coûts logistiques par commande : inclut transport, manutention, stockage, etc. 🚚 Productivité de la préparation : nombre de lignes de commande ou colis préparés par employé et par jour 🚚 Taux d’utilisation de la capacité des transporteurs : optimisation des espaces disponibles

In addition to the distribution costs already mentioned, which are generally handled as surcharges, the number of returns should also be recorded. If I have a daily output of 10,000 items in a distribution center, of which 5% are returned, there are 500 items per day. These should be processed economically and ecologically (waste costs) in the interests of the customer.

Understanding your distribution cost as a percentage of the revenue is crucial. It directly affects your organization's competitiveness in the market. Here are a few industry standards: - Consumer packaged goods: 6–8% of revenue - Manufacturing: 3-4% of revenue - Ecommerce: 10% of revenue

Logistics managers are always looking for ways to optimize distribution costs. Exploring strategies for cost reduction, such as implementing technology for real-time tracking and route optimization, negotiating favorable contracts with shipping partners, and investing in warehouse automation. Providing a cost-benefit analysis of different approaches will make the article more informative. Providing multiple benchmarking strategies, such as calculating distribution costs as a percentage of sales revenue or on a per-unit/per-order basis, offers flexibility to readers. I concur with Milan Dhingra with: Here are a few industry standards: - Consumer packaged goods: 6–8% of revenue - Manufacturing: 3-4% of revenue - E-commerce: 10% of revenue

Many times, thinking that bringing products closer to the final consumer may be better than controlling costs could compromise the profitability of the business to the extent that sometimes decisions that were often made "on the knees" have to be reversed. Cost control is a competitive advantage.

Inventory turnover is a critical metric for gauging inventory efficiency, yet it should be evaluated alongside other metrics like gross margin return on investment (GMROI) and days inventory outstanding (DIO). GMROI assesses the profit earned per dollar of inventory invested, while DIO indicates the average time inventory is held before sale. These metrics, combined with inventory turnover, offer a comprehensive view of inventory management's profitability, liquidity, and efficiency, guiding better decision-making to optimize stock levels, reduce costs, and align inventory strategies with market demands and financial objectives.

Efficient inventory turnover is crucial for maintaining a healthy cash flow. Inventory management techniques, like just-in-time (JIT) inventory systems, RFID technology for real-time tracking, and data analytics for demand forecasting. Emphasizing the impact of carrying costs and how a high inventory turnover ratio can positively influence profitability.

While this topic has always been like the nervous system of the business, its relevance is more noticeable when merchandise consumption cycles are fulfilled. A good example is the retail industry: the amount of merchandise remaining after the Christmas season, how much is it, was it too much or too little, was it more than the previous year, and so on.

The fill rate is a crucial metric for assessing inventory effectiveness in meeting customer demands. A balance between maintaining a high fill rate and avoiding excessive inventory is essential. To optimize this, consider integrating other metrics such as inventory turnover, order accuracy, and total logistics cost. These provide insights into inventory management efficiency, accuracy in fulfilling orders, and the cost-effectiveness of the distribution process, ensuring a comprehensive approach to improving customer satisfaction while maintaining operational and cost efficiency.

The fill rate is an essential figure provided that the stored customer orders are reliable. Otherwise, you will fill up your warehouse with a high handling effort and will no longer be financially liquid. In order to evaluate this figure in a meaningful way, sales, controlling and logistics should coordinate closely when defining the target.

The fill rate is a key metric measuring the percentage of customer orders that are fulfilled in their entirety. Explore the challenges companies face in maintaining a high fill rate, such as stockouts and overstocks. Discuss strategies like safety stock, demand forecasting, and collaborative relationships with suppliers to ensure a high fill rate. Real-world examples of companies successfully managing their fill rates would be valuable.

Do you want to gain market share? Increase your fill rate. Nobody sells what they don't have. The ideal is to sell more of what you sell the most of. The continuity of the business depends to a great extent on the fact that the services, articles or top selling products are never missing.

Order cycle time is indeed a vital metric for distribution performance benchmarking, reflecting the efficiency and responsiveness of the supply chain. By comparing it to customer expectations, competitors, or industry standards, businesses can identify improvement areas. However, it should be complemented with other metrics like inventory turnover, fill rate, and freight costs to gain a comprehensive view of distribution performance. These additional metrics help in understanding the balance between speed, cost efficiency, and customer satisfaction, ensuring a more holistic approach to optimizing supply chain operations.

Order cycle time is the duration from when a customer places an order to when they receive it. Examine the factors influencing order cycle time, including order processing, picking and packing efficiency, and transportation time. Discuss technologies like automated order processing systems and robotics in warehouses that can expedite the order cycle.

There are more than 100 metrics to measure the performance in a distribution center. Difficult to list all of them, here. When benchmarking distribution performance, it's crucial to consider a wide range of metrics beyond just the typical inbound, circular, and outbound processes. Safety, security, and hygiene play pivotal roles in evaluating overall efficiency and effectiveness.

I think we have 3 main areas in distro with specific KPIs: - Warehousing Some mentioned above - Inventory Management Some mentioned above - Transportation Analytics <-- (my expertise) × On time delivery & in full% x service fails × Rate adherence % × OS&D and Claims performance xCarrier scorecard x freight payment audit & aging reports xExports Transit times x SRG adherence x pickup OT % x fleet performance reports when applicable x Operations cost RPM vs Market RPM x RFP Savings trackers x and more 🙃 Happy Analysis!

I have come to realize that a good result can only be achieved with well-coordinated key figures. Order processing time and productivity can get in each other's way. In the past, we attached great importance to productivity, i.e. order lines completed divided by hours worked, while at the same time meeting customer delivery deadlines. Only then did other key figures such as regular inventories or building costs come into play.

There are lots of metrics to choose from and I agree with all the above, also we should note that depending on the kind of product you handle, you would likely find similar metrics that cut across but if you fully understand what are Industry’s best practices, you can easily find the best out of the lot to implement.

Never lose sight of the fact that security issues in transportation is something that can not be left aside because many times this is the main point of boycott of continuity of operations.