Determining KPI and performance metrics for retail logistics

Chad Erchul

By Chad Erchul Business Development at King Solutions

In our technology driven world, everyone wants the newest, coolest device or gadget right away. When a new product is announced, like a smartphone or tablet, a release date is set shortly after. The consumer starts planning ahead, either preordering or preparing to stand in line for a ridiculous amount of hours so that they can be one of the first to hold the next cool thing.

But in order for all this to work, that new product has to arrive to the right place at the right time in the right amount of quantities. This is where retail logistics comes in.

Delivering Results
Whether it’s a new tech device or a hot new toy or this season’s fashion line, timing and accuracy are critical in retail logistics. Retail systems rely heavily on schedules and accurate inventory, which means products, don’t have to arrive on time, but they need to be accurate and undamaged.

In order to make sure your logistics services are delivering the results needed KPIs, or Key Performance Indicators, are used to measure success. In today’s tech heavy logistics industry, there’s a lot of data being captured in real-time. But how does this play into your KPIs, and more importantly, how does it all come together to deliver the best customer experience?

Setting Standards
Determining what your KPIs are can be tricky. Some companies’ first instinct is to try and measure too much, losing site of the ‘Key’ in KPI. They end up with a textbook worth of KPIs, trying to cover every minute detail. Instead, if you focus on the most important metrics, and find success there, many of the smaller items will work themselves out.

When determining KPIs for any service, it should start with looking at your company’s core values. As a business, what do you place emphasis on? Customer experience? Lowest price? Whatever traits you’re defining your business by, these should serve as a basis for your KPIs.

In addition, for retail logistics specifically, you need to take order accuracy, condition, and on time delivery into account.

What Should a Retail Company Expect from a 3PL?
While companies will have different expectations, or at least place different emphasis on certain aspects of logistics, there are metrics that will always be evaluated in retail logistics.

  • Cost
  • Quality of Delivery (condition/accuracy)
  • Productivity
  • Timeliness

These all factor into how a logistics company should set their KPIs.

But What About Measuring Customer Service?
With KPIs, measuring customer service is sometimes taken for granted. After all, it’s logical to assume that if you’re making accurate deliveries on time for a competitive price that the customer will be happy.

Not to mention customer service isn’t a particularly concrete concept. What one client values might be entirely different from another client. Still, there’s certain ‘metrics’ that you can incorporate to ensure your customers are happy with the service you’re providing.

For example, is your service for them improving? Are you constantly looking for ways to give them a better experience? Have you ever provided recommendations to them? Do you ever survey customers’ opinions? How often?

Start measuring your interaction with the customer, and you can start to see if your customer service is getting better or growing stagnant.

So What Should My KPIs Be?
Still not sure what your Key Performance Indicators should be? We can help with that. We regularly work with retail operations to determine what’s most important to them and how they can get better results from their logistics.

logistics services