What can you learn from tracking distribution performance metrics?

If you work in logistics management, you know how important it is to monitor and optimize your distribution processes. Distribution performance metrics are quantitative indicators that measure how well you are delivering your products or services to your customers. They can help you identify and solve problems, improve efficiency and quality, and increase customer satisfaction and loyalty. In this article, we will discuss some of the benefits and challenges of tracking distribution performance metrics, and what you can learn from them to improve your logistics operations.

1 Benefits of tracking distribution performance metrics

Tracking distribution performance metrics can provide you with valuable insights into your distribution performance and help you achieve your strategic goals. Evaluating your performance against your targets and benchmarks, monitoring costs, revenues, and profitability, enhancing customer service and satisfaction, improving quality and safety standards, increasing competitiveness and innovation - these are just some of the benefits of tracking distribution performance metrics. With data-driven insights, you can detect and correct issues in your distribution processes, reduce complaints and returns, reduce errors, defects, and waste, and adapt to changing customer needs and market conditions.

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Luís Eduardo Ribeiro

Executive Director of Operations at ARM Logística
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Foco no cliente em primeiro lugar, em seguida buscar equilíbrio entre nível de serviço e custo. A distribuição é a última etapa de um longo processo da cadeia de suprimentos, e tudo precisa estar otimizado de ponta a ponta. Ter capacidade de movimentar e expedir rapidamente os produtos garante tempo de resposta mais rápido. KPIs de produtividade, acuracidade, OTIF são muito importantes para melhoria contínua e mitigação de riscos na operação.

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Mauricio A.

Operations and Alliances Executive, CPA, Vendor Relations, Generative AI user.
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Logistic data helps in optimizing operations by identifying bottlenecks, improving efficiency, and reducing costs. Real-time data allows for swift decision-making and adjustments in response to changing conditions. Analyzing historical data aids in forecasting, planning, and risk management, leading to better preparedness. Key Performance Indicators (KPIs) measure and track performance, ensuring goals are met, while also highlighting areas for improvement. Utilizing data analytics tools, logistics managers can derive actionable insights to enhance service levels, customer satisfaction, and ultimately, the profitability and effectiveness of the logistic support provided.

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2 Challenges of tracking distribution performance metrics

Tracking distribution performance metrics can be challenging. You need to define the right metrics that align with your objectives and accurately reflect your performance, as well as collect and analyze reliable data from various sources and systems. You must also communicate and report your metrics clearly to stakeholders, and ensure they understand their meaning and implications. Moreover, you should act on your metrics and use them to drive continuous improvement in your distribution processes, while measuring the impact of your actions.

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3 Examples of distribution performance metrics

There are many types of distribution performance metrics to track, based on your industry, product, or service, and your goals and priorities. Order fill rate is the percentage of customer orders that are fulfilled completely and correctly from available inventory. On-time delivery rate is the percentage of customer orders delivered within the agreed or expected time frame. Delivery accuracy rate is the percentage of customer orders delivered without errors, damages, or discrepancies. Delivery cost per unit is the average cost of delivering one unit of product or service to the customer. And inventory turnover rate is the number of times the average inventory is sold or used in a given period, indicating inventory management efficiency and effectiveness.

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4 How to track distribution performance metrics

Tracking your distribution performance metrics effectively requires a systematic process with four steps. Firstly, you need to define the metrics that are relevant and meaningful for your distribution performance, and set clear and realistic targets and benchmarks for them. Secondly, you should gather the data that you need to calculate your metrics, using reliable and standardized methods and tools. Thirdly, you should use appropriate techniques and software to process and interpret your data, generating meaningful and actionable insights from it. Finally, communicate and present your metrics and insights to your stakeholders, using them to identify and implement improvement actions and monitor their results.

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5 Best practices for tracking distribution performance metrics

To make the most of your distribution performance metrics, you should follow some best practices that can help optimize your tracking process and outcomes. First, align your metrics with your strategy and customer expectations, and review them regularly to ensure they are still valid. Secondly, use a balanced and comprehensive set of metrics that cover different aspects of your distribution performance. Additionally, use SMART criteria to define and evaluate your metrics, so they are consistent and comparable across different periods, locations, and segments. Furthermore, use a dashboard or scorecard to visualize and display your metrics and insights for stakeholders. Lastly, use a feedback loop to continuously monitor and improve your metrics and insights in order to drive positive change and innovation in your distribution processes.

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Aristo Satma Endarperbawa

Supply Chain Enthusiast
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Using SMART criteria is the best way to create and track Distribution Performance Metrics in a daily basis. S = Specific, a specific goal must be defined first, There can be several goals however should be related one to another ( e.g Order Fill Rate and On-time Delivery Rate ) M = Measurable, set a lean process to gather data from several sources accurately in a short time. We can utilize a friendly tool such as Ms Excel to execute it. A = Actionable, The Defined Goal(s) and The Benchmark(s) can be applied easily by each person in a department. R = Relevant, The Defined Goal(s) must be relevant to the Organization's Vision and Mission. T = Time-Bound, with respect to the discipline vibe we should do it regularly on a daily basis.

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6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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What can you learn from tracking distribution performance metrics?

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1 Benefits of tracking distribution performance metrics

2 Challenges of tracking distribution performance metrics

3 Examples of distribution performance metrics

4 How to track distribution performance metrics

5 Best practices for tracking distribution performance metrics

6 Here’s what else to consider

Logistics Management

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What can you learn from tracking distribution performance metrics?

1

2

3

4

5

6

1 Benefits of tracking distribution performance metrics

2 Challenges of tracking distribution performance metrics

3 Examples of distribution performance metrics

4 How to track distribution performance metrics

5 Best practices for tracking distribution performance metrics

6 Here’s what else to consider

Logistics Management

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