Improve your supply chain’s delivery metrics by leveraging Circuit for Teams delivery route optimization technology.

Supply chain performance is essential to maintaining a competitive edge in today’s business landscape. While you can’t control the global supply chain, you can manage your own to improve business outcomes.

Key performance indicators (KPIs) are supply chain performance metrics that play a critical role in measuring the efficiency and effectiveness of supply chain processes. They can include supply chain costs, order fill rates, perfect order rates, cash-to-cash cycle time, and delivery logistics.

This article will explain why monitoring and improving your supply chain KPIs is a key part of your supply chain performance measurement system.

Key takeaways:

What is supply chain performance, and why does it matter?

Supply chain performance refers to the efficiency and effectiveness of the processes involved in getting products from suppliers to customers. So, improving your supply chain strategy can reduce costs, increase revenue, and improve customer satisfaction.

This involves managing all activities along the supply chain, from procurement of raw materials to delivering finished products to customers.

Improving supply chain performance is important for several reasons. It helps you meet customer demand with timely order delivery and improved customer satisfaction, encouraging loyalty and repeat business.

An efficient supply chain can also reduce business costs. You can save money and even increase profits by optimizing supply chain aspects like order lead times and transportation logistics.

As you can see, your supply chain performance is crucial for reducing costs, improving financial performance, and achieving your business goals. Measuring and optimizing the right KPIs can enhance your supply chain performance and give you a competitive advantage.

Supply chain KPIs to monitor and improve

There are many ways to streamline your supply chain and improve your bottom line. But, where to start? Here are five essential KPIs for supply chain managers to focus on, along with actionable examples to enhance each one.

Supply chain costs

Supply chain costs refer to the expenses incurred during goods production, transportation, and distribution from the manufacturer to the end consumer.

These costs generally divide into three categories:

How to improve supply chain costs:

Improve and strengthen your supplier relationships by focusing on ways to communicate clearly about your needs and expectations. This can influence your suppliers to deliver high-quality products and materials in a timely manner. Conduct regular performance evaluations to identify areas for improvement and give supplier feedback.

Optimizing your supply chain costs comes with many benefits, including more profits and enhanced customer satisfaction through faster delivery — both of which give you a competitive advantage. Effectively managing your expenses throughout your supply chain also strengthens your brand’s reputation by consistently and reliably delivering customer orders on time.

Order fill rate

Order fill rate measures the percentage of customer orders fulfilled completely and delivered on time. It’s a critical performance metric for businesses, directly affecting customer satisfaction and retention.

How to improve order fill rate:

Examples of automation technology include inventory management systems, order management systems, and warehouse management systems. These can enhance your order fulfillment’s efficiency, accuracy, and speed while helping you control your inventory and improve your order fill rates.

Order fill rate is an important supply chain KPI to measure since improving it offers multiple benefits. Some examples include enhanced customer satisfaction (due to receiving correct orders on time), reduced costs (due to fewer order returns, customer complaints, and lost sales), and increased revenue (thanks to the resulting customer loyalty, recommendations, and positive reviews).

Perfect order rate

Perfect order rate measures the percentage of customer orders fulfilled without errors, disruptions, or issues. It is another important performance metric for businesses as it reflects your customers’ satisfaction and the quality of your supply chain management processes.

A high perfect order rate indicates orders are being processed and fulfilled quickly, accurately, and without errors.

How to improve perfect order rate:

Technology also plays a vital role in your perfect order rate. For example, automating your quality control makes it easier to spot problems in your production process for better product quality. Barcode scanning and tracking systems can also help by precisely tracking inventory and streamlining order fulfillment.

Embracing these tech solutions can enhance your perfect order rate and improve customer satisfaction, loyalty, and retention. It can also result in cost savings thanks to fewer returns and re-shipments and increased efficiency and productivity.

Cash-to-cash cycle time

Cash-to-cash (C2C) cycle time measures the time it takes to convert your cash outflows (like supplier payments and labor costs) into cash inflows (including customer payments). This is an important metric to improve since it reflects your cash management’s efficiency.

How to improve cash-to-cash cycle time:

Improving your cash-to-cash cycle time can enhance your cash flow and allow you to make quick payments as needed, improving your relationships with suppliers and employees.

Plus, reducing financing costs due to cash flow gaps means you can increase your profits and improve your return on investment (ROI). A shorter cash-to-cash cycle time also gives you more agility and flexibility to seize market opportunities throughout your product life cycle and quickly adjust to change.

Technology can help cut your cash-to-cash cycle time in several ways. One example is using automated payment processing to streamline payment workflows, minimizing errors and delays. A cash flow forecasting tool can also help by giving you real-time visibility into your cash flow gaps and opportunities.

Overall, improving your C2C cycle time can result in better profitability, cash flow, and liquidity. It can also improve relationships with suppliers and customers, who will appreciate faster payment and delivery times.

On-time deliveries

On-time deliveries refer to your ability to fulfill and deliver customer orders within the specified time frame. This is an essential aspect of supply chain performance, as delivery delays can result in dissatisfied customers, lost sales, and additional costs.

While delivering customer orders on time is an important part of it, on-time deliveries also refer to deliveries coming from suppliers to your warehouse.

How to increase on-time deliveries:

Improving on-time deliveries can result in several benefits, including:

In particular, your last-mile delivery stage is essential for successful on-time deliveries and happy customers. Accomplish this by optimizing delivery routes and managing driving teams with a software solution like Circuit for Teams.

Here’s how Circuit for Teams improves the last-mile delivery aspect of your on-time deliveries:

These supports can improve your decision-making insights and enhance your business’s sustainability. They can also improve customer satisfaction and loyalty, reduce costs, and improve efficiency in your overall supply chain operations.

Learn more about how Circuits for Teams can help you improve supply chain performance and boost your bottom line.