Business

Measuring Success in Supply Chain Management: Metrics and KPIs to Track

Measuring Success in Supply Chain Management: Metrics and KPIs to Track

 

At its core, a supply chain is a complex web of interconnected activities that work together to move products from the manufacturer to the consumer. If we talk in the context of eCommerce, supply chain management plays a crucial role in ensuring that customers receive their orders accurately, on time, and in good condition. Let’s take a closer look at how the supply chain works for an eCommerce brand.

 

The process starts with the manufacturer, who creates the product and sends it to a distribution centre. From there, the product is shipped to a fulfilment centre, where it is stored until a customer places an order.

 

When an order is received, the fulfillment centre springs into action. They pick the product from their inventory, pack it, and label it for shipping. The order is then sent to a shipping carrier, who transports it to the customer’s doorstep. Throughout this entire process, data is collected and analyzed to optimize each step and ensure that everything runs smoothly.

 

One of the most critical aspects of the eCommerce supply chain is inventory management. It’s essential to keep track of how much of each product is in stock and when it needs to be replenished. This ensures that customers never encounter out-of-stock items and that the eCommerce brand can keep up with demand.

 

So basically the supply chain is a complex but essential part of any online retail brand. It involves everything from manufacturing and distribution to order fulfilment and shipping. By managing this process effectively, with the help of the right eCommerce shipping solution such as NimbusPost, e-commerce brands can ensure that their customers receive their orders accurately, on time, and in good condition.

 

Supply Chain Management Success

As an online seller, you know that a smooth and efficient supply chain is essential to your business’s success. However, measuring the success of your supply chain can be a challenging task. There are numerous metrics and key performance indicators (KPIs) to track, and understanding which ones to focus on can be overwhelming.

We’ve got the most important metrics and KPIs listed below that you should be tracking to measure the success of your supply chain management. Let’s take a look.

 

On-Time Delivery

Timely delivery is one of the most critical metrics in supply chain management. It measures the percentage of orders that are delivered to the customer within the promised timeframe. Late deliveries can lead to dissatisfied customers, lost sales, and a damaged brand reputation. You should aim for a high on-time delivery rate, ideally over 95%.

 

Order Accuracy

This measures the percentage of orders that are fulfilled correctly. It’s essential to ensure that the correct product is delivered to the customer in the right quantity and condition. A high order accuracy rate will help you avoid costly returns and keep your customers happy.

 

Inventory Turnover

With this metric, you can measure how quickly you’re selling your inventory. A high inventory turnover rate indicates that your products are selling quickly, while a low rate indicates that your products are sitting on the shelves for an extended period. Keeping your inventory moving is crucial to reducing storage costs and preventing obsolete stock.

 

Cost of Goods Sold (COGS)

COGS is the direct cost of producing and delivering your product to the customer. Tracking COGS helps you understand how much money you’re spending on each product and whether you’re making a profit. You should aim to keep your COGS as low as possible while maintaining quality.

 

Lead Time

This metric measures the time it takes to fulfil an order from the moment it’s placed to the moment it’s delivered to the customer. A shorter lead time means that you can fulfil orders faster,

reducing the time your customers have to wait for their products. So, you should aim for a short lead time to provide a better customer experience.

 

Cash-to-Cash Cycle Time

This time measures the duration it takes for you to turn your inventory into cash. It starts when you pay for the raw materials to produce your product and ends when you receive payment from the customer. Here, a shorter cash-to-cash cycle time means that you have more cash available to invest in your business.

 

Perfect Order Rate

With this measure, you can analyze the percentage of orders that are delivered to the customer without any issues, including late deliveries, damaged products, and incorrect orders. A high perfect order rate means that you’re delivering an excellent customer experience and can help you differentiate your business from your competitors.

 

Conclusion

Tracking the right metrics and KPIs can help you measure the success of your supply chain management. By focusing on all the above-listed metrics, you can identify areas for improvement and make data-driven decisions to optimize your supply chain. Remember that these metrics are just a starting point,

and you should tailor them to your specific business needs to ensure that you’re measuring the right aspects of your supply chain.

 

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