Top 10 Supply Chain KPIs You Need to Track for Peak Performance
- Danyul Gleeson
- 3 days ago
- 7 min read
Because What Gets Measured, Gets Managed
Running a high-performing supply chain isn’t about luck—it’s about numbers, insights, and smart decision-making. If you’re not tracking the right Key Performance Indicators (KPIs), you’re essentially flying blind, hoping your logistics magically work themselves out.
Spoiler alert: they won’t.
The best supply chain operators measure, optimise, and constantly fine-tune their logistics. So, whether you’re battling late deliveries, bloated inventory, or supply chain bottlenecks, these Top 10 Supply Chain KPIs will keep your operations lean, mean, and running like a well-oiled machine.
1. On-Time Delivery (OTD)
What It Measures: The percentage of orders delivered to customers on or before the promised delivery date.
Why It Matters: OTD is a direct indicator of customer satisfaction and supply chain reliability. Consistently meeting delivery commitments enhances customer trust and loyalty. According to a study by FourKites, on-time delivery is one of the critical metrics for meeting customer demands and improving satisfaction.
FourKites
Formula: (Number of On-Time Deliveries / Total Number of Deliveries) × 100
🔍 How to Improve It:
Use real-time tracking to monitor deliveries in transit - Check out our KPI Reporting solutions
Optimise last-mile delivery strategies
Hold suppliers accountable for delays - See how we manage supplier performance
2. Inventory Turnover Ratio
What It Measures: The number of times inventory is sold and replaced over a specific period.
Why It Matters: A higher turnover ratio indicates efficient inventory management and strong sales, while a lower ratio may suggest overstocking or weak sales. Efficient inventory turnover reduces holding costs and minimizes the risk of obsolescence. Industry benchmarks vary, but many companies aim for an inventory turnover ratio between 5 and 10.
Formula: Cost of Goods Sold (COGS) / Average Inventory Value
🔍 How to Improve It:
Use predictive analytics to manage stock levels - Explore our technology-driven solutions
Eliminate slow-moving SKUs and optimise demand forecasting
Leverage regional warehousing for faster inventory movement - See how we streamline warehousing
3. Order Accuracy Rate
What It Measures: The percentage of orders delivered without errors, including correct items, quantities, and documentation.
Why It Matters: High order accuracy minimizes returns and increases customer satisfaction. Errors in orders can lead to increased operational costs and damage to the company's reputation. According to Symbia, improving order accuracy is essential for enhancing customer satisfaction.
Symbia Logistics
Formula: (Number of Accurate Orders / Total Number of Orders) × 100
🔍 How to Improve It:
Invest in automated warehouse management systems - See how we implement logistics tech
Use barcode scanning & RFID tracking to reduce errors
Improve employee training on picking & packing
4. Cash-to-Cash Cycle Time
What It Measures: The time taken to convert cash invested in inventory into cash received from sales.
Why It Matters: A shorter cash-to-cash cycle indicates a more efficient use of capital. Reducing this cycle improves liquidity and allows for reinvestment in other areas of the business. Companies with optimized cash-to-cash cycles can better manage their working capital and reduce financing costs.
Formula: Days Inventory Outstanding + Days Sales Outstanding - Days Payable Outstanding
🔍 How to Improve It:
Streamline supplier payments
Improve inventory turnover with smarter stocking strategies - We can help
Shorten receivables collection time
5. Perfect Order Rate
What It Measures: The percentage of orders delivered on time, complete, and without damage.
Why It Matters: This KPI reflects the overall efficiency and effectiveness of the supply chain. A higher perfect order rate leads to increased customer satisfaction and reduced costs associated with returns and rework. According to Cleo, perfect order fulfillment is a key indicator of a well-functioning supply chain.
Cleo
Formula: (Number of Perfect Orders / Total Number of Orders) × 100
🔍 How to Improve It:
Use automated quality control checks
Enhance warehouse picking accuracy - Our logistics solutions help
Implement real-time tracking - Monitor supply chain KPIs with us
6. Fill Rate
What It Measures: The percentage of customer demand met through immediate stock availability without backorders or lost sales.
Why It Matters: A high fill rate indicates effective inventory management and the ability to meet customer demand promptly. Maintaining an optimal fill rate reduces the likelihood of stockouts and enhances customer satisfaction. Industry standards for fill rates often aim for 95% or higher, depending on the sector.
Formula: (Number of Units Delivered on First Attempt / Total Number of Units Ordered) × 100
🔍 How to Improve It:
Optimise warehouse inventory placement
Use demand forecasting tools
Diversify supplier sources to prevent shortages
7. Days Sales of Inventory (DSI)
What It Measures: The average number of days it takes to sell the entire inventory during a specific period.
Why It Matters: DSI provides insights into inventory liquidity. A lower DSI indicates efficient inventory management and quicker turnover, while a higher DSI may suggest overstocking or slow-moving products. Efficient inventory turnover is crucial for reducing holding costs and minimizing the risk of obsolescence.
Formula: (Average Inventory / Cost of Goods Sold) × 365
🔍 How to Improve It:
Clear slow-moving stock with promotions
Refine demand forecasting (Use our analytics tools)
Implement JIT (Just-in-Time) inventory strategies
8. Supplier On-Time Delivery Rate
What It Measures: The percentage of orders from suppliers received on or before the agreed-upon delivery date.
Why It Matters: Reliable supplier performance ensures smooth production schedules and timely order fulfillment. Poor supplier delivery performance can lead to production delays, increased costs, and customer dissatisfaction. According to FourKites, supplier on-time delivery is a critical metric for optimizing supply chain operations.
FourKites
Formula: (Number of On-Time Supplier Deliveries / Total Number of Supplier Deliveries) × 100
🔍 How to Improve It:
Work with high-performing suppliers
Negotiate penalties for late deliveries
Use data to track supplier performance (We’ve got the tools)
9. Cost of Goods Sold (COGS)
What It Measures: The direct costs attributable to the production of goods sold by a company, including the cost of materials and labor.
Why It Matters: Understanding COGS is essential for pricing strategies and profitability analysis. Monitoring COGS helps in identifying areas for cost reduction and improving gross margins. Effective management of COGS contributes to a healthier bottom line and competitive pricing.
Formula: Beginning Inventory + Purchases During the Period - Ending Inventory
🔍 How to Improve It:
Negotiate better supplier contracts
Reduce waste in production & logistics
Optimise packaging & handling costs
10. Return Rate
What It Measures: The percentage of products returned by customers after purchase.
Why It Matters: A high return rate may indicate issues with product quality, inaccurate descriptions, or shipping errors. Monitoring return rates helps identify areas for improvement in product development, marketing, and logistics. Reducing return rates can lead to cost savings and increased customer satisfaction.
🔍 How to Improve It:
Improve quality control
Ensure accurate product descriptions
Use better packaging to prevent damage
FAQs | Top 10 Supply Chain KPIs You Need to Track
Tracking the right Key Performance Indicators (KPIs) is essential for optimising supply chain performance, reducing costs, and improving efficiency. Below are five in-depth, SEO-optimised FAQs to help businesses understand why these metrics matter and how they can transform logistics operations.
Why are supply chain KPIs important for business success?
Supply chain KPIs provide data-driven insights that help businesses make informed decisions, reduce inefficiencies, and improve profitability. Without tracking KPIs, companies risk delayed deliveries, inventory mismanagement, and rising logistics costs.
Key Reasons to Track KPIs:
Improved Operational Efficiency: Businesses that actively track supply chain metrics can improve on-time delivery rates by up to 20% (Source: FourKites).
Cost Reduction: Companies with high inventory turnover ratios experience lower storage costs and reduced product obsolescence, resulting in savings of up to 30% on inventory carrying costs (Source: McKinsey & Company).
Customer Satisfaction & Retention: A 1% improvement in perfect order fulfillment can lead to a 3% increase in customer satisfaction and repeat business (Source: Gartner).
✅ Looking to optimise your supply chain KPIs? Discover our KPI reporting solutions.
How do businesses improve on-time delivery (OTD) performance?
What is inventory turnover ratio, and how does it impact supply chain efficiency?
What is the perfect order rate, and how does it affect customer satisfaction?
How does tracking supplier on-time delivery improve overall supply chain performance?
Final Thoughts on Supply Chain KPIs
Measuring the right supply chain KPIs allows businesses to reduce costs, improve delivery accuracy, streamline inventory, and enhance supplier performance. Without accurate performance tracking, businesses risk inefficiencies that lead to lost revenue, poor customer experiences, and excessive logistics costs.
Need help tracking and optimising your supply chain KPIs?
Comments