{"id":17541,"date":"2025-10-27T09:00:00","date_gmt":"2025-10-27T09:00:00","guid":{"rendered":"https:\/\/www.shipbob.com\/au\/blog\/3pl-kpis\/"},"modified":"2025-10-27T18:56:59","modified_gmt":"2025-10-27T18:56:59","slug":"3pl-kpis","status":"publish","type":"blog","link":"https:\/\/www.shipbob.com\/au\/blog\/3pl-kpis\/","title":{"rendered":"How to Keep on Top of 3PL Performance: Track these KPIs & Metrics"},"content":{"rendered":"\n

Table of Contents<\/p>

** Minutes<\/p><\/div><\/div>\n

Understanding the metrics and KPIs behind 3PL performance\u00a0<\/a><\/p>\n\n\n\n

6 essential 3PL performance metrics and KPIs to track\u00a0<\/a><\/p>\n\n\n\n

How to manage 3PL performance (step-by-step)\u00a0<\/a><\/p>\n\n\n\n

Red flags to look for in 3PL performance\u00a0<\/a><\/p>\n\n\n\n

Advanced strategies for optimising 3PL performance\u00a0<\/a><\/p>\n\n\n\n

ShipBob\u2019s industry-leading logistics services nurture ecommerce metrics\u00a0<\/a><\/p>\n\n\n\n

FAQs\u00a0<\/a><\/p>\n<\/div>\n\n\n\n

Whether you\u2019re considering outsourcing logistics to a 3PL<\/a> or already leverage one, their performance is always top-of-mind. You want your partner to do a great job with everything from inventory storage to fulfilment to shipping \u2013 but how do you know if they are?  <\/p>\n\n\n\n

The easiest way to evaluate your 3PL\u2019s performance<\/a> is to closely monitor key performance indicators (KPIs) to make sure that they\u2019re operating to your standards.\u00a0<\/p>\n\n\n\n

In this post, we\u2019ll go over the most important 3PL metrics to track, why they\u2019re important, and how an expert fulfilment provider like ShipBob can help you improve them and optimise your logistics.  <\/p>\n\n\n\n

Understanding the metrics and KPIs behind 3PL performance <\/h2>\n\n\n\n
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3PL KPIs (or key performance indicators) are vital metrics that are used to measure the performance of a 3PL company. <\/p>\n\n\n\n

They give you insight into your 3PL\u2019s operational efficiency and whether they are helping you meet your business goals. <\/p>\n<\/div>\n\n\n\n

Importance of tracking 3PL KPIs <\/h3>\n\n\n\n

If you trust your 3PL, you may ask yourself: why should I bother tracking any KPIs? The answer is that monitoring 3PL KPIs not only confirms how your 3PL is doing, but helps you better understand your business \u2013 and how to improve it.  <\/p>\n\n\n

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An aerial view of packages as they move on a conveyor belt through a warehouse.<\/figcaption><\/figure>\n<\/div>\n\n\n

Increased efficiency<\/em> <\/h4>\n\n\n\n

When you closely monitor important KPIs like fulfilment speed, you can see whether the 3PL is fulfilling your ecommerce orders quickly. <\/p>\n\n\n\n

You can use these insights to benchmark your supply chain performance<\/a> against the competition and see if there\u2019s any need or opportunity to improve efficiency. You can then work with the 3PL to make improvements in how inventory and orders are moved through the supply chain for greater efficiency. <\/p>\n\n\n

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A business person punches buttons on a calculator.<\/figcaption><\/figure>\n<\/div>\n\n\n

Better cost management<\/em> <\/h4>\n\n\n\n

Certain 3PL metrics will tell you how much you\u2019re spending on certain supply chain areas, functions, and tasks. You can use these insights to see how you\u2019re allocating your resources, and how closely you\u2019re sticking to your budget. <\/p>\n\n\n\n

If you see these numbers increasing or if costs are climbing too high, you can take immediate action to mitigate the issue before you end up overspending. <\/p>\n\n\n

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A blonde woman smiles as she opens a package while sitting on her couch.<\/figcaption><\/figure>\n<\/div>\n\n\n

Improved customer satisfaction<\/em> <\/h4>\n\n\n\n

By constantly monitoring your logistics performance, you are better prepared to improve and optimise your operations for speed and cost. <\/p>\n\n\n\n

When you provide a faster, cheaper, and more seamless delivery experience without sacrificing order accuracy, you\u2019ll delight customers and build brand loyalty that translates into more purchases. <\/p>\n\n\n\n

6 key 3PL metrics and KPIs to monitor\u00a0<\/h2>\n\n\n\n

While there are a lot of metrics you could use to understand how your 3PL is working, some are more telling than others. Here are some of the most crucial KPIs to track to evaluate your 3PL performance. <\/p>\n\n\n\n

1.  Order accuracy <\/h3>\n\n\n\n

This is a measure of how many items were shipped and delivered to your customers without any errors. These errors may include mispicks, sending the wrong quantity, shipping to the wrong destination, or a package being delivered late. Your order accuracy<\/a> directly impacts customer satisfaction, so it\u2019s important that your 3PL partner maintain extremely high OTIF rates<\/a> to preserve your relationship with your customers.  <\/p>\n\n\n\n

ShipBob\u2019s logistics teams, for example, run on a WMS that enforces multiple carefully designed checks and balances throughout the order fulfilment process to ensure order and shipping accuracy. This helps minimise errors, helping us maintain a 99.95% accuracy rate in fulfilling orders. <\/p>\n\n\n\n

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\u201cThe technology employed by ShipBob guarantees accurate deliveries to our customers. ShipBob’s warehouse management system is equipped with numerous checks and balances, minimising the possibility of incorrect items being shipped by warehouse associates.\u201d<\/em><\/p>\n\n\n\n

Ali Shahid, COO of Our Place <\/p>\n<\/blockquote>\n\n\n\n

2.  Fulfilment speed <\/h3>\n\n\n\n

Your fulfilment speed is a measure of how quickly orders are picked, packed, and shipped out to your customers. It helps you understand the efficiency of a 3PL\u2019s operations, as goods need to move seamlessly between various fulfilment processes in order to be fulfilled and shipped on time. <\/p>\n\n\n\n

Higher fulfilment speeds ultimately contribute to higher on-time shipping rates and faster deliveries. This allows you to meet customer expectations and enhance the overall customer experience. <\/p>\n\n\n\n

Make sure your 3PL leverage best practices, technology, and expertise to optimise their logistics processes for speed and efficiency. Some 3PLs like ShipBob also offer a 2-Day Express Shipping<\/a> program, which ensures that orders are delivered to your customers within two days. At ShipBob, we use a proprietary algorithm for this ship option to leverage a combination of ground<\/a>, air, and regional couriers and maintain high on-time deliveries, with 99.96% of orders shipping on time within the service level agreement (SLA). <\/p>\n\n\n\n

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\u201cShipBob can handle our order volume because they\u2019re experts at what they do. The last company I worked at had their own warehouse, and I witnessed firsthand how messy and complicated fulfilment can be, especially at scale when it\u2019s not what your company specializes in. ShipBob\u2019s fulfilment centres are nothing like that. <\/em><\/p>\n\n\n\n

I’ve been to multiple ShipBob locations, and I\u2019ve seen how much they\u2019ve invested into automation and how organised everything is. It\u2019s no wonder that orders get out within 24 hours of being received \u2013 ShipBob is really good at what they do.\u201d<\/em><\/p>\n\n\n\n

Tyler McCann, Co-Founder of Taste Salud <\/p>\n<\/blockquote>\n\n\n\n

3.  Inventory accuracy <\/h3>\n\n\n\n

Most 3PL providers take care of storing ecommerce inventory in addition to fulfilling orders. This means that ecommerce brands should track inventory accuracy,<\/a> which measures inconsistencies between inventory records and actual physical inventory in the 3PL warehouse<\/a>.  <\/p>\n\n\n\n

Your inventory accuracy rate plays a crucial role in your procurement<\/a> and planning. If you maintain accurate inventory records, you can know exactly how much inventory you have in stock and time replenishment<\/a> to avoid stocking out. Similarly, you can prevent overstocking since you know when you have sufficient stock for a certain item. <\/p>\n\n\n\n

If your 3PL has low inventory accuracy, chances are their methods of inventory tracking<\/a> and accounting are out-of-date or manual. This approach isn\u2019t scalable in the long-term, and often results in costly errors that your ecommerce business pays the price for.  <\/p>\n\n\n\n

Instead, brands should find a fulfilment partner that leverages modern, automated inventory management software. ShipBob\u2019s software, for example, features built-in inventory management capabilities and includes real-time inventory tracking capabilities. This tracks your inventory movement in real time, ensuring that your records are always balanced with your physical inventory<\/a>. <\/p>\n\n\n

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4.  Cost per unit shipped <\/h3>\n\n\n\n

Your cost per unit<\/a> shipped measures how much you\u2019re spending for every unit that gets shipped out from the 3PL. It accounts for both variable and fixed costs associated with fulfilling and delivering a single unit to the end customer, including shipping fees. <\/p>\n\n\n\n

The more units you ship out within a specified time period, the lower your cost per unit shipped will be \u2013 so if your cost per unit shipped is low, your 3PL is probably performing efficiently.  <\/p>\n\n\n\n

Beyond maintaining efficient operations, a 3PL can also lower your cost per unit shipped by lowering your shipping costs. One of the best ways to reduce shipping costs<\/a> is through distributing your inventory across multiple strategically-located fulfilment centres, to put inventory closer to customers and minimise transit distance and times.  <\/p>\n\n\n\n

For instance, ShipBob offers brands a network of dozens of fulfilment centres all across the US \u2013 and the world \u2013 that brands can store inventory in and fulfil orders from. Not only does this cut shipping times for customers, but it also cuts shipping costs for merchants. Brands can even use ShipBob\u2019s Ideal Inventory Distribution tool<\/a> to compare their current split with the split ShipBob recommends based on your order history to save as much money as possible.  <\/p>\n\n\n

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5.  Transit times <\/h3>\n\n\n\n

Short transit times are critical for ecommerce brands, whether it\u2019s lead times for manufactured goods or last-mile delivery<\/a> for end customers. Your 3PL should be able to move goods from one supply chain stage to another quickly and cost-effectively and keep you in the loop the entire time with transparent tracking.  <\/p>\n\n\n\n

ShipBob\u2019s proprietary WMS calculates optimal picking routes to reduce transit time in the fulfilment process. Our algorithm also helps to optimise shipping routes to reduce transit times during final mile delivery. <\/p>\n\n\n\n

6.\u00a0 Returns processing efficiency\u00a0<\/h3>\n\n\n\n

The returns management process<\/a> is often overlooked \u2013 but with growing competition and customers\u2019 increased demand for convenience, businesses need to effectively manage their returns by ensuring speedy reverse logistics, efficient processing, and fast refunds.\u00a0\u00a0<\/p>\n\n\n\n

A 3PL that can integrate with leading returns management tools and offers automated returns processing can help you streamline this aspect of your ecommerce operations. They should also ideally offer various options to manage your returned inventory, such as restocking, discarding, or quarantining it. You\u2019ll also want to measure how efficiently they process and sort returned inventory, as it\u2019ll eventually affect the speed of your overall operations.\u00a0<\/p>\n\n\n\n

How to manage 3PL performance (step-by-step) <\/h2>\n\n\n\n

Effective 3PL performance management requires proactive planning and responsive adjustments. This helps you create a continuous improvement cycle to support ongoing management.\u00a0\u00a0<\/p>\n\n\n

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1. Establish clear performance expectations and SLAs\u00a0<\/h3><\/div>
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It\u2019s important to start with a clear outline of the performance you expect from your 3PL, so lay out a comprehensive service level agreement<\/a> (SLA) upfront where you document all your expectations in writing, and state how you\u2019ll both be measuring the partner\u2019s performance. This gives both parties clarity and common expectations, helping you avoid conflicts further down the line. <\/p>\n\n\n\n

Make sure to get as specific as possible about the KPIs that you\u2019ll be using to measure 3PL performance, so you can draw up contracts with terms that specify your expectations and hold the 3PL to those terms. <\/p>\n\n\n\n

For example, your SLAs could specify that you and your 3PL agree on a minimum order accuracy rate of 99%, a minimum on-time fulfilment rate of 98%, and so on. Additionally, you can lay out the target numbers for other performance metrics like: <\/p>\n\n\n\n