{"id":2833,"date":"2024-11-04T21:11:31","date_gmt":"2024-11-04T21:11:31","guid":{"rendered":"https:\/\/www.shipbob.com\/uk\/blog\/supply-chain-metrics\/"},"modified":"2025-12-25T22:36:12","modified_gmt":"2025-12-25T22:36:12","slug":"supply-chain-metrics","status":"publish","type":"blog","link":"https:\/\/www.shipbob.com\/uk\/blog\/supply-chain-metrics\/","title":{"rendered":"How to Select, Monitor, & Optimise Ecommerce Supply Chain KPIs (+ Top Metrics)"},"content":{"rendered":"\n

Table of Contents<\/p>

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

What are supply chain metrics?<\/a><\/p>\n\n\n\n

Why are supply chain metrics important?<\/a><\/p>\n\n\n\n

Essential supply chain metrics & KPIs to track<\/a><\/p>\n\n\n\n

How to optimise your supply chain metrics with ShipBob<\/a><\/p>\n\n\n\n

Supply chain metrics FAQs<\/a><\/p>\n<\/div>\n\n\n\n

How do you know how your business is performing?<\/p>\n\n\n\n

Typically, you wouldn\u2019t rely on your “gut sense”, or how you feel things are going. Instead, you would crunch the numbers on your balance sheet, calculate profits, and track important data points to determine your company\u2019 performance. <\/p>\n\n\n\n

Evaluating your supply chain should work the same way. To get the most accurate picture of your supply chain\u2019s performance, you\u2019ll need to rely on supply chain metrics. These metrics act as rulers, allowing you to measure the quality, efficiency, and ultimately success of your supply chain. <\/p>\n\n\n\n

In this article, we\u2019ll cover the most important supply chain metrics to track, as well as tips for improving your supply chain metrics over time. <\/p>\n\n\n\n

What are supply chain metrics?<\/h2>\n\n\n\n

Supply chain metrics (also called supply chain key performance indicators, or KPIs) are the numbers, ratios, and parameters used to measure supply chain performance<\/a>. <\/p>\n\n\n\n

Supply chain metrics quantify different aspects of your supply chain, such as delivery<\/a> and inventory movement<\/a>, to provide insight into the efficiency and quality of those functions.  <\/p>\n\n\n\n

Why are supply chain metrics important?<\/h2>\n\n\n\n

Supply chain metrics are essential for measuring a company\u2019s progress in achieving their goals. They provide visibility into key functions, and ensure that every part of the supply chain is monitored and running smoothly. <\/p>\n\n\n\n

As such, tracking supply chain metrics can help a business easily identify areas in need of improvement or where supply chain efficiency<\/a> could be enhanced. With a better understanding of their supply chain, businesses can be more proactive when facing challenges, and also increase their supply chain\u2019s resilience<\/a> and agility<\/a>. <\/p>\n\n\n\n

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\u201cShipBob\u2019s reporting is very robust and meets all of our needs. We get visibility into receiving, order volume, SKU availability \u2013 everything from inbounds and inventory transactions to individual order statuses (whether it\u2019s on hold, in processing, an exception order, and other detailed descriptions). All this data is real-time, meaning that we\u2019re always seeing the most accurate, up-to-date information. Having this real-time data is crucial for my team, so the fact that there’s not hours of lag time waiting for data to update is huge.\u201d<\/p>\n\n\n\n

Ryan Steffenson, Senior Manager, Channel Operations at Tonies<\/a><\/em><\/p>\n<\/blockquote>\n\n\n\n

Essential supply chain metrics & KPIs to track<\/h2>\n\n\n\n

There are plenty of supply chain KPIs<\/a> that can help you understand your supply chain performance. While you may want to pay special attention to particular metrics depending on your business\u2019s goals, there are some key metrics that almost every business cares about. <\/p>\n\n\n\n

Here are the supply chain metrics that every ecommerce business needs to track.  <\/p>\n\n\n\n

On-time delivery<\/h3><\/div>
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On-time delivery rate is the percentage of orders delivered on or before the original estimated delivery date.<\/p>\n\n\n\n

In a world where customer satisfaction hinges on speedy delivery, this KPI lets you see how well you are meeting customers\u2019 expectations. <\/p>\n\n\n\n

The formula for measuring on-time delivery (OTD) is:<\/p>\n\n\n\n

Formula: OTD = (On-time deliveries) \/ (Total deliveries) x 100<\/strong><\/p>\n\n\n\n

For example, let\u2019s say that out of 600 orders that were delivered, only 450 were delivered before the promised delivery date. In this case, your on-time delivery rate would be:<\/p>\n\n\n\n

OTD = 450\/600 x 100 = 75% <\/p>\n\n\n\n

In this example, the OTD is quite low. To satisfy and retain customers, strive to maintain at least a 95% OTD rate. <\/p>\n\n\n\n

Some businesses get more granular and measure their on-time in-full<\/a> (OTIF) order rate \u2014 also called the perfect order rate \u2014 which tells you the percentage of orders that were not only delivered on time, but also delivered error-free. <\/p>\n\n\n\n

To improve your on-time delivery percentage, be sure to capture late delivery reasons and address those issues as quickly as possible. In addition, consider re-evaluating your last-mile carrier partnerships, or partner with a logistics provider that offers guaranteed 2-day shipping. <\/p>\n<\/div><\/section>\n\n\n\n

Damage-free delivery<\/h3><\/div>
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This supply chain KPI helps you track the percentage of orders that are delivered damage-free<\/a>. <\/p>\n\n\n\n

A high damage-free delivery percentage is crucial to an ecommerce business\u2019s bottom line, as it almost always costs business a lot of money, time, and effort to replace damaged items.  <\/p>\n\n\n\n

The formula for calculating damage-free delivery rate is:<\/p>\n\n\n\n

Formula: Damage-free delivery rate = (Damage-free deliveries) \/ (Total deliveries) x 100<\/strong><\/p>\n\n\n\n

That means if 550 orders arrive undamaged out of a total of 600 shipments, your damage-free delivery rate would be:<\/p>\n\n\n\n

Damage-free delivery rate = 550\/600 x 100 = 91.6%<\/p>\n\n\n\n

Ideally, businesses should aim for 100% damage-free deliveries. While this isn\u2019t always possible, especially in supply chains that involve multiple touchpoints, try to make sure that your numbers don\u2019t drop below 95%. <\/p>\n\n\n\n

A low damage-free delivery rate is a sign that you need to review your packing process or even reassess your shipping partner. You can also improve this KPI and prevent shipping damages by using the correct box size, wrapping items carefully, and using necessary protection. <\/p>\n<\/div><\/section>\n\n\n\n

Customer order cycle time<\/h3><\/div>
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The customer order cycle time measures the time between when a customer places an order and when that customer receives their order. <\/p>\n\n\n\n

Ideally, your business should keep customer order cycle time as low as possible, since a shorter order cycle time<\/a> typically translates to higher supply chain efficiency and a better customer experience<\/a>. While longer lead times<\/a> and slower shipping rates caused by supply chain crises can inflate cycle time, 2 days<\/a> is a good benchmark to aim for.  <\/p>\n\n\n\n

You can calculate your customer order cycle time with the formula below:<\/p>\n\n\n\n

Formula: Customer order cycle time = (Actual delivery date) \u2013 (Purchase order creation date)<\/strong><\/p>\n\n\n\n

For example, let\u2019s say you received the order on September 20 and delivered it to the customer on September 25, your order cycle time will be:<\/p>\n\n\n\n

Customer order cycle time = 25 \u2013 20 = 5 days<\/p>\n\n\n\n

Automatically forwarding each order to the fulfilment centre closest to its destination can drastically reduce customer order cycle time. Speeding up backend operations by streamlining warehouse management SOPs  and reassessing shipping carrier performance may also help shorten the cycle. <\/p>\n<\/div><\/section>\n\n\n\n

Freight bill accuracy<\/h3><\/div>
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As the name suggests, this metric measures whether your shipping bills have the correct information such as pricing, items, amounts, and weights. Any error in your freight bills can negatively affect your cash flow and harm the customer experience. <\/p>\n\n\n\n

Freight bill accuracy can help identify negative trends in billing operations.<\/p>\n\n\n\n

The metric is calculated using the formula below:<\/p>\n\n\n\n

Formula: Freight bill accuracy = (Number of correct freight bills \/ Total freight bills) x 100<\/strong><\/p>\n\n\n\n

So, let\u2019s say out of 600 freight bills, 500 of them are accurate, your freight bill accuracy rate would be:<\/p>\n\n\n\n

Freight bill accuracy = 500\/600 x 100 = 83.3%<\/p>\n\n\n\n

Once again, the ideal freight bill accuracy rate is 100%, as an inaccuracy rate of even just 5% can cause significant issues in your billing operations. Automating the invoicing and billing process or outsourcing freight management to the experts can help you keep this rate high. <\/p>\n\n\n\n

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\u201cTime is money. The more time that I can save spending energy on things like freight and fulfilment, the more time I can spend on other details for my company. To know that I can trust somebody to complete the tedious stuff and be organised like I would; what a stress reliever. <\/p>\n\n\n\n

We\u2019ve had a lot of ups and downs with supply chain partners and for the first time, I know I\u2019m in good hands with ShipBob. I\u2019ve learned enough hard lessons, so this was a nice easy lesson to learn.\u201d<\/p>\n\n\n\n

Emily \u200b\u200bCoolbaugh, Logistics Coordinator at Driveline Baseball<\/em><\/p>\n<\/blockquote>\n<\/div><\/section>\n\n\n\n

Inventory turnover<\/h3><\/div>
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Your business\u2019s inventory turnover ratio measures how many times your entire inventory has been sold and then replaced within a given timeframe. <\/p>\n\n\n\n

Inventory turnover is an extremely versatile metric, and can be used to evaluate the efficiency of your operations, your order fulfilment<\/a> processes, and your production processes. You can even calculate turnover on the SKU<\/a> level to identify which SKUs are selling well and which ones are slow-moving. <\/p>\n\n\n\n

The following formula is used for calculating inventory turnover<\/a>:<\/p>\n\n\n\n

Formula: Inventory turnover = Cost of goods sold (COGS)<\/a> \/ Average inventory value<\/strong><\/p>\n\n\n\n

For instance, if your COGS in the previous quarter was $100,000, and your average inventory value in that quarter was $25,000, your inventory turnover would be as follows:<\/p>\n\n\n\n

Inventory turnover = 100,000\/25,000 = 4<\/p>\n\n\n\n

That means that in the previous quarter, you completely sold and replenished your inventory 4 times. <\/p>\n\n\n\n

For most retailers<\/a>, an inventory turnover rate between 2 and 4 is ideal. However, this can vary by industry. A high inventory turnover rate is a good sign that your business is doing well in terms of sales. To improve low inventory turnover, focus on forecasting demand more accurately so that you can invest in inventory that has a higher chance of being sold quickly. In addition, optimising your order management process for efficiency speeds up the order life cycle and helps keep inventory moving. <\/p>\n<\/div><\/section>\n\n\n\n

Order fill rate<\/h3><\/div>
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Order fill rate is the percentage of orders that are successfully completed without stocking out, backordering, or requiring split shipments. It\u2019s an important KPI for measuring the efficiency of your supply chain operations, and it correlates strongly with customer satisfaction. <\/strong> <\/p>\n\n\n\n

Formula: (Total Orders Shipped \/ Total Orders Placed) x 100<\/strong> <\/p>\n\n\n\n

For example, if your brand received 500 orders, but could only fulfil 490 of them before stocking out (leaving 10 customers on backorder), your order fll rate would be as follows:  <\/p>\n\n\n\n

Order fill rate = (490\/500) x 100 = 98% <\/p>\n\n\n\n

Automating order management and optimising your inventory replenishment strategy are essential for improving your fill rate, and avoiding costly stockouts. <\/p>\n<\/div><\/section>\n\n\n\n

Gross margin return on investment (GMROI) <\/h3><\/div>
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GMROI measures how much money was made from selling certain inventory investments. This is a good metric for assessing your profitability, and to determine which products are selling well (enabling you to optimise inventory planning and procurement). <\/p>\n\n\n\n

Formula: <\/strong>([Revenue \u2013 COGS] \/ [{Beginning inventory + Ending inventory} \/ 2]) x 100<\/strong> <\/p>\n\n\n\n

For example, say you wanted to calculate your brand\u2019s GMROI for the last month\u2019s inventory. You find the following information: <\/p>\n\n\n\n