A very important part of evaluating the quality of the e-commerce logistics order preparation process is to determine which key performance indicators (KPIs) are most valuable in an e-commerce or retail or full outsourcing activity.
Once you recognize and understand the most important parameters for an online, retail or omnichannel sales activity, you can compare current performance and monitor improvements and progress towards your targets and goals.
Although the formulas used to calculate and evaluate KPIs may seem simple, it is useful to explain them so you can understand which is applicable to your specific business situation. Below, we report some important formulas for the KPIs of the Italian and global supply chain and order fulfillment.
Key formulas of the ecommerce Supply Chain
Perfect order rate
The percentage of perfect orders verifies the % of orders shipped on time, complete, without damage, without errors and with correct and suitable documentation. We are talking about a measure to evaluate whether or not a retail e-commerce order fulfillment service involves an order fulfillment operation that satisfies the expectations of the retail or end customer or not.
Formula: % orders on time X % orders shipped complete X % orders shipped without damage X % orders with suitable and correct documentation
On-time shipping rate
Punctual B2B e-commerce shipping verifies and calculates the % of orders shipped on time by the Italian and foreign logistics system and service. Like perfect order rate, on-time shipping rate is a critical KPI considered to monitor whether or not an operation meets end customer expectations in both e-commerce and omnichannel retail.
Formula: number of orders shipped on time / number of orders shipped
Order fulfillment rate
The order fulfillment rate reflects the % of orders fulfilled at 100% compared to the total number of orders fulfilled. It can be considered as a general indicator of the accuracy and efficiency of a logistics service.
Formula: total orders executed upon customer request / total orders executed
Like order fulfillment rate above, line item fulfillment rate is another way an operation can measure its overall efficiency and identify room for improvement. Reflects the ratio of 100% filled order lines to the total number of lines.
Formula: total completed order lines/total processed order lines
Orders taken per hour
Orders collected per hour is a metric that measures order fulfillment and shipping productivity in lines per person per hour. This is a profit benchmark that allows an operation to compare its performance with that of others in the industry. It should include all functions within the operation and total hours worked across shifts.
Formula: total orders successfully collected and shipped / total hours worked in picking and shipping
Order lines picked and shipped per hour
Picked and shipped lines per hour measures the productivity of e-commerce pick and ship operations in lines per person per hour. By determining the total lines processed during your operation, you can get an accurate representation of your operational efficiency.
Formula: total order lines successfully picked and shipped / total hours worked on picking and shipping
Inventory accuracy
Inventory accuracy, as the name indicates, is used to calculate the accuracy of your inventory management process. It works by counting the items in stock and comparing that number to what is recorded in your database. Benchmarking and monitoring inventory accuracy can help ensure your accounting and data management practices are in order.
Formula: Number of items counted
Space utilization rate in warehousing and logistics services
Your storage space utilization rate reflects how efficiently you use the amount of available space in your ecommerce warehouse or fulfillment center. Operations with less than optimal stock utilization can take advantage of a number of options to recover lost warehouse space (pallet, shelf, hanging item storage).
Formula: cubic meters of inventory / total cubic meters of e-commerce warehouse and B2B retail warehouse.
You are likely to find that the logistics warehouse utilization rate is low. This is because sufficient space must be maintained around the inventory to allow for the operation and movement of machinery and personnel.
Days of inventory supply
Inventory days supply measures the amount of inventory available within the logistics business to cover a number of days of expected usage. For most operations, a lower GFI is ideal, but should only be measured within the scope of the operation’s content. It can vary widely across industries, product lines, business models, and even warehouse strategies. For example, consider logistics services for fashion, logistics services for fashion, logistics services for cosmetics, logistics services for beauty products and perfumes, logistics services for dry food products, logistics services for health products, and sports. Food supplements, dietary products, logistics services for sporting goods, logistics services for footwear.
Formula: Value of Finished Goods Inventory on Hand / Total Annual GFI (Cost of Goods Sold) / 365
Total order cycle time
Total order cycle time, also known as inventory cycle time, reflects the average time between the customer placing an order and shipping the order, whether this is an ecommerce order or a retail order. Because the speed and efficiency with which orders move through the fulfillment process impacts profitability and customer service, tracking and improving total order cycle time is critical for most fulfillment logistics companies. orders.
Formula: temporal order received from the customer – temporal order placed / total number of orders shipped
Internal order cycle time reflects the average time it takes from the time the customer’s ecommerce or retail order is released into the warehouse for processing and from the time the order is shipped. It is a key reflection of all aspects of order fulfillment that a fulfillment center has control over.
Formula: order time shipped – order time received / number of orders shipped
Bottom line
Once key performance indicators have been compared, it is possible to monitor performance over time and identify which areas of Italian and foreign logistics activity and operations could benefit from greater attention. Once you know which component of your logistics business you want to optimize, a trusted third-party logistics (3PL) provider can help ecommerce, omnichannel, retail, wholesale, full outsourcing companies consider options, whether that includes changes to internal workflows, the implementation of automation technologies, or something else.
If a customer has difficulty setting KPIs and could certainly use a 3PL or 4PL to outsource their Italian e-commerce logistics, Italian e-commerce logistics, Italian and foreign logistics services. A brand or company can also make use of a logistics site to outsource specific value-added services: see for example the list of VAS services, the numerous companies with which we collaborate and our network to guarantee excellent logistical support. Send us a note to see how eshop logistics srl can help a company grow.
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