3 Logistics KPIs That Support Supply Chain Growth

Published : July 19, 2016

Logistics KPIs that support supply chain growth

Businesses grow. Brands grow. Workforces grow. What about fulfillment centers? With the day-to-day focus resting heavily on supply chain performance metrics, sometimes growth isn't even on the radar for management teams — who often pour all of their effort into maintaining the status quo. However, just like the non-fulfillment aspects of business, the greater goal should always be expansion. For some companies, that means geography, for others, sku volume. However your fulfillment center defines growth, you'll need a strategy to hit your milestones, and it needs to incorporate three strong pillars for the best results: visibility, agility and connections — both internal and external to your company.

Pillar 1: Visibility

Good news: You already have a substantial foundation for this pillar built, by virtue of successfully operating your fulfillment center. Reports, supply chain metrics, assessments and other periodic state-of-the-warehouse-style tasks help put systems in place that can be fine-tuned to offer more information quickly and easily. One of the biggest challenges to fulfillment teams, particularly those working with several WMS programs and systems, is compiling various automatic data streams in one easily-digestible place. With that in mind, use this checklist to guide your pillar-building:

  • Decide who needs access to data streams for business decisions.
  • Decide on a format for all results: email, daily print-outs, etc.
  • Decide how the data will be used to influence decisions: formal meetings, informal planning sessions, etc.
  • Decide how to secure the raw data and output for digital safety.

Once you've determined how to improve visibility within the walls of your own warehouse, it's time to look beyond the loading dock and into the complex network of your supply chain. Consider how much of the information you need to make ordering decisions relies on reaching out to a vendor and spending time and effort discussing their numbers and capability. But you shouldn’t need to start a new conversation to get this important information every time you want an update. Look for a partner who offers automated reporting of metrics. Ask your supply chain partner what they're willing to share in regards to stock availability and movement, and speak up if there's a data stream you'd like to see. Even the best supply chain partners aren't mind-readers.

Pillar 2: Agility

To paraphrase an old saying, if you make a business plan foolproof, the world will just send bigger fools. You need a supply chain that enables you to change direction or strategy mid-stride without disrupting the average volume and profitability of your fulfillment center, a supply chain management style that’s a hybrid between seamless planning, implementation and course correction. This agility is the focus that removes panic when unforeseen situations — port strikes, natural disasters, industry scandals — turn your carefully laid plans into a potential mess. It puts a great deal of stock in forecasting and examines past mistakes for future insights and, hopefully, sidesteps repeating history along the way. Here are the questions that you and your team need to answer before you can truly call your supply chain agile:

  • Do you have "plan B" suppliers to order from if all of your main suppliers suddenly closed?
  • Is the inter-chain technology you're using user-friendly and storing to redundant backups?
  • Do the suppliers you're working with give you the freedom to change or adjust orders with ease?
  • Are your supply chain partners open to discussions on mutually-beneficial investments in innovation and tech?

While a "no" isn't necessarily a brick wall here, it does indicate a potential obstacle to agility. You have enough of your own hurdles to clear within your company, so if your supply chain is standing in the way, it's time to reroute or replace some of those stops along the way.

Supply chain professionals can improve their approach to agility by eliminating "linear thinking" during planning and focusing on building a weight-bearing network of different routes and backup suppliers. That way, if one strand "breaks" and can't deliver within the timeline, or in the volume required, the rest of the "net" can hopefully help to pick up the slack and keep supply chain velocity intact. 

Pillar 3: Relationships

Don't let the industry's propensity for buzzwords fool you: supply chain performance management is still largely an art built on a foundation of solid business relationships. Despite how widespread technologies like the Internet of Things and automatic data streams have become, person-to-person business contacts are still a huge driver for any given supply chain. Businesses that talk to one another aren't caught by surprise when problems pile up. They notice the warning signs in frequent conversations, or even out-and-out discussions, and have had the time to prepare accordingly. These connections are also crucial for building trust, which in turn can be leveraged into favorable repayment terms, specialty delivery setups and even priority delivery order, depending on the age and depth of the relationship.

Here are a few important things to remember when forging and maintaining your supply chain relationships:

  • It has to be a give-and-take scenario. If you're doing all the asking, the other business isn't getting anything from you except orders. Make sure that you're helping your partners out, whether that's through in-the-know advice, forewarning on industry-impacting issues or even just organizing your receiving processes to get their products or services in, accounted for and paid as soon as possible. 
  • Let the other party set the tone. Some businesses prefer to keep a cordial, business-centric tone in their interactions, while others want to talk about last night's ballgame before getting into the facts and figures of your order schedule. The best way to build rapport is to let them take the lead and follow suit.
  • Be honest about issues.No one likes to rock the boat, but if you're having consistent issues with a product or component, don't let concern about your business relationships keep you mute. Reverse logistics are a critical consideration for businesses, and if a company's products keep showing up in your returns, the only way to address that issue is to communicate with the source.
  • Don't forget your own team. Outside vendors may provide you with the physical products and parts that you need to operate, but it's your employees who make those items profitable. Open Door policies aren't always the best way to start conversations; some team members may be too busy or even intimidated by the concept. Approach your team regularly to ask specifically about pain points, frustrations and ideas for improving current processes. 

If each pillar is built carefully and with regards to the two around it, your business will rest on top, fully supported, durable and perfectly balanced as a table. Supply chain performance woes can often feel like your entire brand base is caught in an earthquake, which is why strength — and equal distribution — is key in developing this trio of core concepts. Treat them well and don't let them get lost in the shuffle of operations: they could be the fine line between success and failure during the next major upset in your industry.

Logistics Managers Guide

Topics: Supply Chain Logistics, Supply Chain Efficiency

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