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Consumer Goods Logistics Blog


There Are Logistics KPIs - Then There is Everything Else....

Published by Steve Buckman on March 27, 2013

Over the last several years, there has been an intense focus on logistics KPI's and the development of metrics to measure 3PL effectiveness.  KPI's that are collaboratively developed and focused on clear business outcomes are a great roadmap for clients and 3PL's to understand how they are doing in meeting the objectives of the relationships.

However, clients experience the relationships on many levels - far beyond KPI's...  3PL leaders can drive improved communication by keeping this in mind. 

In mature supply chains, clients often set the bar fairly high.  They have a right to.  They have worked hard to develop their supply chain; to drive cost out and to increase the quality and value proposition they bring to their customers.  In the process, these logistics KPI's often rise to a level such that minor differences in a KPI from one provider to another do NOT have a significant impact on the overall business.  For example, if there is a goal of 99.990% accuracy on outbound shipping, what is the impact of 99.989% on the business?  If you ship 300 orders a day, 7 days a week - it means instead of having 10 shipping errors all year, you had 11 - that probably won't impact the client's business in any significant way.

So, once the logistics KPI's are green - and then even a little greener - what defines the relationship - how can 3PL's continue to provide value at the operational and tactical level?

Some of the clients with whom I have spoken talk about many of the softer parts of the relationships - How flexible are we?  How available?  What is our relationship with the client's customers?  Where is the client in the priorities of the organization? 

Often, these issues can be translated into an overall "alignment"...  how aligned are we with the client's business objectives?  And if we are going to be successful, we have to drive that alignment throughout the organization.  It is not enough that "you" or your manager is taking care of the client's business.  Clients want to know that the 3rd shift weekend supervisor and his lift truck operator are just as engaged - and just as focused on getting it right.

Engaging your clients is about far more than getting to "green KPI's."  The deep level of alignment and engagement is much harder, much more complex, much more difficult to measure, but, ultimately, may be much more rewarding for everyone.

Filed under: Logistics KPIs| 3PL Outsourcing