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OKRs (Objectives and Key Results) and KPIs (Key Performance Indicators) play a vital role in the success and competitiveness of a supply chain. Research shows that organizations that effectively implement OKRs have a 33% higher chance of meeting their objectives and are 11 times more likely to hit their strategic goals (Source: Google). On the other hand, companies that regularly track and measure KPIs see a 20% improvement in performance and a 27% reduction in costs (Source: Google. The importance of leadership in adopting and effectively using OKRs and KPIs cannot be overstated.
Leaders who provide clear direction, encourage accountability and make data-driven decisions are more likely to achieve their goals and drive success throughout their supply chain organization. In conclusion, OKRs and KPIs provide the framework and tools needed to optimize and measure the performance of a supply chain. Effective adoption of these practices by leadership is crucial for realizing significant improvements and long-term success.
Here is the same list of 50 Key Performance Indicators (KPIs) in supply chain management with typical benchmarks:
1. Inventory turnover - Measures the number of times inventory is sold and replaced in a given time period. Benchmark: >4.
2. Order fulfillment rate - The percentage of customer orders that are shipped on-time and complete. Benchmark: >95%.
3. Lead time - The time it takes from when an order is placed to when it is received. Benchmark: <10 days.
4. Supplier delivery performance - Measures the accuracy and punctuality of supplier deliveries. Benchmark: >95%.
5. Transportation costs - The cost of moving goods from one location to another. Benchmark: <10% of revenue.
6. Warehouse space utilization - The percentage of warehouse space that is being used effectively. Benchmark: >80%.
7. Stock accuracy - The accuracy of the inventory management system in terms of the actual stock levels. Benchmark: >98%.
8. Order processing time - The time it takes to process an order from start to finish. Benchmark: <24 hours.
9. Return on investment (ROI) - Measures the profitability of an investment. Benchmark: >10%.
10. Gross margin - The difference between revenue and the cost of goods sold. Benchmark: >20%.
11. The total cost of ownership (TCO) - The total cost of a product over its lifetime, including production, transportation, storage, and disposal. Benchmark: <30% of revenue.
12. On-time delivery rate - The percentage of deliveries that arrive on or before the promised delivery date. Benchmark: >95%.
13. Carrier performance - Measures the efficiency and reliability of carriers. Benchmark: >95%.
14. Stock obsolescence - The cost of holding onto inventory that is no longer needed or wanted. Benchmark: <5% of inventory value.
15. Demand forecasting accuracy - The accuracy of demand forecasts. Benchmark: >90%.
16. Safety stock level - The amount of inventory kept on hand to mitigate the risk of stockouts. Benchmark: <10% of inventory value.
17. Cost of goods sold (COGS) - The cost of the goods sold during a specific period. Benchmark: <70% of revenue.
18. Supply chain cycle time - The total time it takes to complete the supply chain process from start to finish. Benchmark: <10 days.
19. Supplier quality performance - Measures the quality of products and services supplied by suppliers. Benchmark: >95%.
20. Customer satisfaction - The level of satisfaction of customers with the products and services received. Benchmark: >85%.
21. Supplier scorecard - A tool that measures supplier performance against agreed-upon metrics. Benchmark: >80%.
22. Carrier reliability - The consistency of carrier performance in terms of delivery times and the quality of services provided. Benchmark: >95%.
23. Carrier capacity utilization - The utilization of carrier capacity to meet customer demand. Benchmark: >80%.
24. Logistics cost per unit - The cost of logistics per unit of product. Benchmark: <10% of the product cost.
35. The number of order processing errors - The number of errors in the order processing system. Benchmark: <1%.
26. Carrier lead time - The time it takes for a carrier to pick up a shipment. Benchmark: <2 days.
27. Capacity utilization rate - The utilization of available resources to meet customer demand. Benchmark: >80%.
28. Average time to resolve supplier issues - The time it takes to resolve issues with suppliers. Benchmark: <2 days.
29. Carrier on-time delivery rate - The percentage of deliveries made by carriers that arrive on-time. Benchmark: >95%.
30. Capacity utilization rate - The utilization of available resources to meet customer demand. Benchmark: >80%.
31. Supplier on-time delivery rate - The percentage of deliveries from suppliers that arrive on-time. Benchmark: >95%.
32. Capacity planning accuracy - The accuracy of capacity planning processes. Benchmark: >90%.
33. Inventory carrying cost - The cost of holding inventory, including storage, insurance, and financing costs. Benchmark: <20% of inventory value.
34. Carrier utilization rate - The utilization of carrier resources to meet customer demand. Benchmark: >80%.
35. Carrier pick-up performance - Measures the efficiency and reliability of carrier pick-ups. Benchmark: >95%.
36. Carrier damage rate - The percentage of shipments that are damaged during transportation. Benchmark: <1%.
37. Carrier shipment visibility - The visibility of shipments during transportation. Benchmark: >95%.
38. Carrier cost per shipment - The cost of using a carrier for a shipment. Benchmark: <10% of shipment value.
39. Carrier compliance rate - The percentage of shipments that comply with carrier requirements. Benchmark: >95%.
40. Carrier route efficiency - The efficiency of carrier routes in terms of time and cost. Benchmark: >95%.
41. Carrier delivery performance - Measures the efficiency and reliability of carrier deliveries. Benchmark: >95%.
42. Carrier response time - The time it takes for a carrier to respond to a customer request. Benchmark: <24 hours.
43. Carrier routing guide compliance - The compliance of shipments with carrier routing guides. Benchmark: >95%.
44. Carrier pick-up performance - Measures the efficiency and reliability of carrier pick-ups. Benchmark: >95%.
45. Carrier damage rate - The percentage of shipments that are damaged during transportation. Benchmark: <1%.
46. Carrier shipment visibility - The visibility of shipments during transportation. Benchmark: >95%.
47. Carrier cost per shipment - The cost of using a carrier for a shipment. Benchmark: <10% of shipment value.
48. Carrier compliance rate - The percentage of shipments that comply with carrier requirements. Benchmark: >95%.
49. Carrier route efficiency - The efficiency of carrier routes in terms of time and cost. Benchmark: >95%.
50. Carrier delivery performance - Measures the efficiency and reliability of carrier deliveries. Benchmark: >95%.
Here are OKRs examples, with actions and milestones to drive them that can help you tackle common supply chain obstacles and strengthen your process.
Objective 1: Reduce Supply Chain Costs end of the fiscal year in order to improve Gross margin
Key Result 1: Conduct a thorough analysis of all current supply chain processes to identify areas of inefficiency. ( Milestone KR)
Action: Schedule bi-weekly meetings with the supply chain team to review the results of the analysis and implement improvements.
Key Result 2: Implement a new logistics solution that streamlines and automates current processes. ( Milestone KR )
Action: Partner with a logistics provider to find the best solution for our needs and integrate it into our supply chain by the end of Q3.
Key Result 3: Reduce cost from negotiation from USD 500K to USD 250K
Action: Assign a dedicated negotiation team to meet with suppliers and logistics providers and reach a mutually beneficial agreement by the end of Q2.
Objective 2: Improve Customer Satisfaction in order to drive sales
Key Result 1: Reduce response time from 15 mins to 1 min by launching a chatbot system.
Key Result 2: Increase the number of ratings obtained from 25% to 75% of orders through WhatsApp links
Key Result 3: Increase automated deliveries from 100,000 to 250,00 orders via RFID tags.
In conclusion, aligning Supply Chain OKRs and KPIs is a crucial step toward ensuring the success of a supply chain operation. By setting clear and measurable goals, organizations can track their progress toward achieving their supply chain objectives and make data-driven decisions to improve performance. It's important to keep in mind that OKRs and KPIs are not just tools for measuring success, but also a way to drive action and bring the strategy to life. As a result, companies that prioritize the alignment of their supply chain OKRs and KPIs are more likely to achieve their goals, stay competitive, and improve their bottom line.
At Fitbots we are obsessed with OKRs, KPIs, and strategy execution. While helping you figure out what to measure, we strongly believe actions drive progress. Fitbots software is specially tuned to help you drive actions with both OKRs and KPIs no matter how you choose to run your business.
Kashi is the Co-founder and CTO of Fitbots. Kashi has coached over 700+ teams on OKRs with the focus on helping founders and teams achieve more with OKRs. His niche focuses on the future of work by bringing technology to life.
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