Understanding KPIs for Fulfillment Providers

kpis for fulfillment providers

KPI stands for key performance indicators. It is technically a measurable value that shows how efficient a company is in achieving vital business objectives. Most organizations will use KPIs at different levels to assess the level of success that they are performing. There are higher-level KPIs that look at the overall performance while low-level KPIs focus on the various departments in the company, such as HR, support, and marketing. The KPIs for fulfillment providers that e-commerce businesses should consider are always higher-level.

Relevance of KPIs for Fulfillment Providers

KPIs are essential to a business since they are the indicators of where the company is headed. They will tell the direction the firm is going to. They could indicate if the business is making any progress or stagnant at one point. The indicators will also make the business owners or management to make effective decisions to make it successful.

Before embarking on selecting a fulfillment provider, consider these useful hacks so that your goods will arrive in good shape and on time.

Seek Input from the Provider on Their KPIs

Many people believe that asking for the company’s own KPIs is not a bright idea since they could elevate themselves to meet the standards you are looking for. But when you really think about it, is it not good to ask an interviewee what they are going to bring to the company during the interview? The logistics provider thinks about fulfillment all the time, and they, therefore, have more insights on performance metrics.

When having that conversation, consider asking about the four fulfillment provider KPIs listed below. The ideal provider ought to possess these.

Four KPIs for Fulfillment Providers

  • Inventory integrity – You should determine the acceptable variance in what the system and records have as inventory versus the physical inventory. If the variation is quite huge, then there is a problem with that provider from receiving accuracy to the fulfillment accuracy, and that will result in increased costs.
  • Receiving efficiency – A product is never ready for collection if it is still at the DC area rather than at the picking position. That only means that it will not be packed and shipped to the owner in good time. That creates even more hurdles in the entire processing of the product leading to losses because of time lost by the provider. Check on the efficiency of the fulfillment center before you decide to hire their services.
  • On-time shipping – consider the orders you need to be shipped by the provider and if they will be able to meet your deadline.
  • Shipping accuracy – well, in a perfect environment, shipping would be excellent, and clients will receive their goods in good time, but in the real situation, nothing is ever perfect. Even the best logistics company will have some issues in some way. The question, to what extent will your company accept errors and mistakes. Because cases like wrong address deliveries, damaged goods, wrong count of the items, and such will always appear. 

Keep it Simple

Monitoring and reporting several metrics when it is too early is not one of the best approaches. Dwelling too much on the parameters may cause the fulfillment provider to divert their attention from the execution of their duties and provide too complicated services that your team can hardly comprehend.

For tangible and efficient results, place your focus on very few strategic measures that are most relevant.

For tangible and efficient results, place your focus on very few strategic measures that are most relevant. You will add more KPIs to the firm as it grows in size in the future. Ensure the metrics you choose are manageable in terms of calculations. If the KPIs ask people to leave their daily duties to come and make the calculations, then they are sophisticated metrics, and you should do away with them.

Understand the Internal KPIs for Fulfillment Provider Partner

Every company will have its internal KPIs to evaluate its performance. You could always ask about these metrics since the production of this provider company will affect your business either positively or negatively. Below are some of the key indicators you could look for in the provider’s firm

Three Internal KPIs for Fulfillment Providers

  • Recordable Incident Rate – this metric will give the prevalence of the recorded safety incidents in any operation carried out. If the facility looks safe from this metric, then you can be sure it is a highly productive one.
  • Staff Turnover – by now, you are aware that it takes some time before a new employee is absorbed in the company and starts working to maximum productivity. If your provider is struggling to retain their staff, then you know mistakes will be inevitable in that company, and their productivity level and quality will be low.
  • Innovation – the ideal fulfillment provider will solicit brilliant ideas from clients and associates and eventually enhance the service and increase the cost. They will then measure what they have implemented against the income generated. Fulfillment providers that fully embrace innovations and are continually running improvement programs will be beneficial to your business.

Never Ignore the KPIs for Fulfillment Providers

Many businesses will craft articulate KPIs and then let them alone until something happens, and that’s when they go looking for them. You should ensure you review the performance for your business regularly against the set benchmarks as the KPIs. By doing so, you will note problems way before they become a disaster and correct them.    

QuickBox Fulfillment, an Inc. 500 2019 company, strives to set and maintain high level KPIs to deliver world-class fast, friendly and accurate fulfillment service. If you’d like to discuss this more and figure out if we are the right partner for you, reach out to us today at QuickBox.com.