KPI conundrum
25 October 2007 | Steve Bagshaw
This week a reader asked SM:
I have just transferred to a logistics function as a planner and my first task is to set up key performance indicators (KPIs) for the warehouse, purchasing and shipping departments. What should I consider?
What do you think?
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KPI’s need to be: Specific, Measurable, Achievable, Result-oriented, and Time- based (SMART).
Some example areas to focus on (and these are not all KPIs themselves) would be: vehicle weight capacity and efficiency increased, employment of store capacity increased, maintenance incidents reduced, repair times reduced, higher accuracy of delivery/collection to order statistics, more deliveries on time, average delivery times reduced, staff satisfaction increased, customer satisfaction increased, supplier satisfaction increased, out of stock numbers reduced, number of expired goods reduced, frequency and reasons for deviations from schedule reduced, Fuel consumption reduced, and an increased product range.
Many KPIs will be contract/supplier specific, so you apply KPIs directly to those areas of risk and benefit that you and other users are aware of. Obviously, those specific to a contract require agreement with the supplier(s) under the tendering process or, if the contract is already in place, to be acceptable under the contract as well as to the supplier(s).