Blog Posts How Do I Establish Meaningful KPIs for Ecommerce Fulfillment?
Key Takeaways:
- In today’s competitive marketplace, it’s important to keep a close eye on ecommerce fulfillment operations and continually measure their efficacy.
- Establishing effective key performance indicators (KPIs) that are aligned with your business goals can help to keep operations functioning optimally.
- What you measure matters. Consider setting KPIs in six key areas: receiving, put away, inventory management, order processing, shipping and quality.
Effective ecommerce fulfillment depends on getting the right product to the right customer in the right quantity at the right place at the right time. To make sure you don’t take a wrong turn, it’s important to establish meaningful key performance indicators (KPIs).
“KPIs should be strategically aligned with your specific business goals,” explains Perry Belcastro, Senior Vice President, Fulfillment Services at Saddle Creek. “Start by thinking about what you are trying to achieve. Then, determine what needs to be done every day to make that happen, and how that activity can best be measured.”
Defining the Right Key Performance Indicators
In a recent blog for Multichannel Merchant, Belcastro recommends establishing KPIs in six key areas to help optimize order fulfillment operations: receiving, put away, inventory management, order processing, shipping and quality. Two of these areas are outlined here:
Order processing
Order turnaround time is critical. Once an order is received, how fast can it be accurately picked, packed and prepared to ship out in the most efficient manner? To satisfy consumers’ ever-increasing demands, there is an expectation to fulfill orders the same day they are received.
Shipping
With increased pressure to turn orders faster, most merchants also establish KPIs related to on-time shipping. For example, they might set expectations that all orders received by 1:00 p.m. and express orders received by 4:00 p.m. will go out same day. Their KPI, then, identifies the target percentage of orders meeting those expectations.
Measurement doesn’t stop once they’re out the door. The transit element is a key area of consideration – particularly in light of recent delivery delays by major carriers during the coronavirus pandemic. How many of your orders arrive at their destination on time? To track this, you will need to work with your parcel carrier (or third-party fulfillment provider if you’re shipping on their parcel account).
To learn about other important KPIs for order fulfillment, read the full article.
“KPIs should be strategically aligned with your specific business goals. Start by thinking about what you are trying to achieve. Then, determine what needs to be done every day to make that happen, and how that activity can best be measured.”
- Perry Belcastro, Senior Vice President, Fulfillment Services, Saddle Creek Logistics Services
