Identifying and Discussing KPI, SLA, and All other Metrics in Logistics
The refrigerated logistics industry in the UK is growing rapidly, driven by the increasing demand for temperature-sensitive products such as food, pharmaceuticals, and chemicals. With this growth comes the need for effective monitoring and management of the Metrics in Logistics such as key performance indicators (KPIs), service level agreements (SLAs), and other metrics that ensure the quality and efficiency of refrigerated logistics operations. In this blog, we will identify and discuss these metrics in logistics.
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Key Performance Indicators (KPIs) as one of the Metrics in Logistics
KPIs are critical metrics that enable companies to monitor and evaluate the performance of their refrigerated logistics operations. The following are some of the essential KPIs for refrigerated logistics in the UK:
Temperature Compliance
Temperature compliance is a critical KPI in refrigerated logistics. It refers to the percentage of shipments that are transported within the specified temperature range. The temperature range varies depending on the type of product being transported. For example, frozen foods need to be transported at -18°C, while pharmaceuticals may require a temperature range of +2°C to +8°C. Temperature compliance is crucial as it ensures that products are delivered in optimal condition and that they meet regulatory requirements.
On-Time Delivery
On-time delivery is another critical KPI in refrigerated logistics. It refers to the percentage of shipments that are delivered on time. Delays in refrigerated logistics can be costly, as they can lead to spoilage of temperature-sensitive products. On-time delivery is also critical as it ensures that customers receive their products as scheduled, which enhances customer satisfaction.
Product Damage
Product damage is a KPI that measures the percentage of shipments that are damaged during transportation. refrigerated logistics operations must ensure that products are transported in a way that prevents damage during transit. This is particularly crucial for temperature-sensitive products, as damage can compromise product quality and safety.
Inventory Accuracy
Inventory accuracy is a KPI that measures the accuracy of inventory records. refrigerated logistics operations must have accurate inventory records to ensure that products are delivered as scheduled and that customers receive the correct products. Accurate inventory records also help to prevent inventory shortages and overstocking.
Cost per Shipment / unit
KPI that measures the cost of transporting a shipment. refrigerated logistics operations must manage their costs effectively to remain competitive. Cost per shipment includes various factors, such as transportation costs, warehousing costs, and labour costs.
Service Level Agreements (SLAs) to control the Metrics in Logistics
Service level agreements (SLAs) are contractual agreements between customers and logistics providers that define the levels of service to be provided. In refrigerated logistics, SLAs are critical as they ensure that customers receive the required level of service. The following are some of the key components of SLAs in refrigerated logistics:
Definition of SLAs and the relevance to the Metrics in Logistics
SLAs define the level of service that logistics providers have committed to deliver.
Importance of SLAs in Metrics in Logistics
SLAs are critical in refrigerated logistics as they provide a framework for measuring and monitoring performance. They also ensure that customers receive the required level of service, which enhances customer satisfaction and loyalty. In addition, SLAs help logistics providers to manage their operations effectively, as they provide a clear understanding of customer requirements.
| Component of SLA | Description |
|---|---|
| Service Description | Defines the scope of the service, including the type of product, required temperature range, and delivery schedule. |
| Performance Measures | Specifies Key Performance Indicators (KPIs) used to measure and monitor performance, e.g., temperature compliance, on-time delivery, shipment damage. |
| Remedies | Outlines actions to be taken in case of SLA breaches, such as compensation or penalty clauses. |
| Reporting Requirements | Defines the logistics provider\’s reporting obligations, including report frequency and format. |
Refrigerated Logistics other Metrics in Logistics
Apart from KPIs and SLAs, there are other metrics that are important in refrigerated logistics. These include:
Customer Satisfaction are important Metrics in Logistics
Customer satisfaction is a critical metric in refrigerated logistics, as it measures the degree to which customers are satisfied with the service provided. Logistics providers must ensure that they meet customer expectations in terms of product quality, delivery time, and customer service.
Dwell Time
Dwell time is the amount of time that products spend in a warehouse or transit hub. It is an important metric in refrigerated logistics as it can impact product quality. Prolonged dwell times can lead to spoilage of temperature-sensitive products, while shorter dwell times can reduce the risk of spoilage. Many clients insist on the product life is utilised in store on the shelf and not in the RDC.
Transit Time
Transit time is the time taken for a shipment to be transported from the origin to the destination. It is an important metric in refrigerated logistics as it impacts product quality and customer satisfaction. Longer transit times can increase the risk of product spoilage, while shorter transit times can improve customer satisfaction. Route optimisation is a paramount activity for this metric
Order Fulfilment Accuracy
Order fulfilment accuracy is a metric that measures the accuracy of order fulfilment. Logistics providers must ensure that they deliver the correct products to customers, as errors can result in customer dissatisfaction and lost revenue.
Carbon Emissions
Carbon emissions are an important metric in refrigerated logistics, as they impact the environment. Logistics providers must manage their carbon emissions effectively to reduce their environmental impact and comply with regulatory requirements.
Metrics in Logistics poor?. Remedial action with logistics providers
If a supplier is not hitting the targets, it is important to take a systematic approach to address the issue. Here are some steps that can be taken:
Review the contract:
Review the contract to ensure that the supplier is meeting the agreed-upon terms and conditions. Look for any performance indicators and benchmarks that have been set, as well as any penalties for non-compliance.
Identify the root cause:
Investigate the reasons why the supplier is not meeting the targets. This may involve examining their processes, personnel, equipment, or systems. It may also be helpful to speak to the supplier to gain a better understanding of their challenges and limitations.
Communicate the issue:
Contact the supplier to communicate the issue and work together to identify a solution. Be clear about the expectations and what needs to be achieved, as well as the consequences of not meeting the targets.
Develop an action plan:
Develop an action plan that outlines the steps to be taken to address the issue. This may involve developing new processes, revising the current agreement, or seeking new suppliers.
Monitor progress:
Monitor progress regularly to ensure that the supplier is making the necessary improvements. This may involve conducting regular audits or inspections, reviewing reports, or engaging with the supplier on a regular basis.
Consider termination:
If the supplier continues to fail to meet the targets despite efforts to address the issue, consider terminating the contract. Be sure to follow any legal or contractual obligations to avoid any legal or financial consequences.
It is important when addressing a supplier who is not hitting the targets is to take a systematic approach. It is important to identify the root cause, communicate the issue, develop an action plan, monitor progress, and consider termination if necessary. By following these steps, you can ensure that your supply chain remains efficient and effective.
Conclusion
In conclusion, the refrigerated logistics industry in the UK relies on key performance indicators, service level agreements, and other metrics to ensure that perishable goods are transported and stored in optimal conditions. The KPIs and SLAs used in this industry are diverse and may vary depending on the type of product, customer requirements, and logistics provider. However, some of the most common metrics used in refrigerated logistics include temperature accuracy, delivery performance, inventory accuracy, and product quality. These metrics are critical to maintaining the integrity of perishable goods, minimising waste, and maximising efficiency.
In summary, understanding the importance of KPIs, SLAs, and other metrics in refrigerated logistics is crucial for companies operating in this industry. By tracking and analysing these metrics, logistics providers can improve their performance, meet customer expectations, and achieve a competitive advantage. As the demand for refrigerated logistics continues to grow, it is essential that logistics providers prioritise the development and implementation of effective KPIs, SLAs, and other metrics to ensure the safe and efficient transportation and storage of perishable goods.
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