Supply chain metrics

Managing your supplies is no cakewalk, especially when your business is growing and the supply chain metrics are becoming more complex. 

Having a strong supply chain is very important if you want to make it in today’s tough business world and rake in more revenue. A survey conducted by Deloitte found that 79% of companies with top-notch supply chains see their revenues shoot past the industry average. 

One handy way to see if your supply chain is up to the mark is by monitoring its metrics or KPIs. These metrics help you measure and understand how well your supply chain is performing.

In this blog, we will talk about the key supply chain metrics that you should be tracking to improve your logistics process and maximize the value of your business.

Let’s get started!

Supply Chain Metrics: What Are They?

Before we get into the supply chain management metrics, let’s first understand the basic supply chain metrics definition.

Supply chain metrics are the figures and ratios that a company keeps an eye on to see how smoothly they are delivering the products to their customers. Efficiency in supply chain execution boils down to how effectively and affordably businesses manage the movement of materials from buying them to delivering them. This involves factors like making, storing, and shipping goods.

So, how do you figure out where you can do better and find the sweet spot between what your customers want and your need to save money and work more effectively? 

Supply chain KPI metrics is your solution. However, there is more to it. 

Keeping track of these sets of metrics helps align your organization and makes it more adaptable, which ultimately results in happier customers. 

Let’s see why monitoring your supply chain metrics is important. 

Supply Chain Metrics: Why Are They Important?

In this fast-paced realm of supply management, it is crucial to understand the advantages that key supply chain metrics offer and how they contribute to your business.

Now that we know the importance of metrics in supply chain management, let us understand the various supply chain metrics that you need to be aware of.

Top 10 Supply Chain Management Metrics That You Need To Monitor

Down below are the top 10 metrics used to measure supply chain perfomance.

1. Inventory Turnover

Inventory turnover is a fundamental metric you should keep tabs on. 

To calculate it, you divide the Cost of Goods Sold by the average inventory.

2. Demand Forecasting

Demand forecasting is all about predicting and keeping a check on how much demand you expect for your products. 

3. Lead Time

Wouldn’t you as a customer want to know how quickly you’ll receive a product when you order it?

4. Outsourcing Confidence

Outsourcing involves handing over some or all of a company’s production tasks to a vendor. 

5. Order Fill Rate

Your order fill rate basically shows you how many customer orders you can ship right away from what you already have in stock. 

To figure out your order fill rate, just use this formula:

Total Number of Customer Orders Shipped / Number of Customer Orders Filled x 100

6. Perfect Order Rate

The perfect order rate shows you the percentage of orders that go out without any mistakes. 

7. Backorders

Backorders are those orders that cannot be filled when the customer places one.

To calculate this use this formula:

Number of orders undelivered/ total number of orders x 100

Orders with long waiting hours indicate that something is wrong. You can reduce backorders by using a system to get real-time data on your stock levels to reorder the products before they go out of stock.

8. Inventory Days On Hand

Inventory days on hand is a supply chain metric that shows you how many days, on average, it takes to sell your inventory.

To work it out, you use this formula:

Average Inventory for the Year / Cost of Goods Sold x 365

9. Rate Of Return

The return rate metric indicates how often shipped items are sent back. 

10. Cash-to-Cash Time

The final important supply chain management metric is the cash-to-cash cycle, also referred to as cash conversion. 

This metric reveals the duration between when a company pays suppliers and when it receives payment from customers.

FAQs: 10 Important Metrics Every Business Organisation Should Keep A Track Of

Why do you need to monitor supply chain metrics?

Monitoring supply chain metrics is essential because it helps you understand how efficiently your supply chain is operating. By tracking key metrics, you can identify areas for improvement, optimize processes, and ensure timely delivery of goods to customers. Ultimately, this leads to improved customer satisfaction, reduced costs, and a competitive edge in the market.

What are the benefits of tracking supply chain metrics?

Tracking supply chain metrics offers several benefits. Firstly, it provides valuable insights into the performance of various supply chain processes, allowing you to identify strengths and weaknesses. Secondly, it helps in making data-driven decisions for process optimization and resource allocation. 

Which supply chain metrics should you focus on?

Some common metrics to consider include inventory turnover, order fill rate, on-time delivery performance, and perfect order rate. These metrics provide visibility into different aspects of your supply chain, such as inventory management, customer service, and overall performance. By selecting relevant metrics, you can effectively monitor critical areas and drive continuous improvement.


Keeping an eye on how well your supply chain works is super important for keeping customers happy and staying ahead in the market. 

But watching too many numbers can get overwhelming, so focus on the ones that affect your profits. If you’re short on time or resources to keep track of all this, team up with a third-party logistics provider. They have the tools and know-how to help you keep an eye on your supply chain performance and make things run smoother. 
You can also check out the list of services provided by Qodenext to learn more and enjoy great logistics support.

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