The logistics and shipping industry will see a sharp increase in revenue in the next few years. The global logistics and shipping market is expected to grow by as much as 4.7% by 2024.
This is excellent news for those involved in this industry, as the pandemic had a reasonably mixed impact on shipping companies. This is quite the boost, and business owners interested in the logistics and shipping industry are now presented with an excellent opportunity to grow their businesses.
Of course, the core of growing one’s business comes down to transparency and performance. One can gain this transparency and insights by tracking their logistics business’s metrics. However, not all metrics are worth looking into, while others are incredibly valuable.
This quick guide will look into our six top hospitality metrics that provide top-notch visibility into logistics and shipping businesses.
Top 6 KPIs and Metrics You Should Be Monitoring in Logistics and Shipping (and Why)
Cash to Cash Time Cycle
This supply chain metric makes it possible to calculate to total timeframe needed to turn resources into revenue flows. This metric uses days of inventory, days of payables, and days of receivables to effectively visualize the required period between supplier payments and customer cash payments. The goal is to shorten this conversion cycle as much as possible.
Ideal Order Rate
This supply chain KPI is critical for businesses that cover a wide range of industries or sectors. The ideal or perfect order rate is designed to measure the overall success of your business’s ability to deliver the product without incident, which can prevent errors, damage, delays, and potential losses in inventory. The goal is to have the highest ideal order rate possible.
Inventory Turnover in Logistics and Shipping
In today’s supply chain, this has to be one of the best KPIs that one could use to focus on logistics. Inventory turnover helps an organization understand the total number of times that its whole inventory has been sold during a certain amount of time.
This can indicate how efficient your production planning is, how well your process strategies are working, and your actual fulfillment capabilities. This metric can also provide insight into the success of your business’s marketing and sales endeavors.
Calculate your on-time shipping rate and compare it to that of your competitors to generate a crystal-clear management reporting practice.
Gross Margin Return On Investment
Gross Margin Return On Investment, or GMROI, is a standard metric used across multiple industries. For the logistics and shipping industry, this KPI makes it easy to see how many commercial activities your business is taking on and whether or not you are getting back what you are investing into your company.
A GMROI can provide a clear view of your gross profit for every dollar of the average investment in your company’s inventory. Calculate this metric by dividing your gross profit by the total average inventory investment.
We recommend running this KPI once per month at a minimum to see which of your items are simply not performing well and which items deserve more of an investment.
Days Sales Outstanding
Days Sales Outstanding, or DSO, is a supply chain KPI that measures how quickly your business can generate revenue from your customers and clients. This metric aims to get the lowest (or healthiest) DSO possible.
The lower this number, the fewer days it takes to collect your payments from your customers’ accounts receivable. On the other hand, a high DSO might reveal that a business is selling products to customers via credit, and it will take a lot longer to collect revenue.
This, unfortunately, can seriously minimize cash flow and overall revenue in the long term. We recommend calculating this metric as often as possible so that you can collect your cash quickly and more efficiently to benefit your bottom line.
Freight Bill Accuracy in Logistics and Shipping
The process of shipping and then freighting your product (either from supplier to the warehouse or the warehouse to the customer) is essential to your operation’s success. Any problem during this timeline can waste resources and investments. By measuring your billing accuracy, you’ll be able to improve your business’s profitability and overall customer satisfaction.
How DashboardFox Can Help in Logistics and Shipping
Whatever industry we are in, metrics and KPIs are still crucial as they determine where we are going on the grand scale of things and whether we are hitting our goals or need to do something about our company’s performance.
However, if you’re planning to count on your Microsoft Excel and PowerPoint skills in tracking the KPIs and metrics of your logistics and shipping company, then you’re doing it wrong.
That’s why DashboardFox is here to offer you help in monitoring the six KPIs and metrics we have mentioned in the logistics and shipping business that you have.
DashboardFox is designed to help you create and manage data visualization offerings, such as interactive dashboards, graphs, and even maps, to help you monitor the specific KPIs you need to measure your company’s development and progress.
Anyone can use DashboardFox, even those without any extensive IT or computer programming background.
DashboardFox is designed to make the business flow smoother and more systematic to ensure growth and progress, thanks to its no-code building environment.
Apart from that, they also offer a sensible one-payment scheme (no subscriptions needed) and a dedicated staff to help you with your concerns at your beck and call. With its self-hosted setup, you don’t have to worry about exposing your data to those who don’t need to see it. Your data’s security is also our priority.
We are just one meeting away if you have any other questions. Better yet, please take advantage of our free live demo session to see what we can do to revolutionize your business further. We’ll be waiting!
What do you think of these top key metrics for logistics and shipping businesses? Let us know what you think in the comments below.