Transform Your Logistics Operations with Our Service Invoice Format for Logistics

Service invoice format for Logistics

hi and welcome to supply chain secrets the topic this week is KPIs and specifically customer service measures because so many people get baffled with KPIs and particularly around customer service I'm going to show you this week what I reckon is one of the best KPIs you could possibly have for supply chain and logistics coming right up okay so a lot of people get really tied up in knots when it comes to KPIs key performance indicators in supply chain and logistics operations and they either measure the wrong things or they measure too many in fact I think following this video I'll do another one on kpi's but this week I want to talk about what I think is one of the best KPI is ever and it's called the probability of a perfect order and you'll see as I unders why it's such a good KPI so if I said to you what key performance indicators do you use in supply chain logistics and I asked people this at every single event that I talk at they all come up or 90% of them come up with one particular KPI and that is dye fought delivered in full on time and that's really a very important KPI but most people measure it the wrong way and that's why I'm gonna show you today the ultimate measure now I'm going to click forward on a slide here so excuse me but this sort of goes in a little bit of a sequence and we'll run that sequence and behind me as well so we call this the probability of a perfect order and you'll see why in a second and this is some numbers actually from a live case study a little while back so one of the first things that I think you should be measuring is actually your order entry accuracy so think about this for a moment are you taking phone orders and you're taking you know EDI orders automatic you know web orders some people still take phone orders I've met some businesses who still take fax orders but however those orders are coming in are they being entered into your systems accurately so in this organization they were getting that 90% 98% accurate so think about that just for a moment because what that actually means is they were getting 2% errors right up front so they were getting keying errors or you know translation errors or whatever they were getting 2% of the orders wrong up front and that's not uncommon obviously these days with you know online systems are so on can reduce that error a lot so that's the first thing to measure and the next one we've got is inventory availability and this one doesn't get measured enough to be honest so what do I mean by this okay so we've got the customers order into the system but do we actually have the stock to fulfill that order and in this case 20% of the time that they didn't so you can see we're already behind the eight ball trying to look after our customers because 20% of the time we didn't even have the stock available so that's an absolutely crucial component to measure then we come to the warehouse default service level so this is the ability of the warehouse to actually have the product picked packed ready for dispatch all accurate ready for sending out to the customer and in this case they were getting 90% okay so here we've got you know 10% errors still creeping in so maybe you can start to think of some of the things that you would do to correct this then we have the one that everybody seems to measure which is the carrier the transport companies delivery in full on time and this is ninety-eight percent in this example and look that sounds pretty good and most people would quote numbers like that but look at some of the earlier numbers and I'll show you the consequences of this in a moment then we have the customer accepting the order so the product wasn't damaged it was what they ordered the paperwork is right and so on so in 95% of the cases here their customer was accepting that and then to close the loop it's really nice to measure the payments of the accurate invoice was paid on time and here that was in ninety-eight percent of cases so having said that the most common KPI is dye fault which in this case this is the carriers delivery in full on time this one's 98% that's the thing that most people measure but you've got to measure the other stuff and not only have you got to measure the other stuff but to get an accurate reflection of your performance you actually have to multiply them all out and let's have a look at what that means so we're taking the 98% times eight times 80 percent times 90 percent times 98 percent and so on so if we multiply them all out because they all impact each other we can see the probability of getting that order perfect is only 64 percent so if you have numbers like this in your business and you might be looking at die for and it's 98 percent you think hey we're doing pretty well you're not because if you you know the the probability of you getting a perfect order is not 98 percent that was 98 percent of the stuff that was keyed in correctly that was available that was packed correctly it's only a small piece of the puzzle so in this case 64 percent was the probability of a perfect order so you can imagine what the CEO said in this example what do you think what should it be what's the average in our industry a very good question and in this case parity or Average was 68 percent it's still not that great so if you've done a lot of work with senior executives and CEOs what do you think would be the next question the CEO would be asking the supply chain manager all right if that's the average what's best in class and in this case in this industry it was 93 percent a lot better so have a think about that for a moment now what would you tackle if these were your numbers what would you look at first to try and lift that 64 percent closer towards 93 percent I mean there's one that just stands right out doesn't it it's the inventory availability and that's exactly what this company did they focused on improving the inventory as long as along with all the other things because they they focused on that one because that's going to have the biggest impact in lifting the overall measure so you can see the beauty of a measure like this there's a number of things we're looking at all the key functions that actually lead to servicing our customer which is really important not just die fast it's also cross-functional which is great so we've got customer service we've got supply chain we've got the warehousing about the inventory people we've even got finance we're processing invoices and what you get is collaboration across the and functions all working together to try and improve on this number which is awesome now just to tell you what actually happened with this company so they started off with 64% probability of a perfect order I think they got to 68 percent in about nine months and it was a two-year program for them but they then got to this advantage or best-in-class number ninety three percent within two years and this KPI was the thing that gave them the focus it gave them that that cooperation and collaboration across functions to try and improve the number so that's why I'll absolutely love this KPI okay so I'll let a link below because I think I've got some explanations to this as well on our blog but if you've got any questions on this KPI or other kpi's do comment below I'd love to hear your questions and certainly I'll get around to answering those and I'll do another KPI video coming up as well because a lot of people get confused about how many KPIs to have and what type of KPIs to have for different levels of the organization so there we go the probability of the perfect order probably one of the best KPI is going in supply chain if you enjoyed this video you know how it works I do like to comment to share if you're not already subscribed to the channel please do subscribe because we have new videos coming out every week generally on a Wednesday and I think there's a bell button just next to the subscribe if you hit that you'll be notified as soon as we publish a new video so there we go kpi's demystified and a great KPI for you to use in your own business see you next week [Music]