Supply chain professionals know key performance indicators (KPIs) are vital to reaching strategic and tactical objectives. Issues are identified, improvements are made and goals are more likely to be met. Use the following metrics to build a resilient, sustainable and digitally mature supply chain in 2026 and beyond.
1. On-time supply is the difference between orders delivered on time and delivered late, divided by the number of total orders. Tracking this KPI helps you understand whether or not a supplier is reliable.
2. If you aren’t tracking your suppliers’ ability to deliver materials on time, on-time delivery — calculated by shipments delivered on time versus late — may indicate a need to do so. It also can identify possible issues in customer logistics. For many, this is the most important KPI because it speaks to customer satisfaction and can directly affect the bottom line.
3. Downtime in proportion to operating time is the ratio between the time production and supply chain lines are stopped and the time they operate. It is a direct indicator of asset availability for production: The lower the number, the more efficiently your manufacturing equipment is being used. A ratio of 0.5 means production lines were stopped half of the time.
4. Productivity in revenue per employee shows areas with the least and greatest return on investment and can be examined on several levels: company, department and even production line. Find this number by dividing all generated revenue by the number of employees.
5. Incoming material quality is the amount of time or money spent repairing a product because of the quality of materials used. This can be examined by supplier, by product category or as a percentage of faulty materials versus good materials.
6. Extra inventory ties up valuable financial and real estate resources, as you want to use your space for production, not for storing extra materials and components. Inventory turnover control is calculated by the number of days materials haven’t moved from warehouse storage to production. The higher the turnover rate, the more efficiently your supply chain is built. The number varies by industry and manufacturer-specific needs, but, as the general rule, turnover should be 30 days or less.
7. Our global supply chains continue to face unprecedented volatility, from geopolitical tensions to climate change. Time to recover (TTR) is an essential KPI because it directly measures a company's agility and ability to minimize the impact of disruption. A shorter TTR translates to reduced downtime, faster restoration of customer service and minimized financial losses, providing a significant competitive advantage in an unpredictable environment.
8. While the original on-time delivery KPI hints at customer experience, customer order cycle time provides more direct and critical insight. This KPI measures the average duration from the moment a customer places an order to the moment they receive it. Encompassing order processing, fulfillment and final delivery, a shorter cycle time is increasingly a key competitive advantage in today's fast-paced, e-commerce-driven market.
9. End-to-end visibility provides the foundational awareness needed for proactive risk management and informed decision-making. Knowing where goods are, their condition and potential bottlenecks in real-time enables organizations to anticipate problems, optimize flow and respond swiftly to deviations, ultimately leading to improved efficiency, reduced costs, and enhanced customer satisfaction.
10. A clear indicator of future competitiveness, the level of digital supply chain maturity highlights the value of technology adoption and integration. A single metric may be insufficient, so begin by assessing the percentage of processes automated, the Integration of digital tools, and the data utilization rate. These KPIs provide necessary insights into a supply chain's digital transformation journey.
Tracking performance with KPIs can be the difference between success and failure. Keep in mind that supply chain metrics by themselves can’t solve ongoing issues; they are roadmaps and compasses, showing whether an operation is moving in the right direction. Moreover, identifying a problem and its cause is just the first step; supply chain excellence requires a continuous investment of expert management and workforce training and education.
Editor's note: This article has been updated to reflect the current global supply chain landscape. It was originally published July 1, 2020.
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