3PL Warehouse KPIs Fundamentals


Supply chains are crucial to the operation of any retail or commercial business. No matter what field you may be in, a disruption in supply can lead to a disruption of service for the end consumer. When that happens, businesses lose money or can fail completely. Working with a reliable 3PL will reduce hiccups and bring stronger security to your supply chain. It’s important to monitor your 3PL Warehouse KPIs to make sure that your business needs are being met or find areas for improvement.

3PL Warehouse KPIs Fundamentals

KPI’s let you know how effective your chosen 3PL is doing and if you need to make changes or even find a new provider.

What Are 3PL Warehouse KPIs?

When you hire a 3PL, you are giving them the keys to your supply chain warehousing and distribution components. Naturally, you are trusting them to apply their expertise and perform that the highest levels so you can focus on other aspects of your business. KPI’s are metrics that let you know just how well your 3PL servicer is doing in regard to your supply chain and management.

3PL Warehouse Fundamentals

Understanding the metrics and fundamentals will help you better understand how your 3PL is performing. Most companies target a 95-100% range for order picking accuracy, on-time shipments, ready to shop, inventory count accuracy, fill rates, and order fill rates. They also target an 80-95% warehouse capacity with a workforce turnover of 15% or less. Of course, these are basic numbers used across the industry in the logistic space, it is important to check KPIs that are fundamental to the operation of your business. Establishing these numbers at the start of your contract will prevent complications down the road and also let your 3PL know what you expect from their services.

3PL KPIs Activity

When your 3PL KPIs show that your needs are being met on a regular basis, then you won’t need to change much. If those numbers show that your targets are being exceeded over a period of weeks, or even months, you can consider increasing your load with your particular 3PL. Most 3PL providers are always on the lookout for ways to improve their services and optimize their operations.

On the other hand, KPIs will also show you when your 3PL is not performing up to your expectations. This will allow you to find out the cause of the missed targets and seek correction. If measures are not taken to meet the targets, then you will need to change your 3PL in order to maintain a stable supply chain for your business.

Keep in mind the poor KPIs can be a result of an underperforming 3PL, or it may be a problem with someone else in the chain. For example, if your 3PL is tasked with delivering a specific item to a plant by a certain time but are continually late due to last-minute add on’s at the manufacturer, the KPIs are both right and wrong. You will need to look at each metric to determine the cause of the low numbers and decide if they are acceptable to your business margins. For example, if the last-minute add-on items are rare supplies that are back-ordered, then it is beneficial for your delivery to be slightly late in order to gain much-needed materials that are usually in short supply.

The Fundamentals of Warehouse KPIs

Measuring the performance of your 3PL warehouse operations will allow you to improve in some places and make changes in others. Tracking allows you to make your supply chain more efficient while also mitigating loss in terms of time, assets, manpower, and consumables. Metrics may seem confusing at first, but when you break them down into manageable parts, understanding 3PL KPIs is relatively simple.

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