The drive to offer same‑day delivery has turned logistics into a true success factor. Customers no longer just expect the product; they demand full transparency at every stage. They want to know exactly how many minutes pass between the order confirmation and the moment the goods are loaded on the truck, what percentage of consignments leave on time and how often damage or picking errors occur. All of this can now be quantified through key performance indicators (KPIs), enabling businesses to spot trends sooner, fine‑tune operational planning and assess warehouse efficiency and quality with rigour. Delivery time is a typical performance KPI, while package integrity serves as a direct measure of quality.
Choosing which KPIs deserve priority is up to the contracting company. In a B2C environment, where speed is critical, the focus naturally falls on warehouse agility and on‑time delivery. When the goods in question are especially sensitive—pharmaceuticals, hazardous materials or chemical agents—quality indicators carry even more weight.
Absolute and relative KPIs
In logistics, a KPI can be expressed as an absolute or a relative value.
- Absolute KPIs are standalone figures that do not depend on other variables—for instance, the time a product spends in storage or the planned daily volume of dispatches, both indispensable for sizing shifts and resources.
- Relative KPIs set a proportion between two data points: inventory turnover shows how many times the stock is renewed in a given period, while warehouse punctuality measures the share of orders shipped within the agreed window (if 9,800 of 10,000 orders are processed, the success rate is 98 %). Such comparative indicators reveal warehouse productivity, refine cost estimates and ultimately gauge the overall efficiency of the supply chain.
Greater transparency through KPIs
KPIs create value for both the company that outsources logistics and its 3PL partner. Far from being mere operational thermometers, they serve as the reference point for calculating and auditing the agreed service level. Thanks to KPIs, both parties can monitor performance and quality continuously and take corrective action as soon as deviations appear. KPI collection is usually written into the contract and forms the basis for incentive and penalty systems that cement a mutual commitment to operational excellence.
“Defining the relevant KPIs should happen at the tender stage. With clear metrics, both the provider and the client can analyse and improve their relationship continually and detect any weak spots,” explains Sören Moschüring, Field Manager Business Intelligence at Rhenus Warehousing Solutions.
KPIs in Practice
For an online pet‑food manufacturer, dispatch punctuality is critical. Customer Max Schmidt placed a dog‑food order at 22:42. Under the agreed KPI, the package had to leave the warehouse before 18:00 the next day; in reality, it was processed at 14:05—target achieved. Both the manufacturer and the logistics partner can see on a dashboard the order’s entry time, overall punctuality and the exact moment the goods were loaded. KPIs are reviewed weekly to smooth out typical weekend fluctuations.
How can a KPI be met in logistics?
Precise forecasting is necessary to ensure exact compliance with the logistics KPIs. This forecasting supports the short-term and medium-term planning work for capacities based on the expected volumes of orders and deliveries. As a result, the logistics specialist can plan its personnel efficiently and optimise its warehouse costs in the long term. The estimated volume of orders depends on discount campaigns, public holidays or seasonal fluctuations and may change quickly, depending on the market situation. Forecasts covering several weeks, three-month periods or the whole year map peaks, such as an increase in the volume of orders before Christmas. Processes at the outsourcing company and its logistics partner can be improved by interlinking the KPIs and the forecasts.
The two-way relationship between forecasts and KPIs in logistics
The ‘warehouse punctuality for outgoing goods’ KPI for an online trader is based on an average number of incoming orders of 20,000. Thanks to a discount campaign, however, the trader is expecting a significantly higher volume of orders of 40,000 during the next weekend. The forecastgives the service provider an opportunity to increase its numbers of personnel in good time – so that it can meet the set level of warehouse punctuality. Order peaks vary, depending on which sector is involved. Forecasts are therefore always geared towards the individual requirements of the client.
“Instead of aiming for a 100 % perfect solution from day one, it’s smarter to start by meeting the goals for the top three KPIs,” Moschüring advises.
Productivity: fewer KPIs are often more
As KPIs are very helpful when measuring performance, there is a great temptation to track as many figures as possible. But more does not always mean better. If too many performance indicators are considered at the same time, things can quickly become confusing and this can lead to errors and avoidable costs. It is therefore necessary to initially examine the possible logistics KPI to see what benefits it provides and its productivity. “Particularly at the beginning of any working relationship, it’s helpful to find the most informative indicators and determine how they can be collected and assessed,” Sören Moschüring advises.
Three steps for successfully using KPIs:
- The company and the logistics service provider need to draw up a concept: The company and logistics specialist draw up a common approach in a workshop. They analyse which data should be available for assessment. How are these figures calculated, where do they come from and who should make the information available?
- Analysing and improving the basis for the data: The service provider examines to what degree the client’s existing data can be assessed and whether there are any other details missing in order to provide a clear picture. The basis for the data is gradually improved.
- Drawing up a dashboard with the defined KPIs: Both partners then draw up a dashboard and the relevant data is fed into it. The dashboard is gradually prepared in order to guarantee the continual checks on the KPIs. What is important is that the calculation basis for the KPIs must be transparent for both sides.
Conclusion: What makes KPIs so important
When operations are outsourced, KPIs are the most important means of ensuring a successful working relationship between a company and its logistics specialist. They permit transparent planning work, a joint analysis and continual improvements for both partners. KPIs and forecasts go hand in hand in this process. Because the client plans its order volumes in advance, the logistics specialist can adapt its personnel capacity. KPIs can therefore be met if any fluctuations in volumes occur. KPIs in logistics consequently increase satisfaction levels for the client and guarantee a successful outsourcing process.