25 Supply Chain Metrics to Measure (With Formulas) - Skills To Get Ahead In Your Career

Companies use a variety of metrics and key performance indicators (KPIs) to help improve their organization. Managers, business analysts and other professionals use different supply chain metrics to monitor and improve their company’s logistics, transportation, production and order fulfillment processes. Learning about different supply chain metrics can help you determine which metrics to measure and analyze for your organization. In this article, we discuss what supply chain metrics are and list 25 different metrics to consider for your organization.

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What are supply chain metrics?

Supply chain metrics are ratios, reports or other metrics that help a company understand the performance of its supply chain. Many companies review a variety of supply chain metrics to identify improvement opportunities or increase customer satisfaction. You can categorize these metrics into different sections, such as:

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Inventory metrics
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Order fulfillment metrics
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Logistics metrics
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Supplier metrics
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Quality metrics

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Inventory metrics

Order fulfillment metrics

Logistics metrics

Supplier metrics

Quality metrics

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25 supply chain metrics

Here are 25 supply chain metrics you can consider measuring for your organization:

1. Inventory turnover

This metric can help you understand how fast your organization is selling its entire inventory. The ideal ratio varies between industries, so it’s a good idea to research your industry’s average. To calculate inventory turnover, you can use this formula:

Inventory turnover ratio = cost of goods sold in period / [(opening stock in period-closing stock in period) / 2]

2. Perfect order index

The perfect order index can help you understand the number of error-free deliveries in your organization. Having a higher percentage often indicates that your organization has a high number of error-free deliveries, which can improve customer satisfaction. The formula used to calculate this metric is:

Perfect order = [(total orders – errors) / total orders] x 100

3. Freight bill accuracy

This metric measures how accurately your organization bills freight costs from suppliers, warehouses and vendors. Accurately billing these entities can help foster strong professional relationships and improve the correctness of other financial statements. To calculate this metric, you can use this formula:

Freight bill accuracy = (error-free freight bills / total freight bills) x 100

4. Cash-to-cash time

Cash-to-cash time refers to the length of time it takes to convert materials or supplies into cash flows for your organization. This metric analyzes three ratios to determine how long it takes from paying vendors to receiving cash flows from final customers. The ratios used in this metric include:

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Days of inventory (DOI)
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Day of payables (DOP)
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Days of receivables (DOR)

Days of inventory (DOI)

Day of payables (DOP)

Days of receivables (DOR)

5. Days sales outstanding (DSO)

Analyzing this metric can help your organization better understand how long it takes to collect or generate revenue from its customers. Having a smaller DSO level reflects that your organization collects its revenue faster. This can improve company cash flows and increase profits for your organization.

6. Supply chain cycle time

Supply chain cycle time refers to how long it might take to fulfill a customer order if all inventory levels were at zero. This can help your company better understand the efficiency of its supply, production and logistics chains. To calculate this metric, you can collect the longest lead time for each stage in your company’s supply chain cycle. Once you’ve collected all these lead times, you can add them together to find the total cycle time. A shorter cycle time means that your company’s processes are flexible, agile and adaptable.

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7. Fill rate

This rate can help you understand the percentage of customer orders that the company completes during the first shipment to the customer. Reviewing this metric regularly can help you quickly identify improvement areas that can improve customer satisfaction and enhance your organization’s reputation. Some items you might measure to understand your company’s fill rate include:

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Orders delivered
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Lines delivered
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Individual items delivered

Orders delivered

Lines delivered

Individual items delivered

8. Gross margin return on investment (GMROI)

This metric helps a company better understand its return on investment (ROI) for each product or service. Analyzing this metric regularly can help you discover the gross profit made on each inventory investment for your company. To calculate this metric, you can use this formula:

GMROI = gross profit / average inventory investment

9. Warehousing costs

Reviewing warehousing costs can help supply chain managers and other professionals learn how warehousing costs affect the organization’s profitability. Researching the costs associated with different warehousing companies can help an organization decide which warehousing company aligns with supply chain budget constraints. Some costs that contribute to warehousing costs include:

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Labor costs
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Warehouse rent
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Utility bills
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Equipment costs
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Information systems

Labor costs

Warehouse rent

Utility bills

Equipment costs

Information systems

10. Service rate

This rate can help you learn about the percentage of orders your company delivers on time. Improving this metric can increase customer satisfaction and optimize delivery costs. The formula for this rate is:

Service rate = product orders delivered on time / product orders received

11. Supply chain costs

Calculating your total supply chain costs can help you learn how these costs affect your business’ profits. Analyzing these costs regularly can help you quickly identify areas for improvement that relate to expenditures. Some supply chain costs to collect and add together include:

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Supply chain planning
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Management costs
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Material sourcing
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Delivery expenses
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Transportation costs

Supply chain planning

Management costs

Material sourcing

Delivery expenses

Transportation costs

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12. Supply chain costs vs. sales

Comparing supply chain costs against sales can help you learn how these expenses relate to your organization’s sales operations. This can help you conduct an expense analysis and provide inspiration for reducing costs in your organization. To calculate this ratio, you can follow this formula:

Supply chain costs vs. sales = (total supply chain costs / total sales) x 100

13. On-time shipping

This metric can help you understand more about the efficiency of your company’s current order fulfillment system. This can also help you discover trends about certain products or customers. The formula used to calculate this metric is:

On-time shipping = [(total orders – orders shipped on time) / total orders] x 100

14. Customer order cycle time

The customer order cycle time metric helps compare a customer’s order placement date with the actual delivery date. This can help you closely analyze your order fulfillment and delivery system. To calculate the cycle time, you can use this formula:

Customer order cycle time = actual delivery date – purchase order creation date

15. Delivery time

This metric focuses on the actual time to ship a finished product from your company to the final customer. Analyzing delivery timelines can also enable you to inform potential customers about delivery timelines, which can improve their experience with your organization. To determine this metric, you can use this calculation:

Delivery time = date of delivery – date of order shipment

16. Return reason

If your organization experiences order returns, it’s a good idea to understand the motivation for these returns. This can help your company identify improvement opportunities within your production processes and supply chain. Actively improving these areas can help your company improve profits, enhance customer experiences and increase your organization’s reputation.

17. Damage-free delivery

Analyzing the number of damaged deliveries that customers report can help your company make decisions regarding transportation procedures. Some companies use this rate to determine packaging procedures and help them decide if they want to use a particular logistics or transportation company. To determine this rate, you can use this formula:

Damage-free delivery = [(total orders – orders that arrive damaged) / total orders] x 100

18. Inventory to sales ratio

Monitoring your company’s inventory to sales ratio can help your organization optimize its inventory and stocking levels to align with sales expectations. This can help your organization prepare for unexpected situations, improve its inventory turnover rates and change existing sales or inventory strategies. To determine this ratio, you can use this calculation:

Inventory to sales ratio: inventory for sales / net sales

19. Inventory velocity (IV)

Inventory velocity is another metric that can help a company efficiently manage its inventory. This can help a company meet customer demands and improve inventory turnover rates. The formula for this metric is:

Inventory velocity = (opening inventory for a period / sales forecast) x100

20. Inventory days of supply

This metric is useful for understanding how many more days your company can produce products with its current supply. Reviewing this metric can help procurement professionals identify when to order additional supplies for your organization. To discover this metric, you can use this formula:

Inventory days of supply = (average value of inventory at standard cost / annual cost of goods sold) / 365

21. Turn-earn index (TEI)

This index helps a company evaluate its profits and effective use of inventory. This can help a company balance its inventory turnover ratio with its profits, which can optimize customer experiences while enabling the company to remain profitable. The calculation for this index is:

Turn-earn index = (inventory turnover ratio x gross profit percentage) x 100

22. Pick and pack cycle time

This cycle time can help you understand the time it takes to source and package all products for a shipment. Analyzing this cycle time can help you identify improvement opportunities with your warehouse storage and order fulfillment processes. To find the cycle time for a single order, you can use this calculation:

Pick and pack cycle time = time of order completion – start time for order fulfillment

23. Delivered on time and in full (OTIF)

The metric combines on-time delivery measurements with in-full deliveries. Improving this metric can help improve overall customer satisfaction and help promote a positive brand reputation. To determine this percentage, you can use this formula:

OTIF = (on-time delivery percentage + in-full delivery percentage) / 2

24. Freight cost per unit

This metric can help you understand how you can optimize shipping costs for your organization’s products. Reviewing this metric can help you identify freight expense trends and provide support for negotiating freight company contracts. To determine this metric, you can use this calculation:

Freight cost per unit = overall freight cost / number of units shipped

25. Use of packing material

Understanding how much packing material your company uses can help reduce packing waste and optimize packing material expenses. This can also help your organization develop picking and packing processes that can improve order fulfillment metrics. You can determine this metric by analyzing and setting a packing material goal for your organization. This enables you to compare the use of packing materials with this goal, which can help you identify improvement opportunities with your company’s packing processes.