KPI of the Day – Logistics: % Orders delivered with damaged products
Definition
Measures the rate at which the orders delivered contain damaged products or items.
Purpose
To assess the transportation service quality. A high level of orders delivered with damaged products indicates a low-quality transportation service.
Recommendations
This is a very useful KPI for tracking delivery system quality. Clumsy product handling, inadequate packaging, poor driving, and inappropriate handling equipment are common causes of high damage rates. Whether products are suitable for transportation is also relevant.
Logistics and distribution costs are frequently increased by damage, loss, and claims. Moreover, these downfalls in the logistics and distribution process can also lead to a gap between the business owner and the shipping partners.
In order to minimize risks associated with damaged deliveries, strong partnerships are demanded of both the supplier and the provider of the transportation means. When all parties in the supply chain are working together, the process of packaging, shipping, and receiving merchandise ensures that this is delivered on time, on budget, and in proper conditions.
Products, in general, suffer damages for two different reasons: either they are incorrectly packed for the method of transit, or the product packaging couldn’t make it through the way it was manipulated during the transit.
In order to optimize logistics and distribution operations so as to minimize damage, some recommendations include the following:
- Assessing the product to be shipped;
- Evaluating available packaging options;
- Finding the best fit, in terms of function and cost;
- Creating a sustainable delivery plan for the product, to minimize the shipping damages.
It is important to understand that in general, most loads will shift to some degree due to the various movements that occur inside a trailer, railcar, or intermodal container. The importance and need for proper load securement methods will prevent damage and potential injuries that come with handling the merchandise.
A high percentage of damaged products shows low service quality in delivering products. If this occurs, procedures should be set in order to minimize future occurrences and deal with customer complaints.
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Tags: KPI, Logistics performance
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