Every industry has specific KPIs, or key performance indicators, that should be constantly monitored to make sure the business is tracking to plan. For
1. Inventory value and carrying cost
Inventory management is always top priority for distribution companies. Keeping your inventory investment low is important, even when demand increases. The ability to accurately forecast and predict customer demand is essential to managing inventory and anticipating production needs. An ERP system that includes powerful forecasting tools will allow you to see the whole picture. An ERP solution like
2. Sales order fill rates
Do you currently track how long it takes for an order to be completed? When you tell a customer that a certain item will be delivered by a certain date, are you able to keep your promise?
3. Vendor performance
It’s essential for distribution companies to accurately score and report on a vendor’s performance. Are your vendors meeting your expectations? Do they meet the level of quality that your customers have come to expect? It’s important to evaluate and make sure vendors are meeting your needs and working efficiently. Even for distributors who feel their vendors are producing top quality product and shipping goods on time, it’s important to track this data and provide regular feedback to vendors, both positive and negative.
4. Lost Sales
After sending a potential customer a quote, do you keep track of why they decided not to purchase from you? Several factors need to be considered, including price, availability and responsiveness. With an integrated
5. Returns due to improper shipments and defective items
Do you have metrics around items that have been returned because of shipping mistakes or defects? Even if you have a Warehouse Management System (WMS) to track them, a powerful ERP or CRM solution will provide more insight into what’s working and what isn’t. By integrating disparate systems, these solutions can provide real-time dashboards with drill-down capabilities, allowing you to pinpoint the problem areas and fix them.
If you are a distributor or a company that operates on a distribution business model, it’s crucial to measure these KPIs to make sure you are tracking to business goals. With many businesses struggling to keep costs low and do more with less, distributors are often asked to provide customers with even more services than before. Having an ERP and CRM solution that is aligned with business goals will help you work more efficiently and ‘do more with less’ - resulting in increased business agility and greater revenues.