Key Performance Indicator (KPI)

A Key Performance Indicator (KPI) is a quantifiable measure used to track how well an organisation, process or supplier is performing against its objectives. KPIs turn goals into specific, measurable numbers that can be monitored over time, compared against targets or benchmarks, and used to drive improvement — the practical expression of “what gets measured gets managed.”

In logistics and supply chain, common KPIs include on-time delivery, order accuracy, order-cycle time, inventory turnover, fill rate, perfect order rate, transport cost per unit, and dock-to-stock time; in procurement, cost savings, spend under management, supplier on-time and quality performance, and purchase-order cycle time. Effective KPIs are relevant, measurable and tied to objectives, and are often gathered into dashboards and scorecards (including supplier scorecards and SLA reporting). Well-chosen KPIs give visibility, focus effort, hold suppliers and teams accountable, and reveal trends and problems early — making them fundamental to managing performance across operations, procurement and the supply chain.