7 Essential Logistics KPIs Your Company Should be Tracking

In retail, business performance and customer satisfaction hinge on efficient logistics. From accurate deliveries to effective inventory management, even the slightest error in the supply chain can lead to lost sales and unhappy customers. That’s why tracking the proper logistics KPIs is critical for your business to remain competitive.

Whether you're focused on reducing shipping costs, boosting delivery speed, or improving order accuracy, the following retail KPIs and delivery performance metrics can help you monitor, measure, and optimize your logistics strategy.

What Are Key Performance Indicators?

Logistics KPIs are quantifiable metrics that measure the effectiveness of logistics operations. Using these indicators will help you to evaluate everything from inventory KPIs to last-mile delivery KPIs in your retail business, giving you a clear picture of operational performance and customer satisfaction.

If you’d like to improve your familiarity with measuring and monitoring logistics performance, the following seven essential logistics KPIs are ideal for getting started.

Along with their outlines, we’re also providing some additional detail on how each of them impacts your business.

1. Perfect Order Rate

Perfect Order Rate: What it Measures

The Perfect Order KPI captures how often an order is completed without any issues—delivered on time, in full, without damage, and with accurate documentation.

Perfect Order Rate: Why it Matters

The perfect order rate in retail is a powerful composite KPI. It evaluates multiple aspects of the supply chain simultaneously, including on-time delivery, picking accuracy, and packaging quality. A low perfect order rate signals gaps in coordination between departments like warehousing, shipping, and inventory control.

How to Improve Perfect Order Rate

• Integrate order management and warehouse systems.
• Train fulfillment teams on quality control.
• Automate labeling and documentation processes.

2. Return Rate

Return Rate: What it Measures

The Return Rate KPI measures the percentage of orders returned by customers after delivery.

Return Rate: Why it Matters

A high return rate increases reverse logistics costs and reduces net sales. It may also signal product, fulfillment, delivery, or service issues—such as misleading descriptions, quality problems, or incorrect shipments.

How to Improve Return Rate

• Provide detailed product descriptions and images.
• Offer sizing guides or customer reviews.
• Enhance picking and packing accuracy to reduce fulfillment errors.

3. Cost per Order Shipped

Cost per Order Shipped: What it Measures

This shipping KPI calculates the average expense to ship each customer order, including packaging, carrier charges, fuel, and labor. It is calculated by dividing the total logistics and shipping costs by the number of orders shipped.

Cost per Order Shipped: Why it Matters

Shipping is one of the biggest expenses in retail. Monitoring this cost helps you uncover inefficiencies and improve your profit margins.

How to Improve Cost per Order Shipped

• Negotiate bulk shipping discounts with carriers.
• Optimize packaging size and weight.
• Offer incentives for slower, but cheaper, shipping options.

4. Inventory Turnover

Inventory Turnover: What it Measures

This inventory KPI indicates how frequently your stock is sold and replenished over a specific timeframe—usually monthly or annually.

Inventory Turnover: Why it Matters

A high turnover rate suggests efficient inventory management and strong product demand. A low rate could indicate overstocking, poor sales, or outdated inventory that ties up capital and storage space.

How to Improve Inventory Turnover

• Use demand forecasting tools.
• Run clearance promotions for aging inventory.
• Implement just-in-time (JIT) inventory strategies.

5. Warehouse Picking Accuracy

Warehouse Picking Accuracy: What it Measures

The Warehouse Picking Accuracy KPI measures the percentage of items picked correctly during order fulfillment, based on order specifications.

Warehouse Picking Accuracy: Why it Matters

This logistics KPI directly influences the perfect order rate in retail and customer satisfaction. Incorrect picks cause delays, increase return rates, and inflate labor costs.

How to Improve Warehouse Picking Accuracy

• Implement barcode scanning and warehouse management systems.
• Use voice-directed picking for efficiency.
• Conduct regular training and audits for warehouse staff.

6. Order Cycle Time

Order Cycle Time: What it Measures

The Order Cycle Time KPI tracks the average time taken from when an order is placed to when the ordered items are delivered.

Order Cycle Time: Why it Matters

Order cycle time is a vital last-mile delivery KPI in retail, especially with the growing demand for fast, predictable shipping. Long cycle times can hurt customer experience and lead to abandoned carts.

How to Improve Order Cycle Time

• Streamline order processing with automation.
• Use distributed fulfillment centers.
• Partner with fast, reliable couriers, such as Shipa Delivery.

7. Stockout Rate

Stockout Rate: What it Measures

The Stockout Rate KPI is used to monitor the frequency at which a product is unavailable when customers attempt to purchase it.

Stockout Rate: Why it Matters

This critical inventory KPI can highlight forecasting or supply chain issues. Stockouts hurt customer loyalty and lead to lost sales—especially when shoppers turn to competitors for similar items.

How to Improve Stockout Rates

• Invest in demand forecasting software.
• Set safety stock thresholds.
• Sync real-time inventory data across all sales channels.

Why Tracking KPIs Matters

The retail world is becoming more complex and, in many cases, aggressive, by the day. That’s why tracking the proper logistics KPIs, retail KPIs, and delivery performance metrics is essential if you want to remain competitive.

By focusing on metrics like perfect order rate, inventory turnover, order cycle time, and shipping cost per order, you can improve your enterprise’s operational visibility, reduce costs, and build long-lasting customer relationships.

These essential logistics KPIs for retailers aren’t just numbers—they're insights that drive action. Use them to identify bottlenecks, optimize performance, and make data-driven decisions that support growth and profitability.

Our experts are experienced in helping businesses track KPIs and identify weaknesses in their retail logistics operations. Contact a team member to see how you can significantly improve your business operations.