Supply chain metrics for 3PL transformation

Tracking the right performance supply chain metrics in a 3PL transformation helps measure efficiency, cost savings, and service improvements. These metrics ensure that operational changes deliver tangible value.

Warehouse Performance Supply Chain Metrics

Order Accuracy (%)

Measures the percentage of correctly fulfilled orders.

Order accuracy directly impacts customer satisfaction and brand reputation. In Australia, where consumer protection laws under the Australian Consumer Law (ACL) emphasise the right to receive goods as described, businesses must minimise order errors. Improving this metric involves investing in barcode scanning technology, automating order verification processes, and integrating Warehouse Management Systems (WMS) to reduce manual handling. Regular staff training and setting KPI-linked incentives can also reinforce quality control during the fulfilment process.

Pick and Pack Accuracy (%)

Tracks errors in picking and packing operations.

Mistakes during picking and packing not only lead to returns but may also breach contract terms for B2B clients, especially under supply agreements regulated by Australian Contract Law. Accuracy can be improved by implementing guided picking (voice or RF-based), assigning zone picking to reduce congestion and confusion, and using system-driven pack validation. Creating a pick-pack audit trail helps with accountability and performance feedback. Engaging casual workers during seasonal peaks (under Fair Work Australia guidelines) should be accompanied by process training to avoid error spikes.

Dock-to-Stock Time (hours)

Measures how quickly inbound shipments are processed and available for use.

This metric is essential for maintaining inventory availability and reducing delays in fulfilment. In Australia, supply chain disruptions (such as port delays or quarantine inspections) can already add external delays. Internally, businesses can optimise dock-to-stock time by streamlining receiving processes through pre-receipt ASN (Advanced Shipping Notice) integration, prioritised unloading schedules, and cross-docking where possible. Ensuring all receiving staff are trained in biosecurity and quarantine compliance, especially for imported goods, also minimises inspection delays.

Storage Utilisation (%)

Evaluates how efficiently warehouse space is being used.

Rising warehousing costs in key Australian markets like Sydney and Melbourne mean that every square metre must be used wisely. Businesses can improve this metric through slotting optimisation (placing high-velocity items in prime locations), vertical space utilisation using high-bay racking, and dynamic allocation of space based on demand cycles. Using space-planning software and regularly reviewing SKU velocity can help maximise usage without breaching Work Health and Safety (WHS) spacing standards or forklift operation clearances.

Inventory Accuracy (%)

Compares recorded inventory levels with actual stock on hand.

Under- or overstocking impacts cash flow, order fulfilment, and reporting accuracy. In Australia, accurate inventory records are also essential for GST compliance and end-of-year financial reporting standards (AASB 102). Improvements come from implementing real-time inventory tracking with RFID or barcode systems, enforcing scanning discipline, and setting up regular system-to-physical reconciliation processes. Investing in a good WMS and ensuring clean master data (accurate SKUs, units of measure, and location logic) is foundational.

Cycle Count Effectiveness (%)

Measures the accuracy of periodic inventory checks.

Instead of relying on costly annual stocktakes, many Australian warehouses are moving to perpetual inventory counting, which reduces downtime and maintains better visibility. Effective cycle counting relies on risk-based categorisation—counting high-value or fast-moving SKUs more frequently—and system-driven random audits. Integration with accounting systems ensures compliance with ASIC and audit requirements. Staff should be trained on proper counting protocols and not involved in simultaneous picking to avoid contamination of data.

Orders Processed Per Hour

Assesses warehouse efficiency and throughput.

This throughput metric is a benchmark for labour productivity. In an Australian context, where labour costs are relatively high due to award wages and penalty rates under the Fair Work Act, improving processing speed can significantly enhance profitability. Use of batch or wave picking, process simplification, automation (e.g. sorters, conveyors), and ergonomic workstation design all contribute to throughput. Labour management software can also identify bottlenecks and optimise staff deployment during demand peaks.

Return Rate (%)

Tracks the percentage of returned goods due to errors or defects.

Returns represent hidden costs and potential compliance risks—especially for consumer-facing businesses governed by ACL refund and replacement obligations. To reduce return rates, Australian businesses should enhance quality control at dispatch, ensure accurate product descriptions on eCommerce platforms, and adopt serialisation or image verification systems before shipment. Analysing return reasons also helps identify systemic issues (e.g. incorrect SKU mapping or packaging errors). For B2B, clearly defining quality criteria in supply contracts can mitigate disputes and chargebacks.

Transportation and Logistics Supply Chain Metrics

On-Time Delivery Rate (%)

Measures the percentage of orders delivered within the promised timeframe.

Delivering on time is essential for maintaining customer satisfaction and avoiding contractual penalties, especially under Australia’s strict consumer guarantees within the Australian Consumer Law (ACL). Improving on-time delivery involves coordinating accurately between warehouse dispatch and transport partners, using route optimisation software, and factoring in regional transport infrastructure challenges—such as congestion in Sydney or long distances in regional Australia. Clear communication with customers about delivery windows and proactive alerts for exceptions also improves perception even when issues arise.

Transit Time Variability (days/hours)

Evaluates fluctuations in shipping times.

Inconsistent transit times disrupt planning, inflate buffer stock, and affect customer trust. To reduce variability, Australian businesses should map critical path routes, monitor performance data by lane, and build contingencies for predictable disruptions (e.g., seasonal weather events, public holidays, or port strikes). Leveraging domestic freight corridors and understanding the differences between metro and remote logistics (especially relevant for states like WA and NT) helps optimise carrier selection and service levels. Partnering with carriers that offer real-time tracking and predictive ETA technology also reduces variability.

Freight Cost Per Order ($)

Tracks transportation costs per unit or per order.

With Australia’s vast geography and high fuel costs, managing freight spend is a critical KPI. This metric helps track transport efficiency across SKUs, customers, or zones. To improve it, businesses can optimise freight profiles by consolidating orders, using multi-drop routing, or leveraging zone skipping where possible. Reviewing freight contracts regularly and benchmarking against industry indices can uncover savings. Also, evaluating transport modes (road, rail, sea) and aligning with chain of responsibility (CoR) obligations under the Heavy Vehicle National Law (HVNL) ensures that cost-saving doesn’t compromise safety or compliance.

Load Utilisation (%)

Measures how well trucks or containers are being filled.

Load under-utilisation increases transport costs and carbon emissions. To improve this, Australian businesses should implement load planning software, use dynamic pallet configuration tools, and review packaging design for space efficiency. Backhauling strategies, where outbound trucks return with supplier pickups or redistributed inventory, also boost utilisation. Companies should collaborate across supply chains—especially with third-party logistics (3PL) providers or industry partners—to share loads and reduce empty kilometres. Tracking utilisation alongside vehicle capacity and weight limits ensures compliance with National Heavy Vehicle Regulator (NHVR) rules.

Delivery Performance by Carrier (%)

Assesses how reliably carriers meet their service levels.

Not all carriers perform equally across lanes or freight types. Tracking delivery performance per carrier helps businesses enforce service level agreements (SLAs) and assess whether providers are meeting promised timelines and conditions. In Australia, this is especially important due to regional variability—one carrier may excel in metro deliveries but fall short in rural areas. Using carrier scorecards that include timeliness, condition on delivery, and communication quality helps refine transport strategy. Regular reviews and diversified carrier relationships create resilience and leverage in renegotiations.

Freight Claims Rate (%)

Tracks damage or loss claims for shipments.

High rates of damage or lost freight create customer dissatisfaction and added costs. Improving this metric involves better freight handling practices, strong packaging standards, and using carriers with reliable claims processes. In Australia, businesses must comply with Australian Dangerous Goods Code (ADG) when shipping hazardous items and ensure packaging meets AFGC or GS1 standards for traceability. Digitising proof-of-delivery (POD) and integrating claims tracking into transport management systems (TMS) streamlines resolution. Training staff and carriers on correct handling procedures is also key—especially when using casual or contract labour.

Last-Mile Delivery Efficiency (%)

Evaluates the effectiveness of final-stage distribution.

The last mile is often the most expensive and logistically complex part of delivery—particularly across Australia’s low-density suburbs and remote areas. Improving this metric requires investing in route optimisation tools, dynamic dispatching, and offering flexible delivery windows that align with consumer expectations. Urban consolidation centres and click-and-collect options can reduce delivery density issues in metro areas. For eCommerce, integrating customer notifications and delivery updates builds trust. Additionally, maintaining compliance with WHS laws when subcontracting last-mile services ensures risk is managed as operations scale.

Order Fulfilment and Customer Service Supply Chain Metrics

Order Cycle Time (days/hours)

Measures the time from order placement to delivery.

Order cycle time reflects the total duration from when an order is placed to when it’s delivered to the customer. In Australia, this is a critical performance indicator due to long transport lead times between states and to rural or remote regions. To reduce cycle time, businesses should streamline internal order processing workflows, automate system-to-system handovers (e.g., ERP to WMS), and collaborate closely with transport partners for dispatch readiness. Reducing cycle time not only increases efficiency but improves competitiveness, particularly in eCommerce and wholesale sectors.

Perfect Order Rate (%)

Tracks the percentage of orders delivered on time, in full, and without errors.

This metric aggregates order accuracy, timeliness, and completeness into a single performance indicator. For Australian businesses, meeting these criteria consistently can help reduce complaints under Australian Consumer Law (ACL) and enhance customer loyalty. Enhancing the perfect order rate involves adopting WMS-driven checklists, automated barcode verification, and exception-based alerts for potential errors. Real-time performance dashboards and strong internal QA protocols ensure that nothing falls through the cracks—from pick to dispatch.

Customer Satisfaction Score (CSAT)

Assesses service quality based on customer feedback.

CSAT gauges how customers feel about their experience, usually via post-delivery surveys. Australian customers, who are protected by strict consumer rights and service guarantees, expect rapid issue resolution and transparent communication. Businesses can boost CSAT by promptly acting on feedback, closing the loop with complainants, and empowering frontline teams with the training and authority to resolve issues on the spot. CSAT data should feed directly into continuous improvement initiatives and service design reviews.

Customer Retention Rate (%)

Measures the percentage of repeat customers.

Retention is often more profitable than acquisition—particularly in Australia’s mature markets where customer switching costs are low. A strong retention rate signals high satisfaction and brand loyalty. Improvements come from consistently delivering on promises, offering loyalty incentives, and proactively addressing service failures. Tools like CRM platforms help personalise customer interactions, while re-engagement campaigns and exclusive offers reward repeat customers and reduce churn

Fill Rate (%)

Evaluates the percentage of orders shipped with full stock availability.

Fill rate reflects your ability to ship customer orders in full, immediately from stock. In Australia, where lead times on imports can be long and space is expensive, optimising this metric is critical. Businesses can improve fill rate by refining demand forecasting, maintaining buffer inventory for top SKUs, and prioritising local sourcing where feasible. Automated replenishment tools and safety stock strategies tailored to sales velocity ensure high availability without overcapitalising on stock.

Backorder Rate (%)

Tracks the percentage of delayed or unfulfilled orders.

A high backorder rate frustrates customers and can lead to loss of trust or cancellations. In the Australian context—where supply chains are often reliant on overseas manufacturers—managing this requires proactive inventory control and agile supplier partnerships. Visibility into supplier lead times, real-time stock alerts, and dynamic forecasting based on market trends help reduce backorders. Clear customer communication about expected delivery timelines can also protect the customer relationship when delays are unavoidable.

Claims and Disputes per Order (%)

Measures the frequency of customer complaints related to orders.

This metric tracks how often customers raise issues around delivery, condition, or order accuracy. In Australia, formal disputes can escalate quickly under ACL provisions, so prevention is key. Businesses can lower this rate by enhancing packaging integrity, improving communication (e.g. delivery confirmations and tracking updates), and ensuring that customer service teams are well-trained in issue resolution protocols. Using root-cause analysis on claims helps identify recurring process failures and target them for correction.

Financial and Cost Control Metrics

Cost Per Order ($)

Measures the total operational cost per fulfilled order.

This all-encompassing metric shows the total operational cost of fulfilling each customer order, including labour, packaging, storage, and transport. In Australia, where wages and infrastructure costs are relatively high, managing this metric is critical for protecting margins. Businesses can lower cost per order by automating repetitive tasks, consolidating handling steps, and using lean fulfilment processes. It’s also worth reviewing order profiles—small or low-value orders may be disproportionately expensive unless bundled, incentivised, or redirected to lower-cost channels.

Cost-to-Serve ($)

Evaluates total supply chain costs for fulfilling customer demand.

This metric provides a true view of profitability by measuring the complete cost of servicing a particular customer, segment, or product. For Australian businesses, it helps balance the demands of servicing rural customers or low-volume channels with financial sustainability. Improving cost-to-serve involves analysing logistics, warehousing, customer support, and returns together—often revealing that certain services or SKUs need to be restructured, repriced, or discontinued. Modelling cost-to-serve in platforms like Power BI or Tableau can reveal hidden cost drivers and optimisation opportunities.

Warehouse Cost Per Square Foot ($/sq. ft.)

Assesses facility cost efficiency.

This metric is increasingly important in Australia, where industrial real estate in metro areas like Sydney, Melbourne, and Brisbane commands a premium. Improving this ratio requires maximising space utility through vertical racking, efficient aisle layouts, and dynamic slotting. Businesses should regularly benchmark their cost per square metre against market averages and evaluate the trade-off between leasing larger sites versus investing in automation or storage compaction systems that increase throughput in smaller footprints.

Labour Cost Per Order ($)

Tracks workforce expenses relative to fulfilment volume.

In a high-wage economy like Australia, labour is one of the largest controllable fulfilment costs. Measuring labour cost per order enables visibility into workforce productivity and helps justify investment in automation. Strategies to reduce it include using labour management software, cross-training staff for flexibility, implementing task-based rostering, and standardising workflows to reduce retraining requirements. Where casual workers are used, ensure adherence to Fair Work Act conditions to avoid hidden liabilities and compliance risk.

Freight Spend as a Percentage of Revenue (%)

Measures logistics costs relative to sales revenue.

This ratio helps businesses understand the weight freight costs have on profitability—especially critical in a geographically dispersed market like Australia. Freight spend can be managed through improved carrier negotiations, shipment consolidation, and evaluating alternative modes such as rail for long-haul interstate moves. Businesses should also consider how freight charges are passed onto customers and review pricing strategies for regional deliveries to ensure they align with actual costs.

Return on Assets (ROA) (%)

Evaluates how effectively assets are utilised in logistics operations.

ROA evaluates how effectively logistics assets—warehouses, vehicles, equipment—are used to generate returns. For capital-intensive Australian businesses, this is a key financial health check. To improve ROA, companies should audit asset utilisation, retire underperforming assets, and consider flexible alternatives like shared warehousing or third-party transport. Tracking idle time and leasing versus owning decisions can also free up capital for higher-return uses.

Shrinkage Rate (%)

Tracks the percentage of lost, stolen, or damaged inventory.

Shrinkage reflects the portion of inventory lost to theft, misplacement, damage, or untracked consumption. It’s a silent profit killer and a compliance risk in sectors like pharmaceuticals or alcohol where Australian industry regulations are strict. Businesses should deploy warehouse surveillance, enforce receiving and dispatch controls, and invest in system-directed cycle counts. Shrinkage analysis by SKU, shift, or team also helps identify patterns and target training or policy changes accordingly.

Labour Productivity and Workforce Metrics

Units Picked Per Hour

Measures individual or team productivity in warehouse operations.

This key productivity metric measures how many units each employee or team picks during a shift. In Australian warehouses, where labour costs are relatively high, even small improvements in picking speed can significantly enhance margin. Increasing this metric involves deploying WMS-guided picking methods (such as RF scanning or voice picking), investing in ergonomic equipment to reduce fatigue, and using performance dashboards to set clear targets. Standardising processes across shifts and conducting regular retraining ensures consistency and reduces variance.

Labour Utilisation Rate (%)

Assesses workforce efficiency and deployment.

Labour utilisation tracks how efficiently the workforce is being deployed—specifically, how much of available work time is spent on productive, value-adding tasks. Low utilisation rates often indicate poor shift planning, downtime between tasks, or excessive indirect labour (e.g., meetings, waiting on materials). Australian businesses can improve this by implementing task-based labour management systems, aligning workforce schedules to actual demand curves (especially during seasonal spikes), and cross-training staff to minimise gaps between task types.

Overtime Hours Per Employee (hours/month)

Tracks excess labour costs and inefficiencies.

Excessive overtime not only adds cost but can also lead to fatigue and WHS non-compliance. Monitoring and reducing overtime is especially important in Australia due to penalty rates governed by the Fair Work Act. To improve this metric, businesses should balance shift loadings, introduce better demand forecasting to enable proactive planning, and redesign workflows to reduce rework. Strategic use of part-time or casual workers—under legally compliant arrangements—can absorb spikes without over-reliance on full-time staff for extended hours.

Employee Turnover Rate (%)

Measures workforce retention in logistics operations.

High turnover disrupts operations, raises recruitment and training costs, and can compromise fulfilment consistency. In the Australian logistics market, labour shortages and a competitive warehouse talent pool make retention a strategic priority. Businesses can reduce turnover by offering development pathways, investing in leadership training, gathering and acting on employee feedback, and fostering a strong safety and culture program. Transparent communication, inclusive decision-making, and celebrating team wins go a long way toward building loyalty in shift-based workforces.

Training Effectiveness Score (%)

Evaluates the impact of employee training on performance.

Measuring how well training translates into performance improvement ensures that learning investments deliver ROI. This is particularly important in sectors with frequent process changes or new technologies. Australian employers can use post-training assessments, on-the-job observation, and KPI shifts (e.g., fewer errors or faster task execution) to gauge effectiveness. Involving experienced employees in peer training and focusing on interactive, hands-on sessions also improves knowledge retention compared to static, one-off inductions.

Technology and Automation Metrics

System Downtime (minutes/hours)

Measures WMS, TMS, and automation uptime and reliability.

System downtime measures how often and for how long your WMS (Warehouse Management System), TMS (Transport Management System), or automation tools are offline. In Australian warehouses—especially those operating across multiple time zones—downtime can cause cascading delays and lost revenue. To reduce risk, businesses should invest in local cloud hosting or edge computing for low-latency reliability, establish strong Service Level Agreements (SLAs) with vendors, and use 24/7 monitoring tools. Backup protocols and redundancy planning are also essential, particularly when critical systems are integrated across the network.

Order Processing Time via Automation (seconds/minutes)

Tracks the speed of automated fulfilment.

This metric shows how quickly your automated systems—such as conveyors, sorters, or robotic fulfilment stations—process customer orders. It offers a direct comparison to manual processing times and provides tangible justification for investment. Australian operations can optimise this by fine-tuning workflows, sequencing high-volume orders for automation, and proactively maintaining equipment. Regular performance testing and updating software logic (e.g. pick paths, batching rules) ensures speed advantages are sustained as volumes or product mixes evolve.

Percentage of Orders Processed via Automation (%)

Evaluates automation adoption levels.

A high percentage reflects strong adoption of fulfilment automation, enabling consistent output even under labour constraints or during seasonal surges. To grow this metric, Australian businesses should identify repeatable, high-volume tasks suitable for automation and calculate ROI in line with grant schemes (e.g. Modern Manufacturing Initiative) or energy rebates for energy-efficient robotics. A hybrid model—where manual and automated paths coexist—allows flexible scaling while maintaining service levels across diverse order profiles.

IT System Integration Success Rate (%)

Measures the success of technology rollouts.

This metric tracks the percentage of successful system integrations across your supply chain tech stack—WMS, TMS, ERPs, ecommerce platforms, and customer service tools. In Australia’s mid-market landscape, businesses often struggle with fragmented systems or legacy infrastructure. Improving this metric involves conducting sandbox testing, using middleware for API integration, involving operations early in IT decisions, and employing change champions to ease user adoption. Post-go-live training and support are essential to ensure integrations drive the intended outcomes.

Error Reduction Due to Automation (%)

Assesses how automation improves accuracy.

One of the strongest arguments for automation is its ability to reduce picking, packing, labelling, and shipping errors. Tracking this metric helps demonstrate returns on investment and build the case for further automation. To improve it, businesses should set clear pre-automation KPIs, implement post-deployment reviews, and ensure that automation complements (not overrides) quality control steps. In regulated sectors such as healthcare, FMCG, or alcohol, automated compliance checks (e.g. expiry date validation or serial tracking) further enhance accuracy and reduce recall risk.

Sustainability and ESG Metrics

Carbon Emissions Per Order (kg CO₂e)

Measures environmental impact from transportation and warehousing.

This metric quantifies the environmental impact of each fulfilled order in terms of carbon output from transport, handling, and storage. With the Australian government expanding climate disclosure requirements and investor pressure growing, businesses must reduce emissions intensity. To improve these supply chain metrics, companies can consolidate deliveries, shorten last-mile distances through decentralised facilities, and use electric or low-emission vehicles. Tools like the Climate Active Carbon Neutral Standard provide guidance for measuring and reducing Scope 3 emissions linked to logistics.

Energy Consumption Per Facility (kWh/sq. ft.)

Tracks energy usage in warehouses and DCs.

Tracking how much electricity and gas is used per square foot helps businesses identify inefficient warehouse operations and reduce energy bills. In Australia where power costs can be high and peak demand charges significant energy monitoring systems can spotlight savings opportunities. Upgrades like LED lighting, sensor-activated systems, solar energy generation, and battery storage are eligible for state-based rebates and grants. Monitoring HVAC usage, automation draw, and idle equipment usage also ensures energy is used only where needed.

Recycling and Waste Reduction Rate (%)

Evaluates sustainability practices in packaging and operations.

This ESG metric reflects how much of a warehouse or DC’s waste is recycled or diverted from landfill. In Australia, where landfill levies and extended producer responsibility schemes are rising, proactive waste management reduces both environmental impact and costs. Businesses can boost this rate by using recyclable packaging, implementing clear waste separation processes, and partnering with certified recycling services. Supply chain metrics in packaging redesign for recyclability and employee education are key levers to improve waste diversion performance in both B2B and eCommerce fulfilment.

Sustainable Freight Mode Usage (%)

Measures the adoption of greener transport options.

These supply chain metrics show the proportion of freight moved using environmentally friendly transport such as electric vehicles (EVs), rail, or carbon-offset services. For Australian supply chains covering large distances, shifting freight from road to rail or using intermodal hubs reduces emissions and congestion. Urban deliveries can benefit from smaller EV vans, cargo bikes, or consolidated drop-off models. Partnering with carbon-neutral freight providers and joining initiatives like Green Freight Strategy by the Department of Infrastructure can further support long-term emissions reduction.

Seems Like Alot to Track? It Is!

Let our team of supply chain metrics experts do the grunt work for you. These are just a fraction of the supply chain metrics you should be using in your supply chain to measure success, and most businesses use just a fraction. We can assess your operations and work out which ones you need to be tracking to make serious gains, be they productivity based or focused on the bottom line. Ready to get your supply chain moving? Get in touch today.