How Did Your 3PL Do During Peak? These KPIs Can Tell You

With peak season now in the rearview mirror, many businesses would rather move on instead of pausing to assess what could have been better. The thing is, now is the perfect time to analyze post-peak performance to refine strategies for the future.

The performance of your third-party logistics provider (3PL) plays a significant role in peak-season success. Your 3PL ensures the right products are sent to the right place at the right time. If your partner struggled with hitting their order accuracy or on-time fulfillment service level agreements, it’s worth having a conversation about improvement for the new year.

Did your 3PL hit it out of the park this year — or did they miss the mark?

5 Critical Metrics to Assess Post-Peak

To help you evaluate the accuracy of your demand planning, every 3PL should be able to compare forecasts to actuals and report on variances. Beyond this, however, there are five key performance indicators (KPIs) your logistics partner should track and share after peak season to help them (and you) replicate successes and address problems. 

1. Inventory Accuracy

How closely does your actual inventory match what your inventory system says is available? 

Tracking this KPI ensures that your 3PL always knows how far apart your actual and reported inventory numbers are, enabling informed decisions about stock and discrepancies. 

Industry-wide, inventory accuracy typically ranges between 90% to 95%, though low-performers may have much lower accuracy rates. The higher the percentage, the more reliable and accurate your 3PL’s inventory system. A lower percentage could point to issues with processes, miscounts, or theft.

By measuring performance in this area, your 3PL should be able to identify and address discrepancies and maintain optimal stock levels. 

Pro tip: To ensure stellar inventory accuracy, look for fulfillment partners with warehouse management systems that enable real-time inventory tracking so you always know where your inventory is.

2. Return Rate

What percentage of products sold are returned by customers? 

Understanding return rates can help you better identify trends, adjust pricing, discover process issues, and refine marketing strategies.

According to data from Capital One, the average return rate for ecommerce goods is about 26%, compared to 10% for in-store purchases. The lower the percentage, the less often your products are returned. A higher percentage could signal problems with your 3PL’s order fulfillment, shipping, or inventory management process.

Tracking return rate as a KPI gives you and your 3PL vital information about how often your products are returned, which products are returned, and why. This enables you and your 3PL to identify trends and patterns and address underlying issues. 

Pro Tip: Look for partners with established ecommerce return platform integrations, like Loop Returns or ReturnGo. This way, your customers experience a seamless front-end return experience, and your data is automatically synced on the backend.

3. Order Fulfillment Cycle Time

How long does it take for your 3PL to ship a product after it’s ordered? 

Understanding this KPI helps you determine the efficiency of your 3PL’s order fulfillment process from start to finish.

Order fulfillment cycle times may vary by industry, and may range from 30 minutes to a few hours. The shorter the cycle time, the faster your orders are picked, packed, and ready to ship. Long cycle times could indicate issues with 3PL workflows, staffing, or technology.

By tracking how quickly an order is shipped once it’s placed, your 3PL can identify bottlenecks and improve efficiency.

Pro Tip: Partner with a 3PL that has a track record of continuous improvement initiatives and longstanding partnership. Your 3PL should act as an extension of your brand, proactively ensuring efficiency with every order. 

4. Perfect Order Rate 

How many orders are completed without any mistakes? 

While the idea of perfect will vary from brand to brand, completing a perfect order for a 3PL typically requires that the right products are picked and shipped within the specified timeframe and that they arrive without damage.

The average perfect order rate is around 90%. A higher rate means more orders get fulfilled, delivered, and received with no issues. A lower rate may signal issues with fulfillment and process reliability.

Tracking this KPI reveals how effectively your 3PL fulfills orders and the care given to ensure they’re appropriately packaged and shipped. 

Pro Tip: Talk with your provider and make sure your they have a plan in place to meet your expectations around perfect order fulfillment. At WSI, we use our trademarked principles of Condition, Count, and Time ® as our commitment to getting customers’ products to their destinations in the right condition, at the right count, and on time, every time.

5. Order Accuracy 

How many orders were exactly what the customer ordered? 

Customers expect the products that they’ve ordered to arrive safely and securely on their doorstep. When products are missing or incorrect colors/sizes are delivered, brands need to pick up the pieces of a poor customer experience. 

Here’s where order accuracy rate comes in. Order accuracy is exactly what it sounds like — this KPI measures how accurately a 3PL fulfills each of your orders. Errors like mis-picks, lost items, wrong unit quantity, or mis-shipments negatively affect your overall order accuracy rate. 

At WSI, we’re committed to 99.9% order accuracy for our customers. Powered by comprehensive technology and people who care, we ensure your orders are picked, packed, and shipped out meticulously. 

You Have the Data … Now What?

Getting the data for these four KPIs is a good first step, but your work doesn’t stop there. Now it’s time to use the information you have to work with your 3PL and decide where and how to improve.

For example, if your order fulfillment cycle times or return rates were longer than expected this peak season, sit down with your logistics partner and talk through their processes and systems. Perhaps they could improve pick routes or implement batch picking to shorten pick and pack time next year. 

Similarly, if your return rates are above average, you may need to dig deeper into damage rates or on-time delivery rates to see how returns can be reduced.

Discuss how often specific unexpected issues happened during peak season, what caused them, and how those issues were handled. Consider stockouts, for instance. Your logistics provider should be able to tell you how often they occurred, what caused them, what they did to resolve the stockout, and whether a better process is needed.  

By working together, you and your logistics provider can use data from these KPIs to make data-driven decisions that improve efficiency, reduce costs, and keep customers happy—resulting in a more robust, more efficient peak season.