Optimizing Supply Chain Performance
What Is Supply Chain Performance and Why Does It Matter?
Supply chain performance measures how effectively your network moves products from suppliers to customers—balancing cost, speed, accuracy, and reliability across planning, sourcing, transportation, and fulfillment.
It shapes customer experience. When planning is accurate, suppliers deliver on time, and fulfillment runs smoothly, customers get what they want, when they want it, in good condition. When it breaks down, they experience stockouts, late deliveries, and damaged orders.
Supply chain performance directly affects your profitability. Strong performance protects margins by controlling logistics and procurement costs. It improves working capital by reducing excess inventory.
In volatile markets, a supply chain that absorbs variability is resilient. One that runs on thin margins is fragile—a single carrier delay or demand spike can trigger cascading failures.
Although many companies focus solely on freight spend, the real threat to supply chain stability is unmanaged variability. When you chase the lowest freight rates without addressing underlying volatility, you end up spending more on safety stock, expediting, and lost sales than you save.
Key Supply Chain Performance Metrics and KPIs
Supply chain performance metrics and KPIs provide a clear view of how reliably, efficiently, and cost-effectively products move from origin to customer, revealing where service breaks down, costs escalate, or control is lost across the network.
Here are some key supply chain performance metrics that we recommend you track:
Service metrics
- On-time pickup and delivery: This measures the percentage of loads picked up and delivered within the agreed window. Chronic misses usually point to unrealistic lead times, poor dock scheduling, or unstable carrier performance.
- Order fill rate and OTIF (On Time/In Full): Order fill rate tracks what percentage of demand you can fulfill immediately from available inventory. OTIF combines timeliness and completeness: did the customer get exactly what they ordered, exactly when expected? Walmart and other major retailers have made OTIF the de facto standard.
- Transit time consistency: What matters is variability—how often loads arrive earlier or later than planned. High variability forces you to pad lead times and build excess safety stock. Improving consistency often delivers more cost and reliability gains than shaving hours off the average.
Cost metrics
- Transportation cost per unit: This normalizes freight spend so you can compare performance across modes, lanes, and time periods.
- Freight spend vs. budget: Compare actual transportation costs to plan by mode, lane, or region. This keeps leadership aligned and quickly surfaces problems.
- Cost-to-serve by customer or lane: This allocates transportation, handling, accessorials, and warehousing to specific customers or lanes. Two accounts with similar revenue often have very different profitability.
- Total landed cost (TLC): The all-in cost of moving a product from origin to final destination, including purchase price, all transportation legs, duties and taxes, warehousing, and cost of capital locked in inventory. Organizations chasing the lowest freight rate often increase TLC without realizing it. You often pay more per shipment to materially reduce variability and total cost.
Efficiency metrics
- Mode optimization: This evaluates whether shipments move on the right mode for your service and cost targets. Mature teams track the percentage of volume that moves on the “preferred” mode.
- Asset utilization: For fleets and dedicated capacity, this measures how fully you use equipment and labor: trailer cube utilization, empty miles, dwell time.
- Accessorial frequency: This tracks non-base charges—detention, layovers, liftgate, redelivery—by lane and facility. These are process problems, not carrier problems. Reducing them unlocks quick cost wins.
Visibility and control metrics
- Exception rates: This is the percentage of shipments that deviate from plan: late pickups, missed appointments, tracking gaps. Systematically reducing exceptions stabilizes performance fast.
- Carrier compliance: This measures how consistently carriers follow your routing guide: tender acceptance, tracking timeliness, appointment adherence.
- Forecast accuracy: Accurate demand and lane volume forecasts are critical leading indicators for cost and service. Poor accuracy drives stockouts and expedites in some areas, excess in others.
Factors Influencing Supply Chain Performance
Supply chain performance is shaped by how well organizations manage volatile demand, align forecasts with real orders, design and update their network, secure reliable carrier capacity, maintain consistent internal processes, and integrate high-quality data so all teams operate from a single, accurate view.
- Demand volatility and forecast accuracy: Forecasts are simply estimates- in other words, they are almost always wrong. When they aren’t reconciled with actual orders, you plan for demand that no longer exists, creating stockouts and reactive decisions.
- Network design and geographic footprint: Networks optimized once every few years go stale fast. When execution data doesn’t feed back into design models, your footprint drifts out of sync.
- Carrier reliability and capacity alignment: Even the best plan fails without reliable capacity. When carrier performance data doesn’t inform planning, you risk building around underperformers.
- Internal process consistency and communication: Different teams playing by different rules create variability. Without shared workflows, communication becomes ad hoc.
- Data quality and system integration: Poor data and fragmented systems guarantee misalignment. Integration creates a single, trusted view so teams act on the same reality.
Role of Technology and Outsourcing in Supply Chain Performance
Technology and outsourcing improve performance only when tightly connected to day-to-day operations. By combining integrated systems with robust supply chain analytics, teams can see how their network is actually performing and make smarter decisions about capacity, routing, and service.
Transportation Management Systems (TMS) as a performance backbone
A modern TMS orchestrates planning, tendering, routing, and settlement across modes. When integrated with ERP, WMS, and visibility platforms, the TMS keeps planning and execution aligned. Orders flow in, costs flow back, what’s planned is actually executable, and the entirety of the supply chain is visible.
Real-time visibility and exception management tools
Real-time visibility lets teams see where shipments are, when they’ll arrive, and what’s at risk before a customer complaint arrives. Exception workflows route issues to the right people with full context so they can choose the best recovery option.
Data aggregation across modes, carriers, and locations
A unified view of network performance enables fair comparisons. This reveals which carriers hit OTIF, where accessorials cluster, and how different nodes impact total landed cost.
Role of managed services and strategic outsourcing
Strategic partners extend your capabilities by pairing technology with specialized expertise. Instead of a black-box vendor, leading organizations engage partners who operate within their ecosystems and continuously optimize based on live performance data.
At Sheer Logistics, we believe technology alone doesn’t improve performance. Real gains come from seamless integration across systems paired with experienced operational oversight. When data flows from ERP to WMS to TMS to visibility platforms, skilled operators can continuously adjust how the network runs.
Strategies to Improve Supply Chain Performance
Strategies to improve supply chain performance focus on continuous optimization by establishing clear KPI baselines, standardizing processes, using real performance data to optimize modes and carriers, maintaining regular performance governance, and building contingency plans so teams can reduce variability, respond faster to disruption, and sustain long-term cost and service gains.
Establish baseline performance and identify variability drivers
Before you optimize, establish a clear baseline. Define KPIs like OTIF, cost-to-serve, exception rates, and total landed cost by lane and carrier, then identify whether variability comes from carrier performance, bad forecasts, low consolidation, or chronic accessorials so you fix root causes.
Standardize processes across modes, regions, and partners
When every plant, DC, and region follows the same playbook for lead times and exception handling, you eliminate noise from local workarounds and move to consistent, repeatable execution.
Optimize mode and carrier mix based on real performance data
Use actual OTIF, cost, and service data to decide which modes and carriers serve each lane, and refresh those decisions regularly so routing doesn’t drift onto autopilot.
Implement continuous performance reviews and KPI governance
Build a steady cadence (weekly, monthly, quarterly) to review KPIs and agree on small, specific changes. This rhythm extends savings beyond year one and keeps your network aligned with how it actually performs.
Build contingency strategies for disruption and capacity shifts
Map single points of failure in your carrier and mode mix, pre-plan alternatives, and define escalation paths so you respond to shocks in hours, not days.
The biggest gains come from continuous optimization, not perfect network design. Teams with tight feedback loops, clear KPIs, and integrated systems build durable savings and competitive advantage over three to five years.
Final Thoughts on Continuous Performance Improvement
Supply chain performance is never really “finished.” It’s something you keep working on, not a box you check once and move on from.
When you have the visibility to see what’s happening, clear ownership for results, and the flexibility to adjust, small improvements start to stack up into real, long-term advantages.
At Sheer Logistics, we support by providing our logistics optimization that helps you achieve end-to-end transportation efficiency by combining Sheer TMS, integration via our proprietary SheerExchange integration platform, and Managed Services to streamline your logistics processes. This approach lowers costs and improves performance across every aspect of freight management.
Sources
BCG. (2025). Cost and resilience: The new supply chain challenge. https://www.bcg.com/publications/2025/cost-resilience-new-supply-chain-challenge
Mordor Intelligence. (2026). Supply chain analytics market size & share analysis. https://www.mordorintelligence.com/industry-reports/supply-chain-analytics-market
Sheer Logistics. (n.d.). Next-Gen Logistics Optimization Software Sheer Logistics. https://sheerlogistics.com/managed-transportation-services/logistics-optimization/
Sheer Logistics. (n.d.). Supply Chain Analytics: What it is, How it works, and Why it matters Sheer Logistics. https://sheerlogistics.com/blog/understanding-supply-chain-analytics/
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