The Potential of Distribution KPIs

July 27, 2021
Bob Black

Distribution Key Performance Indicators (KPIs) Can Do More Than Just Provide a Financial Snapshot

When someone references the term KPI, most often we think about financial data – the good old bottom line of profitability. Are we making money and where? This is for good reason. Business leaders have to keep a close watch on the financial health of the company by looking back at past events and by attempting to predict and thus steer how the company performs in the future. It’s natural to prioritize the KPIs that give visibility into the health of the entire distribution operation.

But monitoring KPIs is no longer just for giving you financial data or only a good fit for giant distribution companies. In order to keep up and get ahead, small and medium sized distributors also need to think seriously about how to harness KPI data to move the company forward. Below you’ll see some very quick KPI definitions and then I’ll talk about how you can use this information to steer your organization more effectively towards success.

Historical Data: Looking backwards into past business performance is usually termed historical KPI data. Summaries of completed projects, viewing their profitability, and looking at past trends can help you formulate how you approach your forward-looking business plan.

Predictive Data: Looking into the future is typically called predictive KPI data. Your management team can set goals to guide how decisions are made. In distribution, this might mean analyzing demographics and understanding the profitability of certain products.

Ok, that’s good information, but how can you improve your KPI tracking as a distributor?

Many existing distribution ERP platforms, such as Acumatica, now come with a pre-defined set of KPIs to help you get started. You should expect your ERP to have interactive dashboards that are easy to set up, adjust and change by an employee’s role so each person has access to the information they need. This is something that Acumatica Distribution Edition does seamlessly. With the click of your mouse or even a tap on your mobile screen you can drill down into data for clarity and understanding.

While a great starting point, once you master those base KPI sets, you can move on to tailoring them for metrics specific to your distribution operations. Make this a transparent and group process to be sure your department heads are invested and able to obtain the data they need to streamline how they perform their jobs. The dashboards and views you set up will enable all your teams to become more effective and in turn, more profitable.

We have found that many of our distribution customers look at KPIs in relation to inventory. They need to be able to have real-time visibility into where their inventory is and the reorder costs. Determine profitability at the product and warehouse level to better control costs across the entire supply chain.

Other important areas that you will want to be sure you can track closely include:

  • Service and equipment management
  • Sales and purchase order tracking
  • Requisition management
  • Advanced financials

Aktion Associates is a Gold Certified Acumatica Partner. Please reach out to me so we can either set up an Acumatica Distribution demo or to get the Distribution ERP discussion started.