Essential 3PL KPIs and Performance Metrics for Ecommerce Logistics

Whether you’re considering outsourcing logistics to a 3PL or already leverage one, their performance is always top-of-mind. You want your partner to do a great job with everything from inventory storage to fulfillment to shipping – but how do you know if they are?  

The easiest way to evaluate your 3PL’s performance is to closely monitor key performance indicators (KPIs) to make sure that they’re operating to your standards. 

In this post, we’ll go over the most important 3PL metrics to track, why they’re important, and how an expert fulfillment provider like ShipBob can help you improve them and optimize your logistics.  

Understanding the metrics and KPIs behind 3PL performance 

Importance of tracking 3PL KPIs 

If you trust your 3PL, you may ask yourself: why should I bother tracking any KPIs? The answer is that monitoring 3PL KPIs not only confirms how your 3PL is doing, but helps you better understand your business – and how to improve it.  

Increased efficiency 

When you closely monitor important KPIs like fulfillment speed, you can see whether the 3PL is fulfilling your ecommerce orders quickly.

You can use these insights to benchmark your supply chain performance against the competition and see if there’s any need or opportunity to improve efficiency. You can then work with the 3PL to make improvements in how inventory and orders are moved through the supply chain for greater efficiency. 

Better cost management 

Certain 3PL metrics will tell you how much you’re spending on certain supply chain areas, functions, and tasks. You can use these insights to see how you’re allocating your resources, and how closely you’re sticking to your budget.

If you see these numbers increasing or if costs are climbing too high, you can take immediate action to mitigate the issue before you end up overspending. 

Improved customer satisfaction 

By constantly monitoring your logistics performance, you are better prepared to improve and optimize your operations for speed and cost.

When you provide a faster, cheaper, and more seamless delivery experience without sacrificing order accuracy, you’ll delight customers and build brand loyalty that translates into more purchases. 

5 key 3PL metrics and KPIs to monitor 

While there are a lot of metrics you could use to understand how your 3PL is working, some are more telling than others. Here are some of the most crucial KPIs to track to evaluate your 3PL performance. 

1.  Order accuracy 

This is a measure of how many items were shipped and delivered to your customers without any errors. These errors may include mispicks, sending the wrong quantity, shipping to the wrong destination, or a package being delivered late. Your order accuracy directly impacts customer satisfaction, so it’s important that your 3PL partner maintain extremely high OTIF rates to preserve your relationship with your customers.  

ShipBob’s logistics teams, for example, run on a WMS that enforces multiple carefully designed checks and balances throughout the order fulfillment process to ensure order and shipping accuracy. This helps minimize errors, helping us maintain a 99.95% accuracy rate in fulfilling orders. 

“The technology employed by ShipBob guarantees accurate deliveries to our customers. ShipBob’s warehouse management system is equipped with numerous checks and balances, minimizing the possibility of incorrect items being shipped by warehouse associates.”

Ali Shahid, COO of Our Place 

2.  Fulfillment speed 

Your fulfillment speed is a measure of how quickly orders are picked, packed, and shipped out to your customers. It helps you understand the efficiency of a 3PL’s operations, as goods need to move seamlessly between various fulfillment processes in order to be fulfilled and shipped on time. 

Higher fulfillment speeds ultimately contribute to higher on-time shipping rates and faster deliveries. This allows you to meet customer expectations and enhance the overall customer experience. 

Make sure your 3PL leverage best practices, technology, and expertise to optimize their logistics processes for speed and efficiency. Some 3PLs like ShipBob also offer a 2-Day Express Shipping program, which ensures that orders are delivered to your customers within two days. At ShipBob, we use a proprietary algorithm for this ship option to leverage a combination of ground, air, and regional carriers and maintain high on-time deliveries, with 99.96% of orders shipping on time within the service level agreement (SLA). 

“ShipBob can handle our order volume because they’re experts at what they do. The last company I worked at had their own warehouse, and I witnessed firsthand how messy and complicated fulfillment can be, especially at scale when it’s not what your company specializes in. ShipBob’s fulfillment centers are nothing like that.

I’ve been to multiple ShipBob locations, and I’ve seen how much they’ve invested into automation and how organized everything is. It’s no wonder that orders get out within 24 hours of being received – ShipBob is really good at what they do.”

Tyler McCann, Co-Founder of Taste Salud 

3.  Inventory accuracy 

Most 3PL providers take care of storing ecommerce inventory in addition to fulfilling orders. This means that ecommerce brands should track inventory accuracy, which measures inconsistencies between inventory records and actual physical inventory in the 3PL warehouse.  

Your inventory accuracy rate plays a crucial role in your procurement and planning. If you maintain accurate inventory records, you can know exactly how much inventory you have in stock and time replenishment to avoid stocking out. Similarly, you can prevent overstocking since you know when you have sufficient stock for a certain item. 

If your 3PL has low inventory accuracy, chances are their methods of inventory tracking and accounting are out-of-date or manual. This approach isn’t scalable in the long-term, and often results in costly errors that your ecommerce business pays the price for.  

Instead, brands should find a fulfillment partner that leverages modern, automated inventory management software. ShipBob’s software, for example, features built-in inventory management capabilities and includes real-time inventory tracking capabilities. This tracks your inventory movement in real time, ensuring that your records are always balanced with your physical inventory. 

4.  Cost per unit shipped 

Your cost per unit shipped measures how much you’re spending for every unit that gets shipped out from the 3PL. It accounts for both variable and fixed costs associated with fulfilling and delivering a single unit to the end customer, including shipping fees. 

The more units you ship out within a specified time period, the lower your cost per unit shipped will be – so if your cost per unit shipped is low, your 3PL is probably performing efficiently.  

Beyond maintaining efficient operations, a 3PL can also lower your cost per unit shipped by lowering your shipping costs. One of the best ways to reduce shipping costs is through distributing your inventory across multiple strategically-located fulfillment centers, to put inventory closer to customers and minimize transit distance and times.  

For instance, ShipBob offers brands a network of dozens of fulfillment centers all across the US – and the world – that brands can store inventory in and fulfill orders from. Not only does this cut shipping times for customers, but it also cuts shipping costs for merchants. Brands can even use ShipBob’s Ideal Inventory Distribution tool to compare their current split with the split ShipBob recommends based on your order history to save as much money as possible.  

5.  Transit times 

Short transit times are critical for ecommerce brands, whether it’s lead times for manufactured goods or last-mile delivery for end customers. Your 3PL should be able to move goods from one supply chain stage to another quickly and cost-effectively and keep you in the loop the entire time with transparent tracking.  

ShipBob’s proprietary WMS calculates optimal picking routes to reduce transit time in the fulfillment process. Our algorithm also helps to optimize shipping routes to reduce transit times during final mile delivery. 

ShipBob’s industry-leading logistics services nurture ecommerce metrics 

As an expert logistics partner, ShipBob offers ecommerce brands the transparency and visibility into performance and supply chain KPIs they need.  

Advanced analytics and reporting tools 

ShipBob’s free analytics reporting tool provides in-depth insights into your ecommerce performance. You can use this tool to track vital KPIs such as: 

• Orders fulfilled on time, transit times, and other fulfillment metrics 
• Shipping insights such as popular shipping methods, average cost per shipping method, and top selling states  
• Cost breakdowns, including average storage cost per unit and average fulfillment cost per unit 
• Inventory details like on-hand inventory levels, days left until stockout, and SKU-level performance.   

Leveraging this data, you can identify areas for improvement and make more data-driven, strategic decisions for your ecommerce business. 

“The ShipBob dashboard is great for real-time information with their built-in reporting. It’s one of the things that really separates ShipBob from the rest of the solutions on the market. I’ve oftentimes leveraged the data and analytics ShipBob provides when I’m preparing for sales meetings. I can see what our top selling states are, what our average fulfillment time and cost is, how much inventory we have on hand at each fulfillment center – a lot of different metrics that are very helpful. ShipBob has all of that information ready for us at any time.”

Tyler McCann, Co-Founder of Taste Salud 

Real-time inventory management 

ShipBob’s dashboard features real-time inventory management capabilities, allowing you to track inventory movement and balance your inventory records against your physical inventory. This also provides you with accurate inventory levels as well as automatic reorder notifications so you can time inventory replenishment perfectly and never run out of your best-sellers. 

Simultaneously, this level of inventory visibility also ensures that you’re not ordering more inventory when you already have sufficient stock. This helps you avoid expensive storage costs and overstocking. 

These real-time insights also enable you to strategically adjust your inventory distribution. If you see that one fulfillment center is running low on stock for a particular item, you can decide to move things around and maintain healthy stock levels across every location. With optimal stock levels at all your fulfillment locations, you can improve fulfillment speed and prevent customer disappointment. 

“We have a Shopify store but do not use Shopify to track inventory. In terms of tracking inventory, we use ShipBob for everything — to be able to track each bottle of perfume, what we have left, and what we’ve shipped, while getting a lot more information on each order. The analytics are super helpful.”

Ines Guien, Vice President of Operations at Dossier 

Scalable solutions 

ShipBob goes beyond the traditional pick-and-pack 3PL model to deliver an expert supply chain and logistics platform for ecommerce brands. Our solutions won’t just help you pick orders, speed up fulfillment, or ship your packages; rather, ShipBob offers brands a partnership that streamlines your entire supply chain for efficiency and cost-savings while equipping you with the tools and capabilities you need to scale. 

ShipBob’s suite of services includes: 

• DTC and B2B fulfillment capabilities (including retail dropshipping and distribution) 
• Omnichannel visibility across all locations and channels through a single dashboard 
• Seamless integrations with dozens of major ecommerce platforms, tools, and popular retailers 
• 50+ global fulfillment centers to expand into as you grow 
• Customization capabilities, including gift notes, marketing inserts, and custom branded packaging 
• A proprietary warehouse management system (WMS) to power and optimize operations in your own facilities 

“Being able to expand our business without having to look for new partners was huge for us – and ShipBob makes it possible. ShipBob has a growth mindset, and is constantly adding new features and capabilities that are super beneficial to us, so we haven’t needed to look elsewhere for the tools to scale. There’s just so many ways we can grow with ShipBob, and we’re excited to take advantage of all of them.”

Jessica Cedarleaf, VP of Operations at Tonies 

Customer testimonials 

Hear from some real ShipBob customers about how they leverage ShipBob to optimize critical ecommerce KPIs.  

Semaine Health 

As Semaine Health started growing, their existing 3PL was unable to scale with them. They were making multiple mistakes in fulfilling DTC orders, and at the same time, their transit times were creating significant customer service headaches. 

After partnering with ShipBob, Semaine Health joined the Inventory Placement Program to streamline inventory distribution. This helped them to allocate their inventory across four fulfillment centers, reducing their shipping times from 5.2 days to 3.6 days. Although the brand offers 2-day shipping for a premium, most of their orders get delivered within two days anyway after using the Inventory Placement Program. Semaine Health also managed to reduce average fulfillment cost per order by $2 compared to the previous 3PL. 

“We literally would not have been able to expand this year without ShipBob. In the past six months, we’ve quadrupled the number of orders that we’re shipping out. You might expect that that jump in volume would cause issues – but fulfillment has only gotten faster and better. That’s not how it typically works! ShipBob’s solutions have been game-changing for our brand.”  

Matt Crane, Co-Founder and Chief Science Officer at Semaine Health 

Our Place 

ShipBob’s technology and extensive fulfillment network has enabled brands like Our Place to significantly streamline their operations. The brand can now assign a single talented individual to manage all the workflows within an entire function. For example, one expert oversees their end-to-end operations across seven warehouses thanks to ShipBob’s technology and outsourced fulfillment services. 

Our Place has also experienced significant cost savings and improvements in fulfillment efficiency. After expanding from two warehouses to four, they were able to save $1.5 million in freight expenses as they were now shipping locally to lower zones. This also cut their fulfillment and shipping times in half, enabling them to deliver orders in just 2.5 days when it previously used to take 5 to 6 days. 

“ShipBob has transformed our operations into a key competitive edge. I doubt any of our competitors can match our ability to receive orders and deliver them within two and a half days at average. With ShipBob, misshipments are rare occurrences, enabling us to consistently deliver on our promises to customers, ensuring they receive exactly what they’ve ordered.”

Ali Shahid, COO of Our Place 

Third-party logistics KPIs FAQs 

Below are answers to the most commonly asked questions about 3PL KPIs.