Which of the following is a KPI in SCM?

• A. On-time delivery
• B. Lead time variability
• C. Inventory alpha
• D. Carrier cost

Answer: (A)

In SCM, a KPI is a measurable metric that shows how well the supply chain is delivering against service level and cost goals. On-time delivery is a direct measure of customer service performance: it tells you what percentage of orders or shipments arrive when promised, which is exactly what customers care about. Because it quantifies reliability in a simple % format, it’s a clear, action-oriented KPI you can track over time, set targets for, and drive improvements in planning, scheduling, and transportation.

Lead time variability, while important for understanding how predictable your process is, is more of a diagnostic metric about consistency than a straightforward service-level KPI. Inventory alpha isn’t a standard SCM metric you’d typically use as a KPI, and carrier cost focuses on expense rather than how well you meet delivery promises. So among these, on-time delivery best captures the essence of a KPI in SCM.