Tracking the right key performance indicators (KPIs) can mean the difference between success or failure in your logistics enterprise. The top freight KPIs you need to succeed enable continuous improvement, rely on real-time visibility and apply the latest in freight analytics capabilities. Furthermore, the use of freight metrics and KPIs is a testament to the innovation within your organization, explains Zipline Logistics, and critical to success:
“Controlling the performance of business operations, which includes your supply chain and transportation, is nearly impossible without business metrics and data analytics.
These quantifiable measures and in-depth discoveries of useful information help evaluate the success of your organization in meeting your goals. In particular, the moving parts in your supply chain will be difficult to manage if you do not have a central dashboard that provides KPIs.”
To stay competitive and keep freight spend under control, shippers need to understand what’s wrong with basic KPI tracking, how the leading freight KPIs improved visibility and freight management, and what can be done to improve logistics successes through analytics-based KPIs.Listen to “End-to-End Supply Chain Visibility: The Always Evolving Quest Driven by Technology” on Spreaker.
What’s Wrong With Basic KPI Tracking
Basic KPIs can lead to major problems within your enterprise. Improperly defined KPIs, notes Klipfolio, will add to logistics costs and make data management a nightmare. The biggest problems with traditional KPI tracking and limited access to data include:
- Poorly defined metrics that do not really provide any value.
- KPIs that lack accountability is effectively meaningless.
- KPIs that fall well outside of the range of attainable will become useless.
- When measures lack specificity, it is impossible to know what is necessary to improve them.
- Metrics can also be too hard to measure, reflecting the difference between quantifiable and non-quantifiable components of the operation.
So, the solution to avoiding these problems lies in taking a more objective view of KPIs and their impact.
Leading Freight KPIs Provide Snapshot Visibility and Management
The leading freight KPIs must maintain certain characteristics. These characteristics are comparable to the exact opposite of the challenges and limitations of basic KPIs identified above. Industry-leading freight management metrics and KPIs include:
- The rate of perfect shipment within the organization.
- Freight payment accuracy, including invoicing accuracy.
- On-time delivery, as well as any issues that may have improved or otherwise tendered on-time delivery.
- The rate of on-time pick up for your operation as a whole and broken down by carriers.
- The rate of payment on-time and in full. The incidence of use of out-of-network carriers and their costs.
- The average cost per scared or trailer.
- The average rate of utilization among your trailers.
- The average dwell time of both inbound and outbound drivers.
- The total transit time for shipments and distance traveled, as well as a measure of the ratio of transit time to distance.
Remember, all effective KPIs are quantifiable, reflecting a processor opportunity that can be measured with numbers.
How to Evaluate and Apply the Top Freight KPIs for Continued Logistics Success
Creating quantifiable, actionable metrics can feel overwhelming, but shippers that operate robust management styles and understand the principles of SMART KPIs can see real results. In fact, S.M.A.R.T. is an acronym, reflecting the core characteristics necessary for effective KPI use and creation, which include:
- Relevant to the operation or other goals.
After establishing the characteristics of KPIs, it important to follow a few additional best practices, as explained by the Logistics Bureau. These include:
- Limit the total number of KPIs based on authority within the company and accessibility.
- Tie all KPIs back to a core objective or goal.
- Make KPIs accessible to appropriate parties, such as logistics or dock managers.
- Establish a hierarchy for KPIs, reflecting whether KPIs are appropriate for executives or individual workers—basically defining the level of granular detail.
- Enable drill-down functionality to look beyond total KPIs and understand smaller KPIs that amount to larger metrics.
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Know Which Freight KPIs Will Empower Your Team to Grow Your Business
The right lineup of freight KPIs will empower your team and organization for growth, responsiveness and real-world visibility. Of course, the best KPIs will have a degree of automated history—reflecting their generation through analytics-based systems and connected assets. For example, the Cerasis Rater TMS collects and presents KPIs within its dashboards to help users better manage freight. Above all else, remember to start implementing KPIs that have a meaningful impact on your operation now.