As supply chains become more impacted by market disruptions and unpredictable events, they’re also becoming more critical to a company’s customer experience levels and bottom line. Creating a data-driven supply chain tracking important transportation metrics helps shippers respond and adapt as quickly as possible to known and unknown events.
Why Monitor Transportation Metrics
Actionable data is one of the most critical business drivers. Tracking transportation metrics provides more objective and relational context for understanding how transportation best practices enable improvement and automation across an enterprise.
Customer expectations are driving businesses to adapt quickly, operate more efficiently and accommodate requests. Transportation metrics provide visibility that helps drive operative and competitive advantages.
Companies that track this data can then implement and create new supply chain strategies that align with their overall business goals and customer expectations.
Which Transportation Metrics Should Shippers Track to Manage Transportation
These are some of the top transportation metrics to track for improved performance and continuous improvement.
- On-time performance (pick-up and delivery) – Tracking the on-time performance for all pickups and deliveries helps shippers recognize which carriers are performing according to contractual obligations, and it further helps to identify opportunities to increase carrier mix.
- Least cost carrier compliance – This metric reveals which carriers are able to stay in compliance with the lowest overall cost. As problems arise, shippers will spend more to ensure carriers stay in compliance with routing guides, delivery expectations, and service guarantees. Shippers that track carrier compliance are better able to understand the total cost of working with that carrier and may actually be paying for more carriers with lower compliance levels even when billed rates appear more competitive.
- Cost per lb/mile – The cost per pound and per mile is perhaps the simplest metric to track. It’s a calculation of the total costs for shipping, including compliance costs, divided by the total number of pounds and again divided by miles driven. This metric starts to hint at which carriers have the lowest “all-in” rates for transportation.
- Savings – Tracking savings can be among the most difficult metrics to track. After all, savings are subjective and depend on capturing data from across all carriers to know what actual savings exist. That’s partially why more shippers opt to outsource transportation management and provide more FT and LTL transportation stability while reaping lower rates.
- Tender acceptance – Tender acceptance rates reveal which carriers are more likely to accept shipments. Higher acceptance rates in highly volatile markets may actually allude to overspending, so it’s important to track the full picture of logistics to ensure your acceptance rates aren’t covering other issues.
- Claims ratio – The claims ratio is a measure of how many lost or damaged shipments occur compared to total shipments. This is a way to determine which carriers are able to deliver properly and without issue, as well as identifying opportunities for packaging and label optimization to avoid freight claims.
- Rebill count and spend – This transportation metric comes from increased visibility and auditing. Rebills happen when something changes about the shipment after the original freight quote was issued. By recognizing which shipments are subject to rebills helps identify opportunities for improving accuracy with shipment quoting and booking.
- Vendor compliance (lead time) – Tracking supplier or vendor compliance is best viewed in lead time. This metric shows which vendors can deliver on-time and in-full, which is a top priority in the age of disruption.
- Actual transit time vs. published/posted transit – In logistics, time windows often change, and knowing the difference between posted transit time and actual transit time can mean the difference between a happy customer and a customer ready to move to your competitor.
- Accrual (billed vs. unbilled) – Tracking transportation metrics for billed versus unbilled accruals helps shippers account for differences in carrier billing practices and understand the current flow of inventory through the transportation network. More unbilled shipments may mean greater financial instability in your logistics budget.
- Spot bid performance (4PL service) – There will always be a need for spot bids to handle one-off loads and short-term changes to current contracts. This is where a 3PL like GlobalTranz can further add value by reviewing existing contracts and working directly with shippers to find more carriers and avoid overspend.
- Expedites (performance, count and spend) – Gathering data on expedited service shipments, including performance, count, and spend, provides insight into the need for fast-paced, value-added services to account for increased demand in the network.
Start Tracking the Right Metrics by Choosing the Right 3PL
Tracking transportation metrics is not a fly-by-night process. It requires data, an understanding of the logistics industry and operations, as well as each shipper’s unique business goals. Due to the complexity, many companies are outsourcing non-core transportation functions like tracking transportation metrics to a third-party logistics company.
As noted by Gartner, “Over 80% of professionals indicate that they plan to significantly increase logistics outsourcing budgets beyond warehousing and fulfillment in 2020, according to our survey. And it isn’t all about cost optimization, either. Only 34% of survey respondents named saving money as a priority.”
Analyzing data, combined with expertise, can truly allow you to affect change in your organization to improve your business operations, create a competitive advantage and impact your bottom line. Request a consult with a GlobalTranz expert to learn more about how you can put the power of people and technology to work and track performance today.