Ongoing supply chain disruptions have been transformative learning experiences for large businesses the world over. One core lesson from this crisis might be this: transportation metrics are equally important as other core business metrics. In our experience, shippers — for practical reasons — spend a great deal of money and time on core business metrics related to manufacturing and internal quality control rather than data and analytics related to transportation.
That’s not for lack of concern regarding inventory, though. Larger businesses often study data surrounding moving products from point A to point B. However, they don’t always have the necessary resources to extend into a comprehensive overview tracking from customer service to logistics to freight.
In the last couple of years especially, shippers have had to confront the truth that it’s worth examining that chain to find out where broken links might happen and in turn, figure out how to avoid them. It’s not just about the rates, either — a host of granular data can aid in the decision-making process if centralized correctly, in a way that provides a thorough overview.
That’s a good case of “easier said than done,” though. The sheer number of possible metrics involved in measuring transportation cost and usage can make settling on the right ones challenging. So much information is spread across a wide variety of sources — knowing where to focus and how to tie all those threads together can be overwhelming.
We’ve made it easier for you by narrowing down the metrics shippers should track to get the most out of their supply chain.
- Total shipments over a given time period. Having an accurate measure of weekly, monthly, and yearly shipment patterns is vital to understanding and predicting budget needs throughout the year. It’s also a metric that’s easy to find, but not consolidated in one dashboard for most shippers.
- Consolidated spend. You can slice and dice this many ways — by time period, lane, type of shipment, or more. When shippers understand the averages, they can minimize deviations and help budgets stay on track.
- Cost per metrics. Shippers can focus on costs per shipment, pound, mile, or more, look for deviations, and find out why they occur. If a shipping strategy isn’t working, this metric can help identify why. It’s also great data to have available when justifying costs that might be passed along to customers and helps identify preferred carrier partners.
- Transit and Wait Time. Understanding the time it takes to carry freight to a location and how long carriers wait at facilities can be a big cost-saver. When a shipper can identify markets with notably high costs, it could be due to inefficient scheduling or routes.
- Payload Utilization. Are trucks handling the most cost-effective sized loads? If 42,000 lb capacity trailers are regularly off-loading just 34,000 pounds of freight, that can add to real inventory deficits over time. Shippers can leverage this data to be able to optimize this wherever possible.
- Facility metrics. Shippers can examine overall facility behaviors — freight detention time, overtime, etc. — and utilize that data to improve efficiency. For example, if Facility A has an average load time of three hours and Facility B has an average load time of one hour, what can you replicate about Facility B at other facilities?
- Carrier Metrics. This includes on-time pickup and delivery and how they comply with rates offered in their bids. Shippers can track how effective carriers are when it comes to cost offered and final bill.
- Freight invoice accuracy. Invoice errors can lead to expensive budget adjustments. Like poorly optimized loads, they could snowball over time, resulting in big losses. Analyzing invoice inaccuracies, finding where they occur, and putting measures in place to minimize them is vital.
In the simplest terms, shippers want a product picked up and delivered on time, intact. With so many people and systems involved, things can get very complicated, very fast, and real-world factors as unpredictable as a global pandemic can make things exponentially worse.
Start with tracking what matters. Without that, you have no chance of getting to the actionable insights that streamline decision-making and strip away potential causes of wasted money and effort.