In today’s world, data is more valuable than oil. Every department in your business stands to benefit from data collection insights. Data allows you to streamline throughout your supply chain. The right data reveals trends to help you make more informed decisions. When it comes to your supply chain, we recommend five key metrics: Freight Payment Accuracy, On-time Percentages, Average Freight Costs, Trailer Utilization Rates, and Perfect Order Measurement.
1. Freight Payment Accuracy
This key performance indicator examines billing for freight. Specifically, it looks at the percentage of freight bills that are without error. Billing accuracy is important for obvious reasons. Shippers want fair billing–that quotes match invoices–and carriers certainly do not want to spend time rectifying errors. Benchmarking this metric can help you in contract negotiations with current and future carriers.
2. On-Time Percentages
On-time pick-ups and deliveries are also good to watch. What percentage of pick-ups are on time? How much do freight companies adhere to must-arrive-by dates? If there’s a trend toward one carrier always picking up late or one route where deliveries are almost always late, it’s time to look for alternatives–or hold carriers accountable.
3. Average Freight Costs
How much is your freight costing you across carriers? You can calculate averages by tracking the cost of freight across items, SKUs, or skids. You may become aware of a carrier who consistently charges higher-than-average fees that eat into your profit margins. And if that carrier has a much better record for on-time deliveries, it might be worth paying a bit more in freight instead of adjusting your pricing.
These types of insights can also help you move toward predictive analytic methodologies. (Please see our post 3 Ways to use Analytics to Negotiate Shipping Rates for more information on this.)
4. Trailer Utilization Rates
For those shippers running private trucks or a fleet, trailer utilization rates let you gauge how much trailer capacity you use so you can determine how best to optimize loads. Ideally, you want each truck to be as full as possible.
The data here can help you create benchmarks about what percentage capacity is profitable. You may also be able to identify routes that are continually under capacity and unprofitable. From there, you can brainstorm ways to create more efficiency in shipping and logistics.
5. Perfect Order Measurement
Finally, there's the perfect order measurement, which is one you'll find in most supply chain management reports. This KPI looks at the percentage of orders that are free of errors. It's similar to the manufacturing concept of "zero defects," which measures units' percentage without flaw.
With this measurement, you may track trends in perfect orders and higher rates of errors. Using that information, you can locate ways to lower the rate of errors.
You can track and measure many other KPIs to boost supply chain management, but these five are an excellent place to start. The right technology makes it easier to keep an eye on all your KPIs and implement solutions to improve your supply chain efficiency.
Check out our guide to supply chain visibility to learn more about capturing the data that matters, reporting on the data, and how to better manage your internal staff with these insights.