Mastering Shipment Tracking: 6 KPIs You Can't Ignore

Shipping plays a crucial role in the buying experience, whether it’s wholesale, retail, or B2B. Many studies show that as high as 85% of buyers would avoid a company after a poor delivery experience. 

Since shipping has increasingly become a deciding factor in where people buy, keeping a close eye on performance is essential. Whether there is a problem in the warehouse or with your carrier, your company’s reputation (and profits) are on the line.

Core KPIs for Shipment Tracking

While there are plenty of shipping KPIs you can monitor and measure, there are seven core metrics that directly impact the customer experience and your bottom line.

1. On-time delivery rate

The on-time delivery (OTD) rate is the percentage of shipments that arrive by the expected delivery date. This metric indicates reliability and should be 95% or higher for top performance. If your carriers aren’t hitting at least that mark, you must address this or consider other options.

In an environment where people want fast and free shipping, hitting your delivery estimates is essential. 62% of consumers say an accurate delivery date is even more important than fast shipping.

2. Average delivery time

The average delivery time measures how long shipments take to reach customers after being shipped. Benchmark your delivery times against industry standards and competitors and evaluate performance among carriers. If your delivery times are longer than competitors, you may lose customers without knowing it.

3. Cost per shipment

Understanding the total freight spend for your company is essential, but you also want visibility into the cost per shipment. You can calculate this KPI by taking your total annual shipping costs and dividing it by the number of shipments sent.

You will also want to break it down further by segmenting this KPI by product line, service level, carrier, and other variables to identify opportunities to improve cost efficiency. With a robust logistics management platform, you can easily gain insights into data to find more efficient shipping options, such as batch shipping or packaging and pallet optimization.

You always want the best possible rates from your carriers, but many shippers overlook alternative solutions to reduce cost per shipment. The right software can help you carrier rate shop and evaluate whether today’s spot rates are lower than your contract rates, if mixing and matching legs from different carriers can reduce costs, or whether freight pooling may be an alternative.

8 Warehouse KPIs You Need to Know

4. Shipping accuracy

Shipping accuracy refers to the percentage of shipments that contain the correct items and quantities. This KPI should be as close to 100% as possible, as inaccurate orders significantly impact the bottom line.

When the accuracy rate declines, you should evaluate mistakes and identify where the process has failed. Inaccurate shipments typically happen within the warehouse, such as:

• Incorrect product picks
• Data entry mistakes
• Improper kitting or bundling
• Incorrect labeling
• Poor packaging or sealing
• Carrier mishandling
  
  

5. Damaged shipments

The damaged shipment rate reflects the percentage of orders damaged in transit due to poor packaging or mishandling. Damaged shipments are expensive since you have to reship items at your expense and often write off the cost of damaged goods. 

If you are seeing an unacceptable rate of damaged shipments, you will need to do a root cause analysis to determine where the problems are occurring, including:

• Packaging
• Warehouse handling
• Carrier issues
• Environmental factors
  
  

Freight payment accuracy

Another area to track is the accuracy of the charges billed from shippers. Invoice exceptions are unfortunately common and are often unnoticed, costing you money. Some studies suggest that inaccurate freight charges add up to 3% to 5% of overall shipping costs and that more than 20% of invoices are inaccurate. 

While invoice accuracy varies widely across the industry, regular freight audits can uncover significant discrepancies. FreightPOP’s shipping software examines every invoice automatically, comparing the quoted amount to the charged amount and checking if carriers met their commitments. On average, our customers get back 15% of shipping and freight spend in partial refunds with our auditing tool.

Reduce Costs, Improve the Customer Experience

Now, while tracking and managing these KPIs can refine your shipping processes, imagine the transformation when you harness the full potential of advanced freight tracking! Go more in-depth in our new ebook, The ROI of Freight Tracking: An In-depth Analysis of Cost Efficiency and Customer Satisfaction.  

Written explicitly for heavy shippers, this guide offers invaluable insights and strategies to maximize returns on your freight investments. Don't miss out!