Selecting Great Metrics

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The way to determine if you are getting better worse or standing still with your transportation execution is to set good metrics. Metrics should be tracked by lane but also by carrier and employee. Employees that could be tracked with the transportation metrics include Load Planners, Dispatchers, Salespeople and Logistic Managers.

Metrics should not only be measurable but should also be tracked against a benchmark. It is important that you are able to set your benchmark at the lane level as well as at the overall company level. In this way you can have different costing benchmarks for different end customer requirements or different weight benchmarks for your weight per truck benchmark based on origin and destination permit requirements. In this way the logistics group is not penalized when conditions are dictated to them that increase costs.

In general there are there are two types of metrics; Costing and Execution. Each type of metric is normally influenced in some way by a company’s logistics group and by the external service provider

Cost Metrics

With all the cost metrics it is important to set rules for how to deal with the inconsistent items that may cause wild fluctuations. The latter would include stops when the majority of loads are 1 stop and occasional detention charges

Overall Cost: The overall cost metric may use line haul or total freight cost. Cost tracking is normalize to cost per mile for long haul routes or total cost for short haul Within a specific lane the changes in the overall cost metric is a good general guide to what is happening with your costs.

Unit Of Measure (UOM) Cost: The unit of measure cost metric tracks cost using a specific unit of measure relevant to your company. For example, CWT for Aluminum companies, LB for Steel companies, TEU for steam ship companies etc. The UOM Cost metric for a load is the cost divided by the UOM thus if the UOM is LB the metric is the cost divided by the weight in LB’s.

Percent Of Revenue This metric is the percent of sales revenue taken by the cost of transportation. The cost is normally total fright cost and may also include a overhead amount for the cost of the logistics group. The metric is calculated by taking cost and dividing it by revenue generated by the delivery of the load. This is a good metric to track sales people.

Execution Metrics

On Time Pickup – On time pickup can be looked at in two different ways

Requested Pickup – How did the service provider perform against the requested pickup date or pickup date and time.

Scheduled Pickup – How did the service provider perform against the scheduled pickup date or pickup date and time.

On Time Delivery– On time pickup can be looked at in three different ways

Customer Requested Delivery – How did you perform against the customer promised or requested delivery date or delivery date and time. This metric measures the performance of your company and your service provider. In many cases the customer promised or requested date cannot be met by a carrier because it is in the past.

Requested Delivery – How did the service provider perform against the requested delivery date or delivery date and time.

Scheduled Pickup – How did the service provider perform against the scheduled delivery date or delivery date and time.

In the case of the on time metrics different benchmarks may be applied to each, for example it should be expected the service provider will be close to 100% of the scheduled pickup or scheduled delivery time as this was a date and time set by the service provider.

Capacity Utilization – This metric can be applied in a number of different ways depending on your company This metric is an important driver for the UOM cost metric and is a good metric to measure the performance of load planners.

UOM per Load - This metric works for most unit of measures for example LB, CWT, Ton, Pallet, Cube etc. Benchmarks for the metric should be set by lane particularly for weight type unit of measures.

Percent Utilization – This metric is a good measure when the unit of measure is cube or TEU.

Freight Claim Percentage – This metric measures the cost of freight claims as a percentage of the total freight cost. This metric will quickly identify poor performing service providers as it relates to the handling of your goods.

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