You can’t manage what you don’t measure. That saying is popular in business circles for good reason: It’s true. It’s especially true when you need to measure a component that directly affects your products, your customers, and your bottom line—like your carrier. That said, it’s easy to skip the measurement step, especially if you’re comfortable with your carriers, don’t have the time or resources to keep track of measurements, or don’t know what to measure. But you do need to understand how your carrier affects your business, so we’d like to offer these tips to help you evaluate your carrier experience.
What to Measure?
Several specific Key Performance Indicators (KPIs) can help you determine whether your relationship with a carrier makes good business sense. We suggest measuring:
On-Time Performance
Late deliveries, pickups, and departures cost you more than money—they erode customers’ trust in your business. Ask your carrier for on-time performance stats—by customer or terminal—and find out how they determine their measurements. To calculate them yourself, divide the number of on-time shipments by the complete number of shipments (e.g., 480 on-time shipments divided by 500 total shipments equals 96% on-time performance). Anything above 90% is considered acceptable.
Invoice Accuracy
Nobody’s perfect, and carrier accounting departments are no exception. But some companies make mistakes more often than others, and identifying them can save you hassle and money. Invoices should match quotes. Keep track of the ones that do. Categorize those that don’t by the problem.
Damage Claims
Damaged products are no good to anyone. And though customers often understand that the damage usually happens in transit, they still count on you to make sure your products arrive in one piece (and sometimes count on you for replacement items, too). You need to know which carriers you can trust with your goods: Ask for their damage-free shipment statistics; both the actual numbers and percentages. To measure this KPI yourself, divide the number of damage-free shipments by the total number of shipments.
Equipment Maintenance
Sure, maintenance is the carrier’s responsibility, but poor maintenance can also result in delivery delays, less-than-pristine products, or even damaged goods, all of which affect your company. You can track carriers’ equipment maintenance performance by measuring the number of breakdowns, the age of their vehicles, and how often vehicles are serviced and cleaned.
Pricing Structure
Make sure you know what your carrier is charging for (fuel, permits, etc.) or what discounts and waivers they may offer. If your carrier contract includes accessorial charges, monitor them by dividing the charges by the total freight expenditures. In some circumstances, you may find it advantageous to use a carrier who offers pricing on a single or common rate structure.
Tenders Accepted vs. Tenders Declined
A 2014 article by the MIT Center for Transportation and Logistics reported that when shippers’ tenders were rejected once, they typically paid 15 percent more to move those particular loads. And if their next bid was rejected, they paid an average of 25 percent more per load to their third choice carrier. Keeping track of which carriers reject loads most often—and the reasons for those rejections—can help you to make better choices in the future.
Customer Service
Even good customer service is quantifiable if you measure certain variables:
- What’s the response time?
- How long before issues are resolved?
- Does their website allow you to get rate quotes, track shipments, and enter pickup requests?
- Are the customer service representatives knowledgeable about your account?
- How helpful are the staff you speak with? Though this is a somewhat subjective measure, you can use a “from 1-10” satisfaction scale.
Other factors might be difficult to measure mathematically, but should still be evaluated. These include:
Access to Data for Audits
How easily can you get data when you need it? How organized and thorough is that data?
Driver Performance
Even though the carriers’ drivers are not your employees, they are the face of your brand wherever they deliver your goods. They need to be on time, courteous, and careful with your products. In addition, they should adhere to all safety and transportation regulations. Ask your carrier how often they offer training to drivers, how they measure drivers’ performance, and what procedures are in place to ensure driver accountability.
Beyond Measure
At Next Exit Logistics, we earn the trust of our clients with efficiency, transparency, and security. In addition, we understand how to handle freight services for unusual, oversize, or overweight shipments and are certified to arrange the shipment of hazardous materials. To learn more about our services, call Next Exit Logistics at 866-624-2661 or contact us via e-mail.
