Today, a large part of transportation management and shipment optimization focuses on analysis. One of the best ways for managers and team members to keep track of things is with a well-rounded logistics KPIs scorecard. But first, it's essential to understand its value and why it's a critical tool in the shipping manager's playbook.
What is a Logistics KPIs Scorecard
This sort of scorecard highlights areas of supplier performance and works to bring attention to potential problem areas within the shipping supply chain. According to Logistics Management, "Most companies are less than satisfied with their systems in place to measure supplier performance (if they even have a system at all). Creating an effective supplier scorecard—one that aligns directly with the outcomes sought from doing business with that supplier—is an eminently achievable goal. The key is to focus on a set of core characteristics." An organized and complete logistics KPIs scorecard can help bring these core characteristics and points into focus for managers.
Areas to Include on a Logistics KPIs Scorecard
A logistics KPIs scorecard is only as strong and effective as the data points that are included. Maintaining high business intelligence levels is critical for success in any transportation network. Here are some key areas that transportation leaders can benefit from monitoring:
- On-time delivery measurements—The number one metric to track and record is how many orders overall are delivered on time and without issue.
- Average dwell time—Time spent idling at load docks or final destinations will quickly add to wasted income and should be monitored closely.
- Average length of hauls—Getting a clear picture of how much time each load takes on moderate can give a baseline figure for a logistics KPIs scorecard.
- Percentage of customers satisfied with deliveries—Customer satisfaction is key within the industry and must have a logistics KPIs scorecard.
- Average transportation costs—Everything from the cost of fuel per mile, fleet wear and tear per mile, weight load costs, and more should be closely monitored.
- Number of claims files—A well-rounded scorecard can also help you track customer complaints and claims filed on past orders.
- Carrier invoicing error rates—A detailed logistics KPIs scorecard can track invoicing errors to look for repetitive payment issues that need to be addressed.
- Return rates by carrier—While returns are expected to some extent, excessive returns are never a good thing and need to be closely monitored.
- Percentage of freight spend by carrier—Working with multiple carriers offers many benefits, but it is essential to track spending to cut excessive costs quickly.
- Freight broker and 3PL reports—Maintaining a logistics KPIs scorecard is critical for brokers and 3PLs that need feedback and accounting tools.
- Optimizal Carrier Usage - Mode selection is another tricky KPI. Focus on the shipments sent via optimal mode by total shipment sent. Obviously, shippers must know what the optimal shipping method is for each item, so it is best to use a benchmarking period to evaluate the lowest-cost shipping mode.
- Accessorials compared to total freight costs - Failure to track accessorial charges inhibit freight management capability. Keep accessorial fees as close as possible to zero.
- Freight cost for each unit shipped - This KPI is determined by dividing the total costs for freight shipping by the number of units shipped for a given time. This is critical to understanding the overall freight spend for your organization.
- Invoice and payment rates—Knowing when invoices are sent, when they are paid, and when any issues arise helps streamline every step of the shipping process.
- Year Over Year Cost Increases as a Percent of Total Revenue - Although an organization may announce general rate increases (GRIs), it does little good to know whether GRIs reflect shipping costs. Instead, use KPIs to track the cost increases compared to total revenue. Smaller values indicate better operational efficiency, keeping prices low for end-users and your company.
- Service Utilization - It's important to understand which services are being chosen to ship out a specific product, and the cost associated. This KPI will show transportation managers where they can shift services to still meet the same time in-transit window, but at a reduced cost.
Maximize Profitability With Logistics KPIs Scorecards, Expert Insight, and Analytic Support
One of the best ways for logistics managers and freight team members to stay on top of processes throughout the supply chain is with a scorecard focused on key logistics metrics. Contact Intelligent Audit today to request more information.