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Though shippers are experiencing some relief from the mayhem of pandemic-era supply chains, struggles remain. When comparing their companies now to three years ago, 76 percent of supply chain executives expressed more frequent supply chain disruptions now, according to a survey by Gartner.
As these disruptions continue to plague supply chains, it’s vital that shippers use data to continue working toward performance despite the persistent challenges they’re facing. Shippers can use KPIs to track performance across their operations, harnessing the power of data to ensure progress toward maximum efficiency.
This article covers what logistics KPIs are and how to best use them specifically to improve supply chains. It includes six targeted logistics KPI examples that are ideal for shippers to track.
A key performance indicator (KPI) is a measurable value that demonstrates how effectively an organization achieves its business objectives. These benchmarks are commonly used within different areas of the business to go after specific goals and track how well the process is progressing, and they are also helpful for shippers.
In the transportation industry, KPIs are logistics metrics used to track and measure performance within the supply chain. For logistics KPI examples, shippers can use these benchmarks to track measurable values such as on-time delivery rate, cost per mile, order accuracy, inventory turns, and customer satisfaction.
Logistics metrics like these help transportation companies understand their performance levels and identify areas for improvement. They give specific and measurable indications of performance, which is ideal for setting and achieving goals.
Shippers should focus on specific logistics metrics that help them achieve a more efficient supply chain. In 2023, tracking data metrics that focus on improving logistics spend management will be especially helpful. Here are six key performance indicators worth following in the transportation industry this year.
Average and running monthly spend make up one of the top areas for shippers to focus on when tracking KPIs. Turning each of these data points into a logistics KPI and tracking it allows shippers to find disruptions and gain more specific details on carriers, service levels, and other relevant factors. This information is essential for shippers to stay within the budget and reduce the impact of disruptions. They can also use collected data to notice trends that inform better management and carrier compliance.
Tracking on-time pickup is also critical for shippers. This logistics KPI shows shippers how timely each carrier is and points out unacceptable pickup ranges. By regularly monitoring this data, shippers can address the problems and communicate with carriers as soon as possible. They also have a clear view of the source of each issue rather than wasting time trying to figure out what’s going wrong. Further, shippers can collect data on carrier reliability and ability, which is essential for building strong carrier networks and carrying out contract negotiations.
It’s helpful toward logistics success for shippers to pay attention to on-time delivery. This metric goes hand-in-hand with the on-time pickup rate logistics KPI. Following this key performance indicator shows shippers when carriers are unable to keep up with reasonable pickup and delivery expectations and can be used to provide insights for strengthening the carrier network and renegotiating or revoking contracts. In addition, keeping an eye on this KPI helps shippers better communicate with customers regarding delivery windows and delays.
Looking at zone distribution is a great way for shippers to manage spend. This helps them note how the distance for transport and associated costs rise with zone increases. Shippers can use this data to inform distribution strategies. For instance, shippers might save on logistics costs by combining modes or adding new distribution centers in strategic locations. They can make informed and data-backed decisions by tracking KPIs related to this.
Shippers can measure and track two related KPIs logistics — the average cost per shipment and per pound. Following these key performance indicators gives shippers important insights into expenses they can generally expect for each comparable shipment. They can then identify abnormalities and look into the causes. In addition, shippers can use this information to develop shipping strategies, such as having data-backed reasons for increasing price points.
Another helpful KPI for the transportation industry is freight invoice accuracy. This is an essential marker to track, as it shows shippers the ratio of free-of-error invoices to total invoices. This measure gives shippers insight into problems like duplicates and accessorial errors that are impacting the budget and creating problems. It efficiently shows which carriers consistently have a high or low accuracy rating, which helps shippers strengthen their carrier networks.
KPIs help shippers run a successful business and make strategic decisions that help them move forward. They also help companies handle the many difficulties they must adapt to and overcome. In the logistics industry, there are always specific hardships that shippers have to manage, such as the price of gas and fluctuating capacity.
So, let's look at certain hardships that the logistics KPI examples could help shippers with this upcoming year. The supply chain in 2023 faces many challenges:
These are just some dynamics shippers could face as they advance further into 2023. All of these challenges impact supply chains. As these challenges continue, shippers must harness the power of KPIs to maintain vigilance on long and short-term goals despite persistent disruptions.
Setting and monitoring specific transportation KPIs enable shippers to best manage their supply chains despite various disruptions. The list of six critical KPIs can help shippers know the most helpful areas to track and then use the data they gain from those areas to make strategic business decisions. Of course, shippers can add to their lists of logistics key performance indicators to fit their tailored business needs, goals, and challenges. By having specific and measurable objectives, shippers can better know how things are going and what areas to focus on for improvement.
With Intelligent Audit, shippers can gain instant access to unprecedented business intelligence. This powerful software makes it easier for shippers to track important transportation KPIs. Relevant services include:
Get started with Intelligent Audit today to see how cutting-edge technology can help you track your logistics KPIs and use the data wisely.
Set up a call with one of our experts to discuss how Intelligent Audit can help your business uncover opportunities for cost reduction and supply chain improvements through automated freight audit and recovery, business intelligence and analytics, contract optimization, and more.
