Throughput is a top priority for supply chain leaders. The same is true of productivity. According to Lionel Grealou, "productivity is defined as the output per unit of input. [It] focuses on quality produced, created, or completed." While Grealou spoke of manufacturing, that view applies to all shippers and the need to measure throughput. That's why shippers need to track shipping data and the supply chain KPI values that affect both throughput and financial stability. We will take a closer look at the leading throughput supply chain KPIs needed for success for this two-part series.
The so-called perfect order metric is the ideal supply chain KPI. But it's always subject to logistics analytics interpretation. The perfect order could still become a return. That risk means shippers need a different supply chain KPI—delivery on-time-in-full. This KPI shows what matters, a customer's initial experience. It's the actual perfect order rate.
Another supply chain KPI is real-time versus batch capabilities. It's most often applied to carrier and broker transactions. But the metric shows how well a warehouse operates. That may include sending order pick tickets in waves or leveraging a waveless strategy. Waveless picking is also known as order streaming. It offers strong benefits for an overactive supply chain. Enterprises use it to maintain more flexibility and avoid peaks and lulls in throughput, says Veridian. Most would like pure waveless throughput. But that's not reality. Instead, a blended approach is dominant. And it plays into peak season readiness. That's why it's crucial to track the comparison between the two.
Security, primarily cybersecurity, audit frequency and mitigates risks form another top throughput supply chain KPI. Why?
Extensive auditing, mainly automated audits, reduces the risk to the operation. Auditing all records identifies problems before they become disruptions.
On-time pickup and delivery are like the delivery on-time-in-full metric. Yet, it goes a step further. This metric looks to see if the driver held up his/her end of the bargain. Pickup delays could occur even if the delivery is on-time. Carrier contract optimization becomes more critical and insightful with this metric too.
Average loading/unloading times also plays into throughput. As the average declines, it indicates more efficient yard and dock management. It even rises to include dock scheduling, staging, and correction of anomalies before staging.
Load acceptance is another simple metric that measures throughput productivity. Greater load acceptance rates mean carriers are more likely to work with an enterprise. In turn, higher acceptance may indicate it's time for a shipper-of-choice title.
Lead time forms yet another supply chain KPI. It's the amount of time between tendering a load and pickup. Knowing this metric is key to creating delivery estimates and booking capacity even before loads are ready. That's a critical capability for business intelligence. Regardless, it's all up to the shipper to decide what data to share, so an analytics' provider can calculate lead time and order fulfillment time through delivery windows and more.
Tracking the transit time to distance reveals the productivity of drivers or carriers. Longer durations mean road delays. Of course, the industry tries to manage HOS regulations. But still, the need to measure active drive time maximizes throughput.
The last leading throughput supply chain KPI focuses on the routing guide. Routing guide compliance shows how well carriers and drivers adhere to delivery and pickup constraints. In some cases, a chargeback may be necessary. For instance, a chargeback for billed detention time, discussed in part two of this series, may occur if the driver was already late. That's the value of business intelligence. It shows what's happening and how to reduce transportation costs.
Productivity is the essence of a successful supply chain. Efficacy trails back to measuring the health of throughput. That's a major advantage in modernity. And shippers need an edge to beat the Amazon Effect. Request a consultation with Intelligent Audit to find out more about taking advantage of advanced business intelligence software. And don't forget to come back to the blog to check out our next supply chain KPI post on finance KPIs that shippers should start tracking.
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.
Read on to learn why the judges included Testani among 24 regional finalists in one of the world’s most prestigious entrepreneurial recognition programs.