Your KPIs are Trying to Tell You Something

Your KPIs are Trying to Tell You Something

Josh Hasty, Supply Chain Engineer

In order to be successful, shippers must rely heavily upon business intelligence to transform their daily data into core metrics and key performance indicators (KPIs).  Because these types of measurements are critical in supporting tactical, day-to-day business decisions, both visibility and accessibility to this information are of equal importance in facilitating effective management of transportation activity within the supply chain. Your KPIs are trying to tell you something but they can’t do it alone. you need to explore the metric relationships to see the full story.

Often times, analysts find it necessary to regularly review these metrics both individually as well as simultaneously in order to identify potential cause and effect relationships between metrics.  By benchmarking company performance against the performance of a larger network, companies can leverage this information by exposing these relationships and pursuing potential corrective actions in the interest of building a better supply chain.

Consider the following metrics:

  • Tender Acceptance

    The frequency at which a carrier is accepting tendered loads

  • Routing Guide Compliance

    The frequency that the routing plan is being followed

  • On-Time Delivery

    The frequency at which loads are being delivered on time

  • Cost (Line Haul RPM)

    The rate per mile that is being paid for freight movement before fuel and other incidental charges

Each metric provides a snapshot as to how the business is performing for any given period of time.  Introduce some trending and effective comparisons can be made against previous weeks, months and years to see how each of these metrics is changing within that period of time.  However, when viewing these metrics individually, it is difficult to answer to why these trends are occurring because there is little context for why these changes are taking place.

It is when relationships are revealed between metrics that a story begins to unfold.

For example: envision that a recent decline in tender acceptance was discovered in the Chicago area.  When glancing across the different metrics, routing guide compliance may also reflect a decline, which means that the load planners are deviating from the established routing plans in order to cover freight.  Deviating from the routing plan means that the carriers being used are not the primary carriers selected for the Chicago lanes, thus resulting in higher costs and lower on-time delivery percentages due to lower levels of carrier commitment on those lanes.

Viewing the metrics simultaneously exposes patterns and relationships that may not have been visible when viewing the metrics alone.  However, one might ask the question “why?” in regards to the tender acceptance decline that started this plausible chain reaction in the first place.  This is where the information produced by the larger network can begin to be leveraged.

By using the network to benchmark company performance metrics, we’re provided with a much clearer picture as to how well the company is performing.  Company metrics can be compared against their network counterpart in order to determine if highs and lows are consistent, or if there are spikes that need to be further investigated and addressed.  These network comparisons can also help analysts identify if a change is just part the natural ebb and flow of the supply chain, or points to a unique issue within their business.

Here are a few examples what those unique issues might look like:

  • If the company’s tender acceptance is declining in an area, but tender acceptance for the network is steady or increasing in that same area, then there might be frequent loading issues at the pick-up location.
  • If routing guide compliance is trending upward for the network, but is trending downward and freight costs are trending upward for the company, some follow up may be required with the freight planners to ensure they are adhering the routing plan.
  • If costs are high for the company and on-time delivery is suffering, but the network costs are consistently lower, then there may be an opportunity to go out to market in attempt to secure lower pricing with renewed carrier commitments.

While there are many other possible scenarios, the examples above begin to demonstrate the true power of the network.  By reviewing and monitoring what is happening in the network on a regular basis, strategies can be developed that are better suited for what is actually happening in the market and make well-informed decisions to weather the storms that emerge in the industry.

Posted in Blog
Tagged core metrics, data, key performance indicators, kpis, LeanLogistics, metrics, routing guides, Supply Chain, supply chain technology, Technology, Tender

Leave a Reply

Your email address will not be published. Required fields are marked *