Essential KPIs for Trucking and Transportation Companies

October 19, 2020

 

Tracking supply chain key performance indicators (KPIs) can be a difficult task especially within the realm of transportation.

Broadly, tracking freight can be convoluted due to vast networks of service providers needed throughout the supply chain.

Trucking and transportation, though, is a huge part of what makes the supply chain efficient and successful in fulfilling consumer orders and needs. It also can be a major source of delays, cost inefficiencies, and environmental harm.

To accurately determine success for your transportation and trucking operations, you need to determine the best performance indicators to measure.

Choosing the best KPIs to track is tricky: It’s easy to overwhelm and distract your employees from their core goals with too many KPIs in place. With too few, it’s difficult to get an accurate representation of your operations.

This article will discuss three important KPIs that can serve as a starting point for guiding your transportation team toward success without overcommitting them to unnecessary goals.

On-Time Delivery

An on-time delivery (OTD) metric is exactly what it sounds like: it indicates how well a carrier can deliver according to scheduled arrival time.

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Often shown in a percentage, this metric will ensure that your company operates with speed and strategic thinking to meet required business outputs.

Given consumers’ rising expectations for fast delivery times, on-time delivery should be high on all trucking priority lists. Additionally, remaining on-target for delivery dates helps avoid some timing-related fees.

You should strive to obtain a strong OTD percentage because it boosts your reliability and reflects positively on your team’s bandwidth. Both bode well for retaining business and even earning new customers.

In contrast, due to the interconnectivity of the supply chain, late deliveries can have major implications downstream for both efficiency and cost.

In order to improve upon this metric, it’s essential to diagnose areas for growth within your current process.

Delays can result from a number of operational inefficiencies such as poor inventory forecasting, over-processing, or ineffective route planning.

If you’re experiencing a lower OTD than expected, it may be particularly helpful to check up on the accuracy of your forecasting, inventory, and shipment records.

OTD is an essential KPI for companies concerned with maintaining high levels of customer satisfaction and retention.

Cost-Per-Pound

While tracking OTD metrics will ensure your business appears reliable to customers, cost-per-pound showcases how cost-effective companies are with their freight.

The idea behind tracking cost-per-pound is to ensure that you’re moving products efficiently according to freight class. Of course, the key to lowering your cost-per-pound is to increase the weight of freight within each outbound truckload.

This information can be tracked and presented to customers and stakeholders to give insight into shipping trends and patterns. A company that’s able to boast a low cost-per-pound metric is more likely to encourage their customers to continue to invest in a partnership.

Additionally, cost-per-pound can be used for internal strategy. After seriously analyzing your current operation and examining your cost-per-pound, your team will be better equipped to price your services and make more educated choices with purchasing.

It’s also important to actively track changes in your cost-per-pound data to implement agile plans to adjust routing, outsourcing, delivery schedules, and other operational functions.

It’s challenging to make smart decisions about freight costs without cost-per-pound data. This KPI can easily be integrated into your current process. All that’s needed is the weight of each shipment along with its associated costs.

As a financial indicator of success, this data is key to identifying a standard of profitability for your company.

CO2 Emissions Levels

As demand for delivered goods and e-commerce transactions continues to rise, it’s important to consider the impact your operations have on the environment.

Transportation companies have the capacity to notably decrease carbon emissions in the long term. If companies do not make efforts to become more efficient in this area, freight emissions will quickly become the greatest emitter of carbon dioxide.

CO2 emissions can generally be measured by monitoring your fuel consumption. Verifavia Shipping suggests four ways of calculating your emissions.

Regularly tracking your transportation and shipping emissions can help you take preventive action against climate change. Doing so now will place you ahead of the curve, as an environmentally conscious leader in the space.

Before taking any action to improve your current operations for the changing climate, it’s important to analyze your current situation. The Global Logistics Emissions Council (GLEC) offers a solution called the GLEC Framework. It allows companies to effectively account for and report their logistics-related emissions.

By utilizing this framework, you won’t only be helping the planet. You also boost your reputation within the supply chain community and optimize your operations to be more cost-effective.

The framework also allows users to manage transportation performance, evaluate your strategy, and track progress toward your desired climate reduction goals.

GLEC’s solution paired with innovative thinking and implementation will put you on the right path to making you part of the supply chain greener.

Implement Meaningful KPIs Into Your Supply Chain Processes

The thought of measuring and maintaining several KPIs for your transportation business can be overwhelming. That’s why it’s critical to closely consider your business need, selecting KPIs that closely align with your goals.

That said, all transportation operations can benefit from implementing a few broad, foundational KPIs that consider the entire scope of your business.

These include the rate of on-time deliveries, cost-per-pound, and CO2 emissions data. Make sure to monitor these metrics over time to experience the significant impact they can have on your company. ‍

Sydney Wess is a content writer for Clutch, focusing on the supply chain industry.