Your supply chain’s key performance indicators support tactical, day-to-day business decisions, so ensuring you are reading them correctly is imperative. The question becomes, “how are you comparing your transportation metrics to what’s happening around you?” If you only focus on the data in your own supply chain, you could be missing the bigger picture, and ultimately, misreading your KPIs.
When you connect to a global trade network (GTN), you can benchmark your company’s performance against the performance of all the shippers in the network. You need to explore the metric relationships to see the full story. Reviewing the metrics simultaneously helps identify potential cause-and-effect relationships.
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 on how the business is performing for any given period of time. By using the data in a global trade network to benchmark company performance metrics, you’re provided with a much clearer picture as to how well the company is performing.
Here’s a possible scenario to explore in a GTN:
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 the load planners are deviating from the established routing plans in order to cover freight. Deviating from the routing plan means 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.
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 you can begin to leverage the information produced by the larger global trade network. You can compare company metrics against their network counterparts 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.
Reviewing the metrics simultaneously helps identify potential cause-and-effect relationships.
Here are a few examples of 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 to 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 how a global trade network can help transform your economics. 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. Leaders can rest assured they are making well-informed decisions to weather the storms that emerge in the industry.
Bill Madden is Vice President of Logistics as a Service (LaaS) at BluJay Solutions. He leads a team of logistics managers, coordinators, and LaaS Directors handling $2 billion in annual freight movement. His focus is on delivering operational excellence through engineered simplicity.