In today’s world, delivering an exceptional customer experience is crucial for shippers, whether it’s for consumers or businesses. To ensure that your transportation carrier meets or surpasses your service performance expectations, data analytics is the key.
Let’s dive into the world of using data analytics to improve shipping operations. Specifically, I’ll focus on these 5 areas: on-time delivery KPIs, shipment optimization, cost reduction strategies, carrier scorecards, and fine-tuning fleet routing. Harnessing the power of data analytics will enable shippers and carriers to provide the ultimate delivery experience for their customers while keeping costs in check. See below, where I will give you a comprehensive overview of the data analytics that you need to assure unsurpassed carrier delivery results.
- 1. Use On-Time Delivery Key Performance Indicators (KPI) For Data Analytics.
- 2. Optimize Your Shipment’s Characteristics To Reduce Costs, Improve Service.
- 3. Use Data Analytics For Reducing Carrier Spend.
- 4. Use A Carrier Scorecard To Measure And Optimize Carrier Performance.
- 5. Improve Delivery Routing Using Data Analytics.
1. Use On-Time Delivery Key Performance Indicators (KPI) For Data Analytics.
In the age of eCommerce, the on-time delivery rate is crucial for excellent customer satisfaction. By analyzing historical delivery data, businesses can identify trends and patterns that contribute to successful deliveries. To detail, see my article, The Best On-Time Delivery KPIs To Make Your Customers Delighted, for the various ways you can measure and analyze on-time delivery. This includes Order (Click)-To-Delivery KPI, Delivery Promise Accuracy KPI, and Order Fill Rate KPI.
So what are the best KPIs that focus on on-time delivery? What are the KPIs that can help your eCommerce operations focus on reducing bottlenecks, inefficiencies, and shipping exceptions when it comes to on-time delivery? Click here to explore the different types of on-time delivery KPIs that you can use to improve your customers’ delivery experience.
2. Optimize Your Shipment’s Characteristics To Reduce Costs, Improve Service.
More and more delivery carriers charge shippers by the volume of the shipment, and not so much the weight. So shipping costs and efficiency can be greatly improved by using data analytics to optimize shipment characteristics. This process involves analyzing factors such as shipment size, weight, density, and destination to determine the most cost-effective packaging and transportation options. To detail, see my article, Large Package Shipping Mistakes And How To Ship More Cheaply, for an explanation on how parcel carriers charge by volume and what shippers can do to save money and improve service.
If you ship large packages, they can be expensive. In some cases, shippers can get surprised on a carrier’s invoice when they are charged over $1,000 for a single unauthorized package. Click here to explore large package shipping, dimensional pricing, mistakes to avoid and how to take steps to reduce costs.
3. Use Data Analytics For Reducing Carrier Spend.
Implementing data analytics in carrier spend provides businesses with insights that enable them to identify inefficiencies, negotiate better contracts, and implement cost-saving measures across their entire supply chain. These insights may include identifying areas where discounts or volume-based pricing can be negotiated, discovering patterns in carrier performance that justify switching providers or consolidating shipments, and understanding the impact of fluctuations in fuel prices or tariffs on overall spend. Leveraging this information helps businesses make informed decisions that reduce costs without sacrificing service.
To detail, see my article, Package Delivery – See How To Stop Surging Costs And Make Your Customers Happy, for a full explanation on how to reduce shipping costs and still maintain high service levels.
Rising shipping costs hurting your bottom line? There’s a better way! Click here for a package delivery primer for small and large shippers alike. Get the best value for your customers’ shipping needs. First, learn how product, packaging, and customer expectations impact your shipping costs. Then, take action to get the lowest cost for your shipping.
4. Use A Carrier Scorecard To Measure And Optimize Carrier Performance.
Many shippers use a carrier scorecard to evaluate transportation carriers. These carrier scorecards do focus on on-time performance and spend analysis. However, carrier scorecards also focus on many other data analytics and KPIs. Specifically, a carrier scorecard is an essential tool for evaluating and optimizing the performance of third-party logistics providers.
By collecting key performance indicators (KPIs) such as on-time delivery rates, billing accuracy, damage rates, and response times, businesses can develop a comprehensive understanding of each carrier’s strengths and weaknesses. Through ongoing monitoring and benchmarking against industry standards, companies can continue to refine their relationships with existing carriers or explore alternative options when necessary. Below is a list describing other areas that shippers can measure and analyze in regard to carrier service performance.
Use Delivery Metrics As Part Of The Carrier Scorecard.
Besides on-time delivery, this includes on-time pickup and exception-/claims-free delivery. Especially for the Less-Than-Truckload (LTL) and Truckload (TL) shipping these are key performance indicatiors.
Measure Load Tender Acceptance / Cancellations Rates.
Again, this is key for measuring LTL and TL performance. Some carriers can make big promises on being able to handle a shipper’s volume, then they do not accept loads, cancel, or do not have the right equipment (e.g. a reefer with liftgate).
How Well Does The Carrier Share Information – Shipment Status / POD?
It is key that carriers are transparent with their shippers as customers expect with their order deliveries. So it is key that shippers measure and rate carriers on the quality and completeness of their electronic shipment status. Also, that they provide timely proof-of-delivery (POD). Lastly, if needed, that carriers provide real-time GPS tracking location data.
Measure Invoice Accuracy And Timeliness.
Especially with non-parcel carriers, invoice accuracy needs to be analyzed and measured. This is not only key to minimize overcharges, but also because billing errors cost the shipper and carrier labor to reconcile through a post-audit. Additionally, delayed billing as can be the case with international duties can cause cash flow issues.
What Is The Frequency Of Damaged Shipments?
This needs to be tracked and analyzed as the costs are hight to the shipper as well to its reputation.
For more information of Carrier Scorecards, see Descartes’ Analytics for Improving Carrier Performance and Leveraging Trade Data
5. Improve Delivery Routing Using Data Analytics.
Some shippers either have their own fleet or have a say in routing dedicated delivery drivers that deliver their product. In these cases, efficient delivery routing is essential for ensuring timely deliveries and reducing fuel costs. Data analytics can play a vital role in optimizing routing by taking into consideration factors such as real-time traffic conditions, weather patterns, road restrictions, and vehicle capacity. Advanced routing algorithms can then provide the most optimal route options for drivers, ensuring that they efficiently complete their deliveries to meet customer expectations. For more information of route optimization, see GSMTasks’ Route Optimization Algorithm and Big Data and DropOff’s 5 Best Tips To Optimize Your Delivery Routes.
Greetings! As an independent supply chain tech expert with 30+ years of hands-on experience, I take great pleasure in providing actionable insights to logistics leaders. My background includes implementing 100s of innovative solutions using emerging technologies and a data-centric development approach. I have also provided business intelligence (BI) solutions for 1,000s of shippers. For more about me, click here.