In today’s competitive marketplace, delivering an exceptional customer experience is an essential requirement for any shipper, whether servicing consumers or businesses. Indeed, harnessing the power of data analytics ensures that your transportation carriers not only meet but surpass your service performance standards.

In this article, I’ll look at how you can use data analytics to improve your 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. Indeed, exploiting the power of data analytics will enable both shippers and carriers to provide the ultimate delivery experience for their customers while keeping costs in check. So, let’s get started.

1. Use On-Time Delivery Key Performance Indicators (KPI) For Data Analytics.

In this age of ecommerce, your on-time delivery rate is crucial for excellent customer satisfaction. By analyzing historical delivery data, you can identify trends and patterns that contribute to successful deliveries. Specifically, the best key performance indicators (KPI) for measuring and optimizing on-time delivery are as follows:

The Best On-Time Delivery KPIs To Make Your Customers Delighted

1. On-Time Delivery KPI – The Best Measure of Delivery Performance.
2. Order (Click)-To-Delivery KPI – Measuring Both Ecommerce Fulfillment Timeliness and On-Time Delivery.
3. Delivery Promise Accuracy KPI – The Promise Date Is the Key Driver for On-Time Performance.
4. Order Fill Rate KPI – 100% Order Fill Rate and 100% On-Time Delivery Makes for a Happy Customer.
5. On-Time, In-Full (OTIF) – the Ultimate Supply Chain Metric Measuring Both OTD and Order Fulfillment Completeness.
6. WISMO (Where Is My Stuff?) Calls / Returns KPIs – Analytics to Determine the Whys Behind Poor Shipment Status and Post-Delivery Mishaps.

For more details, see my article, The Best On-Time Delivery KPIs To Make Your Customers Delighted, for the best ways you can measure and analyze on-time delivery.

2. Optimize Your Shipment’s Physical 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 the physical characteristics of your shipments. Specifically, this process involves analyzing factors such as shipment dimensions, 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. More importantly, find out what shippers can do to save money and improve service when shipping large packages.

Large Package Shipping Mistakes And How To Ship More Cheaply

3. Apply Data Analytics to Reduce Carrier Spend.

Package Delivery – See How To Stop Surging Costs And Make Your Customers Happy

Implementing data analytics for your carrier spend provides your business with insights that enable you to identify inefficiencies, negotiate better contracts, and implement cost-saving measures across your entire supply chain. For example, carrier spend insights may include:

• identify areas where discounts or volume-based pricing can be negotiated
• Discover patterns of poor carrier performance that justify switching providers or consolidating shipments
• Understanding spend impact from fluctuations in fuel prices or tariffs on overall spend.  

Indeed, leveraging carrier spend 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.

4. Utilize A Carrier Scorecard To Measure And Optimize Their Performance.

Many shippers use a carrier scorecard to evaluate transportation carriers. In fact, carrier scorecards also focus on on-time performance and spend analysis. Moreover, carrier scorecards also include many other data analytics and KPIs. For instance, Isometric Technologies provides the following carrier scorecard description:

“… a way to objectively analyze carriers through KPIs so they can track performance related to On-Time Delivery (OTD), On-Time Invoicing (OTI) and Payment, responsiveness, data governance, among other metrics.”

So, 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 while exploring alternative options when necessary. To detail, below is a list describing other areas that shippers can measure and analyze in regard to carrier service performance.

Example Carrier Scorecard Metrics

a. Pickup and Delivery Metrics.

Besides on-time delivery, this can include on-time pickup, on-time in-full (OTIF), and exception-/claims-free delivery. Especially for the Less-Than-Truckload (LTL) and Truckload (TL) shipping, these are key performance indicators.

b. 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).

Supply Chain Visibility Of Cargo: Know Your Need And The Surprising Challenge To Secure It

c. Shipment Status / POD: How Well Does The Carrier Share Information?

Indeed, transparency is crucial for carriers when dealing with both shippers and end-customers. This is because it is increasingly the norm to have clear visibility of delivery status. So, it is essential for shippers to evaluate carriers based on the accuracy and thoroughness of their electronic shipment status updates. Additionally, shippers should ensure carriers deliver timely proof-of-delivery (POD) documents and, if necessary, provide access to real-time GPS tracking of shipments.

d. Invoice Accuracy And Timeliness Metrics.

Indeed, invoice accuracy needs to be analyzed and measured. This is not only key to minimize overcharges, but also because billing errors cost the shipper more labor in post-audit reconciliation and disputes. Further, billing disputes increase carrier labor cost in resolving billing issues. Lastly, delayed billing, such as in the case with international duties, can cause cash flow issues. For more details on freight bill processing, see my article, Freight Invoice Audit & Payment: New Tech And Methods That Will Make It Better.

e. Damaged Shipment Metrics.

Also, shippers need to track and analyze the root cause of damaged shipments. This is because recurring costs like this add up for the shipper. Worse, it will negatively affects a shipper’s reputation.

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. In this case, data analytics can play a vital role in optimizing routing. Indeed, both dedicated fleets and carriers can improve routing by taking into consideration factors such as real-time traffic conditions, weather patterns, road restrictions, and vehicle capacity. Also, advanced routing algorithms can provide the most optimal route options for drivers. As a result, this ensures efficiency in delivery completion as well as meeting customer expectations.

More References.

• Descartes’ Analytics for Improving Carrier Performance and Leveraging Trade Data
• Isometric Technologies’ Carrier Scorecarding
• FarEye’s What is a Carrier Scorecard? 12 Critical KPI’s for Carrier Scorecards
• GSMTasks’ Route Optimization Algorithm and Big Data
• DropOff’s 5 Best Tips To Optimize Your Delivery Routes
• My article, Data Analysis Examples To Best Overcome The Challenge Of Supply Chains

Data Analysis Examples To Best Overcome The Challenge Of Supply Chains

Need help with an innovative solution to make your supply chain analytics actionable? I’m Randy McClure, and I’ve spent many years solving data analytics and visibility problems. As a supply chain tech advisor, I’ve implemented hundreds of successful projects across all transportation modes, working with the data of thousands of shippers, carriers, and 3rd party logistics (3PL) providers. I specialize in proof-of-concept and operational pilot projects using emerging technologies and methodologies. If you’re ready to supercharge your analytics or if you are a solution provider, let’s talk. To reach me, click here to access my contact form or you can find me on LinkedIn.

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