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Fast, Right, or Cheap: 10 Transportation KPIs to Balance All Three


Fast, Right, or Cheap: 10 Transportation KPIs to Balance All Three

July 19, 2022

Fast, Right, or Cheap?  Pick two.

You may have heard this adage throughout the transportation and logistics industry.  Implying that your transportation strategy must be willing to sacrifice one to achieve the others.  Do you ship quickly and cheaply- but sacrifice accuracy? Do you choose to be accurate and fast, but face higher costs? Balancing all three objectives shouldn’t be a zero-sum game, but can it be done?  The secret may be to consider the three objectives as fluid – when one ebbs, the others flow.

Thinking about this juggling act, how do we know which metrics to pursue and which performance metrics indicate that these objectives are balanced? Regardless of industry and even the unique challenges of your business, managing the following 10 transportation key performance indicators (KPIs) will provide you with the insight to find the balance your business needs.

Today we’ll highlight a few of our top 10 KPIs through a high-level view of the three objectives: speed (fast), quality of service (right), and cost (cheap). By leveraging each of the addressed KPIs, you’ll discover where to focus your attention.

Objective 1: Speed

1. Order fulfillment cycle time

Order fulfillment cycle time measures the total elapsed time from when a customer places an order to the delivery time.

This KPI provides insight into where your organization experiences inefficiencies in order fulfillment strategy.  It is crucial to capture everything including order processing time, transportation planning time, distribution lead time, and transit time*.  By understanding this KPI, you can understand the customer’s experience and manage their expectations once they have placed an order.[*when applicable according to the Incoterms]

2. Freight invoice payment cycle time

Freight invoice payment cycle time measures the total elapsed time from when a forwarder/carrier/broker submits a clean freight invoice (clean defined as having passed all validation audits) up until the invoice is settled.

This KPI evaluates misinterpretations of your carrier rate sheets/contracts in your transportation management system (TMS).  In this KPI, we are finding factors that cause invoices to fail rate audits. Improve your processing time and accuracy for transportation planning, freight audits, and payments by correcting these issues.

3. System downtime recovery (interface reliability) measures the total elapsed time from when a business process is reported as “failing” until the time that process/interface recovers and returns to normal operations. It also measures the number of reported failures over a given period.

In this KPI, you’ll understand what your optimal performance levels are and validate automated processes.  Check processes dependent on system reliability and be sure they are operating as expected- if you find things are not flowing as designed, troubleshoot and bring your systems back to their optimal performance levels.

Objective 2: Cost

4. Freight cost per unit measures the freight cost per weight unit.  Use the unit of measure that is most relevant to your business.

This KPI reminds us how we are tracking transportation costs, without anchoring them to a unit of measure (UoM).  Understanding this KPI will help give you insight into how your operations are performing (relative to budget). By grounding cost to a UoM, you will see trends over time and highlight factors that impact freight expenses.

5. Freight cost as a percent of sales measures the freight spend divided by gross sales.  This KPI helps us understand how transportation costs impact margin.

6. Cargo claims as a percent of sales measures the total dollars filed as a loss or damage in transit claim (with carriers & forwarders) divided by $1000 of gross sales.

This KPI, in conjunction with measuring total deliveries made without exceptions, provides insight into how well carriers are performing. It is important to partner with carriers that will treat your freight as well as possible, and when concerns arise, bring those concerns to your attention.

Concluding Thoughts

Balancing our recommended 10 transportation KPIs will serve as a solid foundation and validate where your operations are performing optimally and where you need to focus your attention.  In today’s post, we highlighted 6 of our 10 transportation KPIs to help improve speed and cost- but what about quality? Read Part 2 today and discover the importance of quality, when balancing your transportation operations.

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Jeremy Hudson

Vice President of Client Services

Jeremy’s focus is on the products and services clients need to stay competitive. Open Sky Group’s mission is to deliver technology-enabled solutions that allow our customers to achieve more while having the flexibility to adapt to change. Jeremy lives the core values and mission by bringing the best experience possible to our clients. He is an essential member of implementation teams, working alongside clients, and encouraging them to use innovation and best practices instead of customizations for success.

Jason Yantiss

Vice President of Client Services

Jason provides leadership to a variety of teams focused on implementation and integration. With 27+ years of experience holding operational and technical management roles in transportation, billing, and warehousing across a vast array of industry verticals, Jason is adept at driving multiple complex projects, understanding customer needs at all levels of the operation and providing viable solutions. Jason’s resume of 150+ implementation projects include Warehouse, Labor, Transportation, Yard Management and multiple AR/AP Freight Pay and Customer Billing systems. 

Eric McPherson

Vice President of Client Services

Mac works to oversee implementation and integration projects. A former Marine officer and military police officer, he brings over 27 years of supply chain experience, including 11 years at Blue Yonder in both delivery and service sales. Mac is a dedicated, team-oriented professional with a background in business management, professional services, customer service, and supply chain technology. His specialties include sales support, supply chain execution systems, project management, fulfillment operations, distribution operations, and GSA contracts.

Shannon Caflisch

Senior Vice President of Sales and Marketing

Shannon is responsible for the strategy and management of all sales, business development, and marketing programs. With over 25 years of sales experience and 15 years focused in the supply chain space, Shannon focuses on building strong relationships with clients and partners and strives to deliver the right software solutions to help conquer supply chain challenges. Shannon believes in learning by listening to understand clients’ goals, struggles, and what is important to their business to build lasting, successful relationships.

Alan Prillaman

Senior Vice President of Client Services

As Senior VP of Client Services, Alan oversees all consulting services and account management at Open Sky Group. Possessing over 30 years of combined industry and consulting experience, Alan leverages his unique background in IT, logistics, quality management systems, manufacturing and distribution operations, and facility and strategic account management to provide clients with creative resolutions to complex challenges. His core philosophy and passion are to deliver tangible value for and establish long-term trusted partnerships with our clients.

Mike Noble

Senior Vice President of Technology

As Senior Vice President of Technology, Mike leads Open Sky Group’s Managed Services, Software Services, Infrastructure Services, and Information Technology teams bringing 35+ years of experience in Supply Chain Execution and Information Technology. Mike and his teams ensure we maintain the highest levels of customer service in a secure and reliable environment, constantly reviewing and evaluating new technologies, their appropriateness and applicability so we can safely and securely transact our own business – and help our clients accomplish the same.

Chad Kramlich


Joining Open Sky Group in 2015, Chad, served as Chief Revenue Officer for three years prior to his appointment to CEO in 2022. With over 25 years of experience delivering results for high-growth software and consulting organizations, Chad is leveraging his background in building efficient and effective implementation teams, establishing high-impact services operations, achieving revenue growth, and deepening executive-level client relations to help propel Open Sky Group into a very successful future.