August 16, 2022
Getting the right product in the right condition.
As an organization, your transportation operations’ main objective should be meeting internal and external customer needs on time and in the right condition (quality). In our last article “Fast, Right, or Cheap: 10 Transportation KPIs to Balance All Three” we focused on the top transportation KPIs that would improve speed and cost, but how do we evaluate quality in our transportation operations? In part two of our article, we review our remaining top 10 transportation KPIs focusing on quality and getting the right products to customers in the right condition.
Objective 3: Quality
7 . Percentage of shipments delivered clear- measures the total number of error-free deliveries divided by the total number of deliveries attempted within a set time window (week, month, quarter).
This KPI validates that customers receive their orders and the order is in good condition. Measuring on-time delivery performance without understanding how many deliveries were accurate can be deceiving. Ask yourself, is an incorrect order delivered on time better than a correct order delivered late? Combined with order fulfillment cycle time, this gives us insight into what your organization needs to ensure accurate and timely deliveries.
8. Percentage of shipments delivered to commit date- measures the total number of deliveries completed (on or before) the customer expected delivery date.
A delivery date can be a firm “in-hands” delivery date or the date your business committed to making goods available. Using a customer requested delivery date can validate your ability to meet customer-specific needs. However, should your customer set unrealistic expectations (same-day delivery), tracking performance to your committed date is also valuable. To further improve your operations, it is important to understand your ability to meet customer requests and honor commitments.
9. Percentage of shipping documents without error- measures the number of shipping documents generated without errors divided by the total number of shipping documents generated over a specific time window.
This KPI evaluates how accurate shipping documents are required to move goods and generate accurate billing. Errors in shipping documentation can cause multiple delays resulting in higher costs. Identifying and correcting systemic issues will provide insight into data integrity and opportunities for improvement.
10. Percentage of invoices billed accurately- measures the total number of accurate carrier invoices divided by the total number of carrier invoices processed over a specific period.
This KPI provides us insight into freight payment delays and billing errors. Your freight payment cycle time should consider accurate invoices. Finding inaccurate invoices may indicate your TMS is facing data integrity issues or carriers over-or under-charging your services. Your estimated freight costs and financials will disrupt the quality of your transportation operations.
When it comes to the health of your transportation management program, these transportation KPIs serve as a foundation focused on quality. By evaluating your transportation operations, you can validate areas of optimal performance and areas in need of attention. Balancing your operations requires careful consideration of all three objectives: speed, quality, and cost.
Looking to implement these ideas as part of a new TMS implementation? Need some expertise on getting the most out of your TMS? Contact us today.