What’s Wrong With Basic KPI Tracking

Basic KPIs can lead to major problems within your enterprise. Improperly defined KPIs, notes Klipfolio, will add to logistics costs and make data management a nightmare. The biggest problems with traditional KPI tracking and limited access to data include:

• Poorly defined metrics that do not really provide any value.
• KPIs that lack accountability is effectively meaningless.
• KPIs that fall well outside of the range of attainable will become useless.
• When measures lack specificity, it is impossible to know what is necessary to improve them.
• Metrics can also be too hard to measure, reflecting the difference between quantifiable and non-quantifiable components of the operation.

So, the solution to avoiding these problems lies in taking a more objective view of KPIs and their impact. 

Leading Freight KPIs Provide Snapshot Visibility and Management

The leading freight KPIs must maintain certain characteristics. These characteristics are comparable to the exact opposite of the challenges and limitations of basic KPIs identified above. Industry-leading freight management metrics and KPIs include:

• The rate of perfect shipment within the organization.
• Freight payment accuracy, including invoicing accuracy.
• On-time delivery, as well as any issues that may have improved or otherwise tendered on-time delivery.
• The rate of on-time pick up for your operation as a whole and broken down by carriers.
• The rate of payment on-time and in full. The incidence of use of out-of-network carriers and their costs.
• The average cost per scared or trailer.
• The average rate of utilization among your trailers.
• The average dwell time of both inbound and outbound drivers.
• The total transit time for shipments and distance traveled, as well as a measure of the ratio of transit time to distance.

Remember, all effective KPIs are quantifiable, reflecting a processor opportunity that can be measured with numbers.

How to Evaluate and Apply the Top Freight KPIs for Continued Logistics Success

Creating quantifiable, actionable metrics can feel overwhelming, but shippers that operate robust management styles and understand the principles of SMART KPIs can see real results. In fact, S.M.A.R.T. is an acronym, reflecting the core characteristics necessary for effective KPI use and creation, which include:

• Specificity.
• Measurability.
• Achievability.
• Relevant to the operation or other goals.
• Time-phased.

After establishing the characteristics of KPIs, it important to follow a few additional best practices, as explained by the Logistics Bureau. These include:

1. Limit the total number of KPIs based on authority within the company and accessibility. 
2. Tie all KPIs back to a core objective or goal.
3. Make KPIs accessible to appropriate parties, such as logistics or dock managers.
4. Establish a hierarchy for KPIs, reflecting whether KPIs are appropriate for executives or individual workers—basically defining the level of granular detail. 
5. Enable drill-down functionality to look beyond total KPIs and understand smaller KPIs that amount to larger metrics.