Performance measurement and improvement, using transportation KPIs, are vital aspects of modern supply chain management. Successful performance measurement and management contribute to enhancements and help to optimize supply chain resources. That includes improvements within the carrier and LSP network. And despite freight market volatility, the freight market continues expanding. According to Globe News Wire, “The Freight and Logistics Market are estimated to grow at a CAGR of approximately 5% during the forecast period.” As a result, companies should create carrier scorecard standards that apply advanced analytics, namely predictive modeling, to consider market volatility and overcome it.
1. Use predictive modeling to determine expected carrier costs based on different scenarios
Predictive rates modeling should also play a role in predicting carrier performance. That provides a continuous flow of information to select the proper range for carrier scorecard metrics in the future.
2. Measure invoiced rates against market trends
The billed or invoiced freight rates should always reflect current market trends. The one exception involves contracted, dedicated fleets that lock in capacity drivers with non-compete contracts. The same also applies to tracking quoted rates against billed rates. And according to Inbound Logistics, “Measuring the rates being paid to the carriers against their quoted bid rates ensures carriers are honoring the rates offered in the bid. Carriers with low bid adherence typically need to improve their own bid process or are attempting to offer low bid rates for visibility to tenders without actually intending to book at the quoted rate.”
3. Remember to consider and track the error rates among carriers
Gia Glad reported in Global Trade Magazine that up to 6% of all carrier invoices contain errors. The error rate must be a line item on any carrier scorecard. And as it increases, it indicates the need to revisit terms and practices involving quoting and billing with the carrier.
4. Track which carriers offer reimbursements based on auditing
Some carriers will offer additional incentives, including reimbursements, to shippers that demonstrate loyalty and prove that a quoted, billed rate was inaccurate. Track those carriers within the scorecard as well.
5. Collect data and benchmark your carriers’ performance
Creating a carrier scorecard is simple. Collect and benchmark carrier performance data. That might include collecting both internal data and using the resources available in SONAR, such as SONAR InGauge, to compare carrier data against the industry.
6. Connect your scorecard resources to freight forecasting platform tools, such as SONAR Lane Scorecard
Measuring carrier performance is excellent. But it can grow more valuable when used in conjunction with other scoring resources, such as SONAR’s Lane Scorecard, which provides carrier and lane-specific data for key lanes chosen and entered by SONAR users.
7. Use advanced analytics to compare metrics to identify your most lucrative carrier relationships
Advanced analytics further help companies compare KPIs and metrics to find the most lucrative carrier relationships. In turn, users can hold carriers accountable for shortfalls. And that is especially true when managing compliance with applicable regulations or inbound freight routing guides. In the dynamic world of freight management, tracking/reviewing market and carrier performance is critical to avoid added delays and mitigate freight market volatility stresses.
8. Use insights to guide RFP and mini-bid activity to secure better rates during uncertainty
And lastly, the carrier scorecard should prescribe a Next Best Action. This “prescription” shows precisely what is necessary to increase carrier performance and maximize supply chain efficiency. In the case of carrier scorecards generated using predictive modeling, the next best action might include tendering loads earlier, sending out additional notifications to carriers, and even looking to other carriers for possible replacement options or expanding your transportation networks. In that way, carrier scorecards become an even more vital aspect of RFP processes and mini-bid activity.
Unlock added value within carrier scorecard creation by using the right freight market tools to generate insights
The need to improve carrier performance is always highest during a disruption. And 2020 taught the logistics industry that disruption is indeed the new normal. In the modern era of disruption, it’s crucial to maintain standards and means of measuring freight management party performance. Creating and using a carrier scorecard is one such tool. And SONAR can help your company create a data-driven, actionable scorecard that applies predictive modeling to survive and thrive through disruption. Request a SONAR demo online to get started.Request a SONAR Demo