“Key performance indicators can make or break supply chain operations, and it seems as though there are more to choose from every day,” says Morgan Forde of Supply Chain Dive. That is the crux of digital tech in supply chain intelligence. Leaders get so involved in leveraging data that they overlook the meaningful aspect. Data for the sake of data lacks value. Tracking the top key performance indicators for shipping industry success, or supply chain KPIs, means boiling them down the essence of these 10.
Successful supply chain management begins with prioritization. Freight broker profit and shipper profitability require strategic prioritization of arrivals/departures. And that begins with understanding the average wait times for given locations. Viewing any WAIT metric within FreightWaves SONAR can provide a market view of average wait times at facilities in a given city. And by looking at the markets with the highest rates, indicated by the share of the treemap and color intensity, it’s possible to prioritize truck schedules better.
Another excellent way to gauge activity within the industry surrounds the volume of new truck orders by class. Of the key performance indicators for shipping industry success, this metric is relatively simple. A rolling volume of new truck orders reveals how overall capacity within the market is trending. As the transportation data regarding order volumes increase, it indicates network expansion throughout the industry.
Any successful list of key performance indicators for shipping industry improvements must include tender rejection indices. Key metrics, such as SONAR’s tender rejection indices, OTRI and ITRI, help enterprises identify weaknesses or problems when covering a load may occur. Since rising levels of rejections indicate increased demand, users should view multiple rejection indices at once. That is especially true when viewing various locations. Fortunately, leveraging a resource, such as SONAR’s Lane Scorecard, to see various metrics for multiple sites can hasten the process.
Freight management parties must also track freight carrier compliance. That includes adhering to the routing guides, fulfilling contractual obligations, and any such deviations.
Tracking on-time pick up and delivery is an additional opportunity to leverage key performance indicators for shipping industry success. Enterprise leaders should also take both holistic and granular views of these metrics. For instance, track on-time pick up and delivery across your whole network and within top O/D pairs.
Inventory velocity provides insight into how quickly freight turns over within your company. Faster speed amounts to faster truckload quotes and increased business profitability. At the same time, decreasing freight rates may indicate limited resources or trouble maintaining current operating status.
Freight managers understand typical expectations for annual freight spend. While some deviation is always inevitable, it is still imperative to track. Obviously, major disruptions will typically coincide with drastic deviations from the typical freight spend. However, recognizing such deviations as they begin to occur can help managers preempt significant market changes. That contributes to proactive transportation optimization.
Shippers should also track the percentage of returned shipments. That is especially crucial in e-commerce ordering. And they must track typical causes for returns. Knowing why customers return a product is the only way to help prevent future returns.
The cash-to-cash time cycle refers to the monetary transactions that occur for a given order. It is the complete cycle time average from the moment a customer pays for an item through the point of payment to the carrier or any other third parties. Tracking the time cycle gives managers a way to gauge overall business health. As the time cycle decreases, it indicates faster fulfillment, invoice processing, and freight settlement. The insights gained through this aspect of the top key performance indicators for shipping industry success will help companies identify possible candidacy for shipper-of-choice status. The same applies to carrier-of-choice status for brokers.
Freight invoices typically contain marginal errors. But inaccuracies add up to major losses over time. Enterprises need to track all invoices’ accuracy and validity with advanced freight tech, such as auditing software.
Successful supply chain management depends on doing more with less. As with any industry, enterprises cannot improve what they do not know. By tracking the right key performance indicators for shipping industry efficiency, continuous improvement is possible. And it all relies on access to and application of freight data. Get the insight your company needs to be successful and actionable with SONAR. Request a SONAR demo by clicking the button below now.