KPI has quickly become a marketing buzz word. But what's more, it is now a regular way of life for anyone who operates a supply chain. One of the most important performance indicators for shippers to keep an eye on is that of their carrier performance rates. Anyone who is involved in physically moving the freight needs to be monitored on performance rates, regularly.
In the past, this process was simple. If a carrier delivered your freight on time and it wasn't damaged, it was a job well done.Times have changed significantly since then, though.
Today a carrier must not only deliver undamaged freight on time but they must also do so with superior customer service. Furthermore, at no additional cost to the price promised just to ensure that safe delivery.
When you're evaluating carrier contracts, how do you know if performance justifies renewal? However, there are other areas that often go unchecked simply because shippers are not aware that they exist. Or maybe they just don't know how to find them. And this is where using a carrier management system is extremely beneficial for shippers of all sizes.
Whether you ship 100 pallets or 100,000 pallets per day, a carrier management system can be configured to collect all that data and organize it! Furthermore, they provide reporting functions that allow you to keep all carriers accountable for their service commitments, rate contract negotiations, fuel surcharges, and more.
In this blog post, we take a look at a few important tips for reviewing your freight carrier's performance. If you follow these tips, you will be able to more easily determine whether you should renew that contract or seek out another carrier!
What are the Benchmarks Carriers Should Hit Each Year?
Before you think about measuring carrier performance, it's important to set up a few benchmarks or goals.
This is one of the super-powers that a robust carrier management system provides shippers. This means that they are fully customizable and accessible from a remote location. This allows every carrier to have specific benchmarks, goals, service commitments, and other important key performance indicators. All while being able to monitor their own performance while out on the road.
Since all carriers are unique, creating individual performance benchmarks is not only fair, but it's simply more accurate. With the ability to monitor their own stats, the carrier can then modify certain processes to increase their rates.
Noted below are some of the important benchmarks or areas of interest you should be monitoring:
On-Time Delivery
When you set up a shipper or carrier profile in your CMS, you're able to upload the service commitments for every individual shipment.
For example, your carrier says they will deliver a product 3 business days after pick up. This service level commitment is set in the CMS for that individual shipment. Once delivered, all delivery records are uploaded electronically and stored in a cloud-based network.
The cool part is having the flexibility to create all kinds of reports. You can show individual performance indicators for all deliveries, those completed during a specific time, or with specific customers.
This allows the shipper to gain a big picture point of view or detailed review of a carrier's performance. If a carrier's delivery expectation windows are less than they quote or estimate, it provides you with the ammunition you need to either negotiate better rates or to find better carriers.
Invoice Auditing
A robust carrier management system also allows a shipper to document all negotiated shipping rates with specific carriers.
If you are working with a carrier that ships both dry and cold storage goods, it is likely that they will have different rates for the specific shipping types. The important thing here is being able to recall these rates when you audit your freight invoices. It is not uncommon for many carriers to "mistakenly" charge a customer a higher rate for a lower rate quoted shipment.
When you are reviewing your invoices, the CMScan download all negotiated rates for individual freight movement types and compare them to those documented on your invoices. As discrepancies are found, corrections can be forwarded directly to the carrier to be quickly amended. When certain carriers continually make these types of errors, it is time to find a new provider.
Final Thoughts
If you do not currently use a CMS, having one designed for your specific industry and size of business is easier than you would think. Redwood's Modern 4PL approach includes cloud-based technology solutions that allow clients to accurately review the performance of each carrier that ships any products on their behalf. This technology allows them to find the best carriers based on specific criteria.See how other companies have benefited from this approach in our case studies.
Learn more about this comprehensive approach to carrier management in our Modern 4PL for Dummies guide.
If you are considering implementing your own CMS, drop us a line today. We would love to help you get up and running!