6 Simple Metrics for Tracking and Improving Carrier Performance
While transportation service providers vary in size and ability, having an overall strategy to track carrier performance can drive long term operational and financial stability. By relying on simple data captured over time, over the road shippers are better positioned to make informed decisions on the fly or in future bids to ensure their desired mix of cost, coverage, and performance.
Collectively, these six strategic carrier metrics can tell most shippers a comprehensive story about a carrier’s performance:
1. On-Time Pickup/Delivery – Measuring a carrier’s on-time percentage based on customizable on-time “rules” can give you visibility to overall and individual carrier on-time performance. Knowing which carriers or lanes are likely to cause issues will let you prioritize both your carrier improvement and tracking work.
2. Communication – By comparing the time a carrier notifies you of a delay to the actual appointment time, you can determine how well a carrier proactively communicates. Failures to proactively communicate, or what some call “delay notification defects,” are often more impactful issues than the late pickup or delivery itself. Having a late delivery that is also not communicated can be a compounded problem that prevents the dock from making an alternate plan to avoid waste in downtime.
3. Fallouts – A fallout is when a carrier accepts a load tender and, for any reason, hands the load back due to lack of capacity. Measuring the percentage of loads from which a carrier “falls out” can give you visibility to the biggest offenders. This is typically more of a problem with brokers making spot buys. Fallouts can quickly increase transportation costs and should be weighed heavily against these other metrics.
4. TMS Updates – The more a carrier is communicating, the better. Simply measuring the frequency of times a carrier updates its arrival/departure times (whether through a TMS system or EDI) can help ensure you have the necessary data to complete your carrier scorecard. The alternative is calling each carrier to track down information. The carriers with a higher update frequency usually have a better handle on the status of their trucks.
5. Tender Acceptance – Measuring the percentage of tenders that each carrier accepts eliminates waste from your tendering process and ensures carriers are meeting bid commitments.
6. Rate/Bid Adherence – 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.
Scorecard Drives Improvements
An action driven scorecard process sustains improvements and creates stability.
The best carrier scoring process means nothing if you’re unable to use the information to improve the performance of your overall network. With that said, it’s critical to send score information to carriers and work with them to improve their performance. Many carriers aren’t capable of scoring themselves in this manner and welcome the opportunity to review the data and improve.
Solutions lie in the corrective actions you take to improve the measures. By working with carriers to improve their performance instead of firing them and replacing them with a new carrier, you’re creating long term stability. It’s not a guarantee that you won’t run into the same issue with your new carrier. Shippers should be confident that the carrier has all the necessary information and is still incapable of improving before they consider a complete replacement.
Focus on partnerships, not transactions
Where possible, shippers should focus on long term relationships with core carriers. When it comes to rates, it’s about carrier partnerships, not transactions. There are simply no winners when shippers beat down carriers on rates to the point where they’re running unprofitably.
If you’re patient with your carriers and they’re willing to improve to your standards, it solidifies the relationship. Your carriers will trust that you will be there for them long term. In turn, they will show you the same loyalty by providing year round trucks at competitive rates and desired performance.