5 Factors to Consider When Measuring the Effectiveness of Your Shipping Strategy

Written by Mike Osborne on . Posted in Third Party Logistics

Many companies understand tactical transportation processes on a shipment to shipment basis. Each time something needs to go out, they look for the best price, tender the freight, and repeat the next time the freight needs to be moved. This approach seems reasonable, but over time it fails to account for carrier performance, changes in shipment mix, customer demands and market trends. This standard tactical approach, if used on its own, also lacks a key component that is vital to any sound strategy: measurable results.

Recording and reincorporating results back into your carrier procurement process is an essential step toward the implementation of an effective shipping program. It is through measuring, that a company can identify:

  • 1. Strengths – What does the company do well?  How are your current service providers helping you to:
    • Turn orders into delivered product faster than the competition?
    • Deliver free of damage?
    • Forecast accurate freight costs?
    • Offer flexible options for minimum order size to your customers? 
  • 2. Weaknesses – Improvements can only be made after your weaknesses are identified. What are failures in your transportation solution costing you in terms of:
    • Overtime Warehouse Pay?
    • Disgruntled Employees?
    • Damaged/Lost Product?
    • Liability/Law Suits?
    • Unhappy Customers?
    • Costly Production Stoppages?
    • Wasted Time Putting Out Fires?
  • 3. Trends – Tracking trends will inform a company which shipping options will be most cost-effective moving forward. How have these trends impacted your freight costs?
    • How much more are you paying as a result of changes to tariffs, or linear foot rules, 12 months ago compared to now?
    • How has your service provider’s freight mix changed and how does it impact how they view your freight?
    • What % do accessorial charges make up of your freight spend vs a year ago? Two years ago?
    • Are you paying more or less for international freight?
    • Have your transit times improved?
  • 4. Progress – When processes are put in place to eliminate weakness, the results need to be monitored. For instance, has switching from Less Than Truckload (LTL) to Partial Truck Load (PTL) reduced damages? Has changing carriers improved delivery time? By how much?
    • What tools do you have in place to measure your progress?
    • What tools are your service partners providing you to track your progress?
    • How often are you tracking your progress?
  • 5. Results – Once a change has been implemented its lasting impact can be measured against baseline performance to identify the long-term effect.

Any company focused on continuous improvement must put measurements in place if they wish to improve their shipping performance. Anyone can get lucky and find a great rate once in a while, but refining the overall transportation strategy requires data to reveal trends and weaknesses in operations. Metric tracking and reporting is the key to more cost-efficient and streamlined shipping strategies.