Remove Your Performance Blinders with TMS-Powered Metrics
Key metrics can be much more than one-dimensional indictors of how a network is performing. In combination with the analytical power of modern transportation management system (TMS) technology, a key metric can be the first line in a multi-layered story about the issues that are hurting the efficiency of your freight network.
If you’re not using these indicators to their full potential, your view of network performance is almost certainly restricted.
Choosing the right metrics depends, to a large extent, on the type of business you’re in. A manufacturer of heavy equipment might focus on cost-oriented measures of efficiency such as mode and truck capacity utilization. In contrast, a company in the food business typically prefers primary measures that are attuned to a service industry, like on time performance.
However, selecting metrics that are great indicators of how your network is trending is not the end of the story. You must also consider their controllability and whether or not they drive change. This second step ensures that the metrics are not only relevant to your business, but also meaningful in terms of providing the data needed to fix performance problems.
There is a third consideration that has become more important over recent years—understanding how TMS technology will support and enhance the measuring system you have put in place.
Today’s TMS solutions connect the performance dots as never before, and, when used effectively, enable shippers to delve deeply into the root causes of efficiency-busting problems. Data related to orders, suppliers, carriers, distribution centers, customers, and shipments are no longer viewed in silos, but instead as integrated data sets that represent a holistic picture of the supply chain. Moreover, when a metric indicates that something is going awry, TMS analysts—who are industry experts and intimately familiar with the shipper’s supply chain—use these correlations to carry out root-and-branch analyses of freight flows.
Keep in mind that modern TMS solutions are much more creative in presenting data. Dashboards with automatic data feeds can be set up for ad hoc projects as well as ongoing monitoring. Visual maps make performance measurements much more dynamic and enable users to pinpoint areas of interest.
Let’s use a hypothetical example to show how TMS technology adds a new dimension to measuring and improving network performance.
A major supplier located in rural Minnesota is enduring a very harsh winter. The performance metrics tell you that average freight costs are rising and on time delivery is in decline. Mother Nature can’t be changed, so do you accept these readings and carry on as best you can, or do you use TMS technology to deepen your understanding of the situation and develop corrective strategies?
The answer is the latter course of action, probably in the shape of a TMS Metric Dashboard that paints a much more detailed picture of the network issues that have arisen.
First, you drill down into the Midwest and identify the lanes and carriers that are suffering the most. The TMS solution provides a lot of timestamp data as well as readily available, correlated metrics. You notice a lane where average transit has increased by a day as a result of the recent slow driving conditions. After a quick adjustment to the TMS, you increase the transit on the lane which instantly impacts appointment scheduling requirements. This helps pad your on time performance.
Now, what about the problem of increasing costs? It is apparent that your primary carrier is struggling with capacity in this lane. Armed with the excellent story that the TMS has generated, you might decide to pick up the phone and talk with the carrier. Perhaps you learn that the service provider needs a little more lead time to align capacity, so you schedule your TMS to push out advanced order visibility reports to the enterprise. If the carrier absolutely cannot find the capacity, you might consider splitting the lane by adding another primary carrier.
Having all of these data points under a single TMS umbrella enables you to make the connections and find the causes of network problems. Notably, the ability to carry out this detective work in a visual manner makes it easier to identify the corrective actions that will have the most impact in the shortest time.
For many years, key metrics have been staples in the freight manager’s toolkit. Today, these measures are so much more, thanks largely to advances in TMS analytics.