Less is more: The secret of KPIs in transport management
Posted by Dr. Ir. Steven De Schrijver on 21/11/2017
How to gain insights into the efficiency of your transport management? Once you decide to measure the system, you have a wide range of KPIs to choose from. How to make this choice, and which KPIs definitely deserve a place in the analysis?
When comparing the available KPIs for transport management, you immediately spot an important difference: some KPIs are universal and therefore applicable in just about each sector or activity, others are very specific. For example, a major international carrier will focus more on KPIs that are kilometre related, while a local courier will benefit more from monitoring stop-related KPIs.
The importance of KPIs
It's important to properly assess the relevant drivers of your business to end up with a smart selection. There is no need to drown in the transport KPIs. On the contrary, the trick lies in drawing as complete a picture as possible with as few KPIs as possible. This also has an impact on the team working on achieving the KPI targets: allow the KPIs to breathe, allow people to speak in these terms, and make them easy to interpret via colour codes. But above all: choose well. Therefore, as help: our selection of indispensable KPIs.
The lower the cost, the more efficient the transport. Optimisation leads to savings and that should never be relegated to the margins. Determine whether your goal is 10%, 15% or 20% savings, and monitor whether you are moving in the right direction throughout the optimisation process.
2. Average driver-profit
A second universal KPI is found on the resource side. If you as a transporter want to establish a long-term relationship with (your own) drivers, then it's good to monitor the revenue they make. Define a KPI for their average earnings in order to chart whether the level of income they receive is sufficiently high. Maintaining a valuable relation with an unprofitable partner is impossible.
3. Driving, working and rest times
However, not only does income play a role in transport optimisation. Don't forget driving, working and rest times. Calculate the buffer still available with respect to the agreements contained in European legislation. By continuously monitoring whether drivers are ahead or behind the ideal schedule, you can give tailored orders to colleagues.
4. Unplanned orders
The percentage of unplanned orders as KPI gives an indication of the number of transports for which you find a solution internally or externally. In other words, this percentage indicates how many of your own drivers you can schedule or how many external resources you need to satisfy your customers. This KPI is highly dependent on the organisation and therefore not applicable in every context.
5. Timely delivery
On the customer side, delivery within the agreed time windows is a generally applicable KPI. In many cases it’s also useful to link this KPI to the number of trips. After all, the goal often is to deliver on time, in as few trips as possible, in order to make optimal use of the time slots you arrange with customers. In this context, it may also be useful to simulate specific opening hours for some customers. Should you come to a new agreement with these customers, it would in its turn create opportunities, for example for other loading times (f.e. loading the day before in the case of a customer with early opening hours).
6. Time in traffic
With a view to timely delivery, traffic congestion is of course a very decisive element. Defining the time in traffic as a KPI helps in planning and avoiding traffic jams. Per segment driven, examine how much extra time is needed due to congestion. Check this the day before and the day after the transport to obtain a better view of the actual duration of a journey.
7. Truck Fill Rates
Travelling as many kilometres as possible with a full load is also a usual suspect among transport KPIs. It's good to look at the average fill rate, but it can also be useful to combine this with the average maximum fill rate. Each route has a maximum fill rate at a certain moment, so take the average of these maximum fill rates into account as well.
8. Load factor/km
Finally, we'll cover perhaps the greatest classic: loading metres, which indicates how heavy the transport day looks. However, this is a KPI that deserves some nuance. After all, you can move 13 loading metres 1 km or 200 km. We like to link how much depth is used to the distance foreseen, which gives a more representative picture of the loading factor. The same reasoning is applicable to truck fill rates.
To conclude, conducting a thorough analysis to have a smart list of KPI’s at your disposal is a valuable investment. Eventually, it will save you plenty of time and it will bring more peace of mind.