It is no secret that the success of any enterprise depends on the efficiency of each of its divisions. Keeping track of all relevant factors in real-time becomes key to stay competitive and to drive for a profitable business. Today, transportation expenses account for between 40 and 50 percent of overall logistics costs and between 4 and 10 percent of the selling price of finished goods, making them a key issue for the logistics industry and other businesses.
Transport logistics plays a crucial role in the activities of any enterprise - the cost of freight transportation is a significant proportion of the cost of goods sold.
Thus, in order to maintain an acceptable profit share and competitiveness in the market, special attention must be paid to the effective management of transport costs. In the structure of these costs, 44% falls on wages, 22% on fuel and lubricants, 19% on depreciation of vehicles, 15% on operating costs. In our previous blog article “Possibilities of Plan-Fact Analytics in LogistInWeb™”, we considered the issues of planned versus factual data of fuel, depreciation and operating costs management. But how to evaluate how efficiently your transport department is working - maybe there are still opportunities for optimizing, debugging and improving its activities? For such an analysis, the KPI system (Key Performance Indicators) has long been used - parameters that evaluate the efficiency of both business processes as a whole and individual employees. Ideally, each company determines for itself an individual set of KPI indicators, the use of which helps to quickly achieve the strategic and tactical goals of the organization.
Among the universal KPIs, the following can be distinguished:
KPI for evaluating the effectiveness of the organization of the cargo transportation process:
Number of delivered (fulfilled) orders
The order is considered completed if it was delivered in full accordance with the established plan and the terms of the contract. The index of completed orders (perfect order index or POI) is defined as a percentage of the total number of orders.
Timeliness of delivery (On-time delivery).
One of the most important indicators, as it directly affects the satisfaction of customers and partners, showing how accurately the established “delivery windows” were observed.
The cost of shipping a unit of cargo (Cost-to-Profit Ratio).
The parameter on which your profit depends. It is necessary to conduct a regular assessment of the cost of delivering goods - do the costs of transportation exceed the profit from the sale? When planning cargo transportation, it is important to take this indicator into account and, if possible, look for ways to optimize it. It is useful to analyze the cost of delivery in dynamics - to track its change over time.
Vehicle Utilization Factor
In other words, this is the ratio of the actual volume or weight of the transported cargo to the total capacity of the vehicle. Assess how loaded your delivery vehicles are. Are they carrying "air"?
Ratio of planned to actual mileage
An indicator that allows you to evaluate not only the discipline of drivers in completing route tasks, but also the quality of route planning - if the actual runs regularly exceed the planned ones, then you should review doability of the planned routes, how feasible they are in reality.
For drivers and couriers, the following KPIs are usually used:
Number of completed orders
Regular assessment of the ratio of the number of orders completed in accordance with established plans to the total number of orders allows you to evaluate the discipline of employees and the quality of their work.
Timeliness of delivery
In the conditions of intense competition, it is not enough to deliver the order to the client, it is important to do it within a clearly defined time frame. Of course, the timely delivery ratio cannot be 100% - real life always makes its own adjustments, but it is necessary to strive so that delays do not become a system but rather exceptions.
Ratio of planned to actual mileage
An indicator that allows you to evaluate not only the discipline of drivers in completing route tasks, but also the quality of route planning - if the actual runs regularly exceed the planned ones, then you should think about the correctness of the planned routes, how feasible they are in reality.
Delivery service quality
If you use a customer feedback system and have tools for obtaining external assessments of the quality of your service, then it is very useful to conduct customer surveys after the closing of their orders and ask them not only about their satisfaction with the quality of goods or services, but also about the quality of the delivery to the end consumer - how punctual was the courier? How neat and polite? Did you take into account all the wishes of the client during delivery? Of course, this indicator does not directly affect transportation costs, but customer loyalty, and hence the likelihood of a repeat purchase, strongly depends on it.
Vehicle driving discipline - ECO Driving
The LogistInWeb™ monitoring module allows not only to determine the location of the vehicle and its actual route, but also to monitor how the driver controls the car entrusted to him. Following the speed limits, engine over-rev, breaking and accelleration behavior, curve behavior, engine running when parked and many more parameters with impact on wear and tear can be monitored in real-time and reviewed on Dashboards and dedicated reports. Aggressive operation significantly increases operating costs as well as risk factors and directly impacts the use life of the vehicle.
The analytical module LogistInWeb™ makes it easy and simple to obtain all the necessary information and data
for regular assessment of the effectiveness of transport logistics management based on KPIs. Apart of a large set of standard reports and dashboards, you can compile your individual reports via our Report Wizard or your individual Dashboards via our Dashboard Wizard. All data can be flexibly exported or integrated via API integration procedures to your company reporting system (ERP, WMS or other client backend solutions).
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