4 Steps beyond Metrics To Ensure Your Company Logistics Program Delivers
Using metrics to measure success is important in the trucking industry.
When it comes to logistics (and many other industries), “what gets measured, gets improved.”
This is important to consider – businesses can spend a lot of time developing metrics for their business, but are they the right ones? Do the metrics that you’re using having a significant impact on your overall business in a positive way?
What are some important metrics to speak with your customers about?
All clients have different needs and requirements based on their business, but there are a few common metrics that are discussed when developing the best potential outcomes. Many companies want to measure logistics services in terms that sometimes, have no impact on their overall business. A common question posed to logistics companies is “what’s your cost per mile?” While this is a valid question, and definitely deserves consideration, it’s not necessarily the most meaningful measurement for customers. It is simple to give clients a cost per mile, but it would be more beneficial to the customer to develop the best logistics plan based on their overall business goals – not based on how many miles your trucks will cover.
- On-time delivery:do our drivers deliver the said product on time, to the desired destination on a consistent basis?
- On-time pickup:are the drivers arriving to pick-up product at the required destination on time, on a consistent basis?
- Cost per mile, per kilo, per delivered pound:do our services meet the desired objectives of our customers based on which of these metrics fits their needs? Are we doing this consistently?
In addition to these common ways of measuring results,working very closely with each of your customers to develop a specialized logistics plan based on their needs will help drive results.By working hard to develop a relationship with your suppliers and shippers, you can establish measurements that make sense and have meaning.
In fact, in many cases the three measurements mentioned above are not enough, but by working through the following points you can deliver additional value for customers.
- Identify Metrics with Impact for Each Customer:The biggest goal as we’ve already mentioned, is to work closely with each customer to find metrics that impact their business plan. What are the “must haves” for their business…is it finding the shortest route possible? Is it a combination of using a dedicated carrier and their drivers? When working towards a mutually beneficial solution, you will find that each metric is unique to each business, and can be changed as goals are met or outcomes improve.
- Metrics Evolve Overtime:Communicate this important message to customers – metrics are always evolving. At any time during the life of a business, different things are important. Maybe a plant has added new capacity for a customer, or maybe traffic in and out of the plant presents a problem. If it’s a traffic issue, for example, we start measuring how quickly our drivers get in and out of a facility to find the standard; let’s say the goal is getting trucks in and out within one hour, and we find that it takes drivers 90 minutes. Our next step is to discuss options and problem-solve to find ways to meet that one-hour standard, and measure accordingly.
- Give Metrics Context:Metrics are built and developed in a context that customers understand. Asking an electrical engineer to measure the number of “likes” your web page receives doesn’t make sense, and is definitely a waste of their time. When we build metrics we put them in a context that makes sense to our customers. Most manufacturers have some volume context to work with – cost per gallon for example – and we want to attach measurable numbers to that item. If company X measures with kilograms, we work to be sure metrics make sense, are understood by all involved and impact the whole business…not just the logistics function of the business.
- Understand Customer Goals and Strategize to Win:Work to fully understand customer goals as an organization, and if possible, impact their larger vision. If the company’s goal is to grow their overall business 5% in the next year, what does this mean from a logistics standpoint? It may mean a 3% reduction in the logistics function, saving XX amount of dollars.With a trusted partnership, we work to find ways to efficiently manage the logistics to create a 3% cost reduction, while at the same time keeping in mind the larger goal of a 5% increase in revenue.By tying these metrics together, we are not only impacting our small section of the customer’s business, but also impacting overall, larger business goals.
An area where we at Dupre´ Logistics are proud to share with our customers is our quality of service through the experience and professionalism of our drivers. Nationwide, driver turnover is 100% but at Dupre´ we experience a very low 25% driver turnover rate. As we work with businesses on developing appropriate metrics, we take this into account…our expectation of success increases greatly when we know our drivers are experienced, professional and have a vested interest in serving customers to the best of their ability. This creates positive outcomes for Dupre´, but more importantly, for the clients we work with.
There is not one metric that always works – there is no magic metric. When working with clients it is a good idea to pick a small group of 3-5 metrics that measure different aspects of the business and encompass a service, cost, productivity, safety and asset utilization and efficiency component. But what those metrics are specifically, depend completely on your customers. It’s something far more meaningful and impactful than just cost per mile.