KPI’s should be built in the beginning of the process with goals that are agreed upon by both the carrier and the customer.
With tightening capacity, increasing regulations, driver shortages, and a host of other issues, it should come as no surprise that Dedicated Contract Carriage is one of the fastest growing segments of the trucking and distribution industry. And it’s easy to see why; Dedicated Contract Carriage offers flexibility and ensures capacity. If you are outsourcing a private fleet Dedicated Contract Carriage also gives you the flexibility of having your own fleet minus the burdensome headaches, cost, and liability of owning your fleet. But turning over your transportation operations to a service provider doesn’t mean you should just sign on the dotted line and then walk away. This is going to be an ongoing situation; one that is vital to the success of your company. That’s why it’s important to set goals in the areas that your company would like to see improvement and then develop KPIs so you can measure those improvements throughout the length of the contract. Remember, you can’t monitor what you can’t measure.
The goals set can apply to a variety of issues other than just reducing costs. For instance, if your company has sustainability initiatives, you might set your goals in MPU’s or idle times. Along with the typical fleet measurement numbers, be sure to include on-time delivery and driver wait times at both the origin and the destination. You want to ensure that the driver is always moving, even at the origin site…just sitting and waiting leads to driver frustration and that’s never a good thing.
KPIs need to cover and support unexpected and unwanted charges, as well:
Wait time: If you’ve addressed long wait time on the KPIs and your company is being billed detention, then you have those measurements in front of you to begin a dialogue with your carrier to identify the underlying issues. Find out where the delays are happening and why…and then develop a process to solve the problem. Reduce the problem and you ultimately reduce costs.
Shipment integrity: One of the advantages of working with a dedicated fleet is the assurance that your shipments arrive in good condition, and this can save on back-charges due to shortages or unusable damaged product. Exceptions can be monitored on the KPI.
Inbound synergies: Why pay for empty mileage when you could utilize your backhaul to reduce or eliminate the cost to ship products in. You can work with your carrier to develop inbound supplier initiatives and then measure the savings.
Communicate. Communicate. Communicate: Make sure that you make your carrier a partner in this process by implementing quarterly business reviews with your operations and sales rep. This is your chance to ensure that the carrier is doing everything that was agreed upon, based on the KPIs; that your operations have not been scaled back. Having everyone at the same table ensures that all participants understand the goals and objectives.
If your core business isn’t transportation; if you can say, “I don’t want to be a trucking company,” then Dedicated Contract Carriage may be the perfect choice for your company.
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