Working with carriers is kind of like dating – you’ve got to get to know them before fully committing. And just like any relationship, issues can pop up that make you question if it’s going to work out long-term. That’s why actively monitoring carrier performance through key analytics is so important for shippers. It provides visibility to identify problems early and manage partnerships in a way that optimizes the supply chain.

I know, tracking metrics sounds about as exciting as filling out a dating profile. But stay with me here! There are meaningful insights to be gained from carrier analytics that can strengthen relationships and avoid nasty breakups. This post will explore the key data shippers should monitor, methods for auditing performance, how analytics improves decision-making, and the future of carrier management. Let’s dive in!

Why Carrier Performance Matters

carriers are really like significant others for shippers. You’re spending all this time together and relying on them for something critical – delivering your goods to customers. When the relationship is healthy, everything flows smoothly. But any hiccups can quickly cascade into bigger issues.

Late deliveries make customers angry. Damaged freight leads to claims and disputes. Incorrect invoices become a billing nightmare. Before you know it, your supply chain has the equivalent of a toxic relationship.

The impacts of weak carrier performance include:

– Lost sales and revenue from stockouts and missed deliveries.

– Higher expenses to expedite shipments. 

– Angry customers and damage to the brand reputation.

– Extended order cycle times that constrain growth.

– Difficulty forecasting inventory and production schedules.

Consequently, supply chain leaders must actively monitor key metrics across their network of carriers. This visibility enables them to identify problems, control costs, and make data-driven decisions to optimize logistics performance.

Key Carrier Performance Metrics

There are several core metrics that provide valuable insights into how well carriers are executing loads, meeting expectations, and supporting the business relationship. Key performance indicators (KPIs) to track include:

On-Time Delivery

The on-time delivery rate shows the percentage of loads that arrived by the scheduled appointment date and time. This measures the carrier’s reliability and ability to meet service level commitments. When this metric declines, it indicates systemic problems that require attention.

Claims Ratio 

The claims ratio calculates the percentage of loads that resulted in a claim due to cargo damage, discrepancies, or other issues. High claims signal poor handling procedures, unsatisfactory equipment conditions, or lack of care by the carrier.

Invoice Accuracy

Invoice accuracy refers to the percentage of carrier invoices with correct rates, accessorial charges, and billing terms per the contract. This gauges the carrier’s attention to detail, system capabilities, and accounting practices.

Equipment Availability 

Carriers should have sufficient capacity to handle normal volume fluctuations. Tracking equipment availability reveals steady shortages that prevent the carrier from meeting service expectations.

Customer Service 

Customer service metrics evaluate the carrier’s responsiveness and problem resolution in areas like communications, claims processing, and general support. Poor performance threatens the partnership and brand reputation.

This core group of KPIs covers timeliness, care, accuracy, capacity, and service – the fundamental carrier capabilities that impact supply chain efficiency. However, companies may track additional metrics related to pricing, technology use, carrier safety programs, environmental impact, or other needs. The key is identifying the factors most critical for the business relationship.

Auditing Carrier Performance

Once key metrics are defined, companies need effective methods to monitor them. There are two primary approaches:

Manual Auditing Methods 

Before advanced analytics, auditing carriers was extremely labor-intensive. Common manual techniques include:

Random Audits

Pulling a random subset of carrier documents like proof of delivery, invoices, and inspection reports to check for problems.

Spot Checking 

Physically observing carrier activities at shipping and receiving docks to verify proper procedures.

Manual auditing by supply chain analysts provides a snapshot of performance, but only covers a tiny fraction of the data. This makes it difficult to identify patterns and risks across all carriers and locations. The process is reactive instead of proactive, looking back at what already occurred rather than preventing future issues.

Automated Auditing With Analytics

Now supply chain technology allows companies to automatically gather performance data across the network for a holistic view. Key elements of an analytics approach include:

Data Collection

Integrating data from transportation management systems (TMS), ERP platforms, and other sources to create a central repository.

KPI Tracking

Establishing metrics for each carrier and setting targets based on contractual terms, industry benchmarks, and past performance.

Benchmarking

Comparing carriers to identify leaders and laggards across the network. 

Analytics and Reporting

Applying algorithms to reveal trends and exceptions. Presenting role-based dashboards, scorecards, and reports to support decision-making.

Advanced analytics transforms thousands of manual audits into a few clicks that uncover actionable insights. This enables proactive optimization rather than reactive firefighting.

Using Analytics to Manage Carrier Relationships

With comprehensive visibility through metrics and benchmarks, shippers can actively manage partnerships in ways that were impossible before. Key applications include:

Identifying Top and Bottom Performers

The 80/20 rule applies – typically 20% of carriers cause 80% of problems. Analytics quantifies exactly which partners consistently underperform or exceed expectations.

Addressing Problems Through Corrective Action

Data reveals the root cause of pain points like late deliveries and claims. Shippers can address systemic issues through carrier improvement plans, rather than simply reacting to failures.

Optimizing Loads and Capacity

Analytics helps match the right loads to the right carrier through route optimization, equipment type needs, and other variables that balance service and cost.

Negotiating Rates and Contracts

Quantified metrics justify better pricing and contract terms with carriers. Underperformers are penalized while top partners win more business.

In essence, data and analytics progress carrier relationships from art to science. Rather than gut feel or manual observations, decisions are driven by validated insights to optimize networks.

Carrier Scorecards and Performance Reviews

To facilitate data-driven conversations, many shippers present carriers with monthly or quarterly scorecards. These summarize key metrics and compliance with targets over time to document performance.

Scorecards provide an agenda and supporting evidence for business reviews. Shippers discuss successes, deficiencies, process improvements, and relationship development opportunities grounded in facts. 

Well-executed business reviews foster collaboration rather than confrontation. The goal is aligning priorities to achieve shared objectives. Scorecards quantify progress toward those mutual goals through critical metrics.

The Future of Carrier Performance Management

The application of analytics to measure, benchmark, and optimize carrier relationships will only increase in the coming years. Key developments include:

– Real-time tracking through IoT devices to identify and resolve issues faster.

– Expanded data integration from new sources like scans, sensors, and GPS. 

– Advanced machine learning algorithms to detect patterns and make recommendations.

– Shared scorecards and metrics across supply chain partners for end-to-end visibility.

– Mobile analytics putting carrier insights in the hands of field personnel.

As analytics capabilities grow, shippers gain unprecedented visibility into carrier activities. This enables continuous improvement through informed decision making, network optimization, and strengthened collaboration.

Conclusion

Managing carrier relationships is critical, but nearly impossible without the right data. As core supply chain partners, carriers have an outsized impact on performance and customer service. 

By leveraging analytics techniques to monitor carrier metrics, shippers can quantify effectiveness and address problems proactively. Visibility and benchmarking also optimize operations and networks for efficiency.

In a volatile logistics environment, shippers need insights to match loads with the best carriers while keeping costs under control. Auditing and managing carrier performance through analytics provides the foundation for resilient, high-velocity supply chains.