There is more data available today than ever before1. Collecting data and utilizing that data to establish performance benchmarks is extremely valuable. These benchmarking metrics can be used to compare performance factors against competitors, industry averages, and previous performance metrics. The analysis of this data can help shippers gain insight into how they can improve, better predict, and strategize their logistics operations. There are numerous tools and resources available to collect and measure benchmarking data.
Industry-Wide Performance Metrics
Many industry resources are available to measure performance and analyze trends. Many associations, consulting firms, and publications provide reporting on a regular basis. One popular resource for North American transportation is the Cass Freight Index. The Cass Freight Index measures North American freight volumes and expenditures and provides trends within the industry on a monthly basis2. Here, shippers can look at capacity tactically and strategically to determine how they should approach their transportation operations moving forward. For instance, shippers can begin to predict how changes in industry capacity will affect them in the short and long terms. Shippers can also use this information to ask how the trends will affect rates or if they should consider dedicated capacity for the long term.
Similar to the Cass Freight Index, other companies like, Jones Land LaSalle (JLL), offer capacity data specific to the warehousing sector3. Evaluating vacancy and capacity statistics by region can contribute to making proactive decisions. For instance, vacancy rates should be compared to overall performance. If a shipper is growing, they need to evaluate if their distribution space has room to expand for that growth, if not they should consider leasing or building a new distribution center to fit their needs. By being proactive, analyzing trends, and planning for different scenarios, shippers can minimize risk as capacity fluctuates.
Evaluating Data and Reporting From Countries
In some instances, various countries will provide overall reporting on different logistics segments. In recent years, Canada has been working to develop a nationwide benchmark for logistics performance and provide predictive metrics on transit times and capacity. The port indicator and the fluidity indicator are particularly important metrics for Transport Canada4. The port indicator is a performance benchmark for Canada’s five largest container ports, the movement of freight through those seaports, and the movement inland to the United States5. The fluidity indicator measures ocean transit times and the amount of time it takes for containers to transfer from the dock to the next mode of transportation. The country is currently updating its statistics to provide shippers and carriers a nationwide average across all metrics. Meanwhile, other countries, like the United States, may be looking to set up similar data collections to establish nationwide benchmarks. Once this happens, countries can be compared to each other to determine if nationwide performance is competitive.
Utilizing a 3PL’s Performance Metrics
Providers should measure themselves and look for ways to improve on behalf of shippers. To get this data, shippers should communicate with their 3PLs to identify the metrics they report on and what type of reporting they can provide. Sophisticated 3PLs benchmark themselves to ensure they provide exceptional service. Many providers invest in various technologies that provide reporting that can be easily shared. In some instances, 3PLs can create scorecards and reporting to continuously measure themselves against previous performance metrics and market averages.
Collect Data and Track Internal Performance Over Time
Shippers should also measure themselves and report those findings internally as well as to their partners. Measuring previous data can determine trends unique to their company and gain a better understanding of what assets and resources they need. For instance, through data, shippers can recognize trends such as surges in demand and determine the appropriate resources they may need in the future.
The best way to utilize benchmarking is to communicate and collaborate with supply chain partners. By referencing resources from partners and external resources, benchmarking can reveal ways to improve. With this data, shippers can determine their success and strategically predict and strategize for the future.