The economic downturn has resulted in some consolidation in the Logistics Service Provider (LSP) industry. When changing providers, or if you want to challenge existing LSPs, this is a good time to review your Key Performance Indicators. Rather than simply accepting standard KPIs presented by your LSP, consider creating your own indicators that are relevant to your operation.
For example, on-time service standards are basic and common to all LSPs. Most logistics service providers present clients with monthly reports touting their on-time delivery percentage. It is easy to become complacent when LSPs routinely report 97-99% on-time service after taking exceptions for weather and other factors.
Why not challenge them to measure absolute performance failures instead of percentages? In a high volume operation even a small percentage can mean a lot of late shipments and unhappy customers. In a smaller operation with fewer customers every shipment is critical. If LSPs can track and report percentages they should be able to do the same for absolute numbers of shipments. FedEx has measured absolute performance for years.
Finally, if you are an LSP, remember that you have a client on both ends of the shipment, so service failures have twice the impact. Tracking different metrics enables you to view your operations with fresh eyes.
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