Cost-to-Serve
When shippers attempt to balance the need for cost-efficient shipping with service, we call the equation cost vs. service level. And it’s important. After all cost to serve is key. Here’s the question: what’s more important? Can your customer relationships survive the poor quality often associated with the lowest costs? Too often, when creating a cost to serve equation, freight forwarders put the emphasis on low cost, and in the end, customers pay the price.
If your final mile carrier cannot afford to provide quality service based on the rates demanded, you’ll see it show up in warning signs like missed deliveries, absence of call-ahead communication to schedule delivery windows or appointments, lengthy delays, and Damage of Product or Delivery Locations.
So, what’s the solution?
Key Performance Indicators for Final Mile Carriers
Simple Key Performance Indicators (KPIs) allow forwarders to monitor and select carriers based on their ability to perform in key areas. To satisfy and retain customers, forwarders must meet and exceed expected standards of service while controlling costs from unnecessary delays or failure to follow procedures. When KPIs are in place, forwarders can make informed decisions.
KPIs help drive performance, identify flaws in processes, and create opportunities for added profitability and satisfactory service. What would these KPIs look like?
On-time delivery is a key measure of customer satisfaction.
- Late delivery. Customers do not appreciate late-delivery percentages. Late delivery chips away at the bottom line and upsets end users, occasionally resulting in the customer cancelling the order.
- Late deliveries affect retailers and their promise to their customers.
- Cancelled orders generate hard to handle returns with additional freight handling costs.
- Early delivery. Customers might not be ready for release of freight. In fact, they can’t take delivery because the freight needs to be held until the promotion or sale is launched.
- Damaged freight from poor handling practices or packaging is another issue that can eat away at the bottom line in terms of additional handling costs and low customer satisfaction blocking future business opportunities.
Costs per Shipment is key for customers.
Today’s retailers are in constant and tough competition with other retailers. These retailers need consistent cost per shipment, and this is only available when a final mile carrier is reliable with a consistent cost per shipment.
Does your final mile carrier perform in the areas important to your customers? Here at Blue Eagle Logistics, we are constantly adapting and updating our KPIs to best serve premiere forwarders in the Lehigh Valley and Northeastern Pennsylvania. We offer route delivery expertise, final mile delivery, critical parts warehousing, and cross-docking services to provide freight forwarders with the best service available.