Articles

The 5 Most Important Supply Chain Metrics to Track and Why

by Cameron Craig, 13 January 2022

One of the greatest advantages to having a great TMS is the data that you can collect and analyse from all areas of your business. This data can be measured against a company's goals.

These analytics can give you a pretty good idea of the strengths and weaknesses of your operations, but they can also be confusing - and many first time users may not know what to look for. 

We’ve put together a list of the 5 most important metrics to look at next time you’re going over your business performance.

1. DIFOT

You know we had to put it first! DIFOT stands for ‘Delivered in full on time’ - meaning the percentage of your deliveries that arrive intact within the timeframe you have given the customers. If you asked anyone in the know, they’d say possibly the most important metric you can track. 

DIFOT is so important because to improve your metric, you need to have both smooth processes and fantastic communication both within the organisation and with customers - which makes it a great indicator of how your business is performing in all of these key areas. Higher DIFOT means happier customers for your business, and your DIFOT can be improved by refining communication between different departments within your organisation - such as warehouse staff, management and delivery drivers. Transport management software that enables instant communication and information transfer between these parties is a key way to streamline this process.

2. Freight Bill Accuracy

Freight bill accuracy is a metric which measures the percentage of error free freight bills as a proportion of total freight bills. This is vital because high percentages of accounting errors - even when individually small - can be a major way in which businesses bleed revenue without even being aware of it. 

Largely, accounting accuracy problems can be attributed to human error. Therefore, using a transport management system that automates a variety of accounting functions can be a simple way to reduce this margin of error. A comprehensive TMS can also help to reduce errors made in data transfers between platforms, as information is centralised and easier to cross reference.

3. Logistics Costs as a Percentage of Sales 

Logistics costs as a percentage of sales (L%S) are a useful metric for understanding the profitability of your operations. This metric works by measuring the cost of your business’ logistics (for example: warehousing costs, distribution costs, fuel, etc)  against the total amount of sales revenue brought in. Ideally, this percentage should be as low as possible, because it means wider profit margins for each job you take on. However, many businesses have a L%S number that is  upwards of 15% without proper management. 

The key way to improve this percentage is simply gathering and analysing data. The logistics bureau suggests that many businesses maintain high logistics costs due to the belief that they are already doing everything possible to reduce costs - which is often untrue. Through consistent analysis, you can identify the areas that consistently result in overspending and make a targeted plan to reduce. 

4. Inventory Turnover

For businesses that manage inventory, inventory turnover is a crucial metric for measuring production efficiency, distribution and fulfilment, and process strategies - providing a holistic overview of a business’ entire supply chain. Inventory turnover is measured by calculating the number of times that your entire inventory was sold and distributed over a period of time, usually a full financial year.

Generally, higher inventory turnovers indicate strong sales and an efficient production process, although the average rate of turnover varies significantly between different industries. Very low turnover rates can often be improved through a combination of stronger sales and distribution strategies, which will keep stock from gathering dust in a warehouse.

5. Delivery Times

As we’re sure you can guess, delivery times refers to the amount of time needed from the moment an order is placed until the order is fulfilled. This metric is important for two reasons: firstly, because the shorter the time frame, the more efficient your operations are at getting jobs done. This means that by measuring delivery times, you can have an overview of the overall efficiency of your business, and shorter delivery times are more attractive to potential customers. 

Secondly, delivery time accuracy and consistency is important to your clients - another reason to keep an eye on this metric. Customers and clients often require  a high level of accuracy in the estimates you provide them, for example, an estimate of 4-5 business days is far more helpful than that of 2-10 business days  - which can only be achieved through consistent analysis.

Start Tracking Today 

These 5 metrics have the potential to reveal a lot about your business’ operations and performance, and can be used to identify a range of strengths and weaknesses. However, gaining access to this data can be challenging without the help of a comprehensive transport management system which keeps track of the numbers from all areas of the organisation.

If you’re looking for a TMS that can give you the data you need, head to TransVirtual  and book a demo with us today.

The Last Mile Delivery Problem & How to Overcome It

by Cameron Craig, 24 January 2022

Last mile delivery is often the shortest leg of a shipping journey, but can be the most troublesome and expensive for businesses, and has the potential to completely tank customer satisfaction. Intimidating, right?   It doesn’t have to be. Many of the challenges of the last mile can be tackled through...

3 Emerging Technologies That are Transforming Last Mile Delivery

by Cameron Craig, 21 January 2022

Last Mile Delivery refers to the final leg of an item’s shipping journey: the ‘final mile’ of delivery distance that lies between a transport hub and its final destination – usually a business or residence. Unfortunately, Last Mile Delivery is the most inefficient and expensive leg of the journey, estimated...

What is Pool Distribution and Why do Businesses Use It?

by Cameron Craig, 18 January 2022

Pool distribution is a tried and true method of distribution that is popular around the world. This method combines freight headed in similar directions in order to fill up otherwise empty truck space – saving time and money in the process.  This article will take you through the basics of...

The 5 Most Important Supply Chain Metrics to Track and Why

by Cameron Craig, 13 January 2022

One of the greatest advantages to having a great TMS is the data that you can collect and analyse from all areas of your business. This data can be measured against a company’s goals. These analytics can give you a pretty good idea of the strengths and weaknesses of your...

What is Multimodal Transport and how does it work?

by Cameron Craig, 11 January 2022

In today’s globalised world, the process of transporting inventory has become increasingly complex. Shipments often need to travel across thousands of kilometers to make it to their destination, meaning that multiple modes of transportation, such as trucks, ships, and planes need to be involved in the process.  There are two...

Trends in Logistics 2021-22

by Cameron Craig, 19 December 2021

Lessons from a pandemic and the race to net zero 2021… There’s been a lot going on, hasn’t there? The transport and logistics industry has seen both immense growth and unsettling change. In this article we’re taking a look at three of the industry’s major trends going into 2022. Maersk...

footer-top-mobile-img

A must-have tool for running a profitable transport and delivery business.

Want a full-featured transport management system that makes your delivery business simple? We’ve built in scalable pricing and optional modules designed to minimise barriers to entry. Save time, lower costs and get your freight where it needs to be faster.

×