Persuade Your Company to Invest in a Transport Management System

Practical Guide for Transport Managers to Build Successful Transportation Improvement Strategies - Part VIII

Link your Initiatives to Your Operational Performance

After identifying the transportation initiatives and ensuring that the strategy aligns with the corporate mission, the next step is to link the initiatives to your Key Performance Indicators (KPIs). These KPIs will help you set the baseline of your current financial and operational performance. The base KPIs can be your initial benchmarks in the absence of external benchmarks which you need to strive to improve upon. Establishing a link between the initiatives that you have
selected with your KPIs will help you assess the progress of the initiative. This linkage is critical to securing the resources and cooperation needed to improve transportation services. Through this process the transport manager is able to translate the initiatives into a language that his team and partners are able to relate to.

A transport manager was constantly under pressure to meet delivery timelines to an external OE production line. He was incurring high expediting costs and regular escalations from the sales and CRM team. Based on discussions with his team and external parties he concluded that he was using the network of an vendor whose cut-offs for pick-up from his warehouse was late evening. This added one extra day to the delivery time. The warehouse was not in a position to get the shipments ready in the morning, but could complete the consolidation by
early afternoon. Based on a study it was determined that for an afternoon dispatch could be met within the limitations if information flow from the warehouse reached the transport operations in the morning. This would help them in faster consolidation and reduce the planning time after the arrival of
the shipments from the warehouse. A technology initiative for integration of warehouse operations with the TMS optimization engine was undertaken. This was expected to reduce the expediting costs by more than 75%, in addition to providing service level improvements. The operational KPIs were drilled down to:
1. Orders planned to be shipped vs % covered in the advanced optimization exercise before cut off

2. Placement time of providers vehicle measured against cut-off

3. Vehicle capacity utilization factor

4. TAT for dock clearance of the vehicle.

The operational team members and external partners could relate to the KPIs easily. The initiative was executed and saved more than 90% in expediting costs and improved service levels to > 99%.