The Utility of Metrics for Transportation Management
The use of metrics for transportation management will enable managers to obtain a clearer glimpse of system performance, as well as to start a performance record for future comparison.
Selecting the relevant metrics for transportation management often seems like such an arduous and complex task, and to some extent, it undeniably is. The transportation of various raw materials and products in different stages of their manufacture is a very complicated process that involves many firms, places, and miles. The entire collection of processes and events that lead from the very first supplier (of raw materials, for example) to the very end consumer or client is usually termed the supply chain. In the modern world, these supply chains can grow to cover vast areas indeed, some spanning the globe from one end to another! As can only be expected, the complexities ramp up rather quickly and the details and interrelationships can seem overwhelming.
However, managers should realize that it is possible to impose order and consistency on even such a system with the proper use of measurement tools such as transportation metrics. This is because any system, without an objective way of analyzing and measuring it, is bound to remain hard to understand and to grasp. That is, measurements and quantitative analysis tend to render the vague much clearer, and to provide order where there used to seem there was none. Even sprawling systems such as logistics networks and supply chains can be made more accessible and approachable with the use of metrics.
These metrics make it easier to understand and know how well the system is performing because they are concrete measurements that can be directly linked to desired performance goals. For example, a seemingly simple measurement such as percentage utility of cargo capacity or truckload can yield insight into the efficiency of a transport system. This metric is calculated by dividing the amount of cargo transported in a given period by the theoretical maximum, if every truck was full to capacity over that period. Managers may be surprised to see how little the transportation system is actually using all the capacity available. A low percentage in this metric would mean that less trucks or smaller trucks would be sufficient for the logistic needs of the organization, and hence some cost cutting would be reasonable.
Other simple, obvious metrics include transit time, freight cost per unit shipped, number of units delivered over a period of time, and so on. While seemingly commonsensical, it pays to actually pay attention to all of these details in an organized and consistent manner. That is, consciously selecting these quantities and keeping track of their values carefully over time will give a lucid glimpse of the workings of the system. And, of course, with this clearer perspective, it will become much easier to make decisions regarding the allocation of resources and the optimization of processes and procedures. With the use of these metrics for transportation management, it will become much easier to determine which aspects of the supply chain need work. Over time, it will become possible to have a quantitative, objective record of performance, which will make it less difficult to determine whether the system is in fact improving or not!
