TRANSPORTATION MANAGEMENT — IDENTIFY, TRACK, and MEASURE a FEW KEY KPIs to OPTIMIZE YOUR PROCESS PERFORMANCE
by Johnny Dollar
Recently I was talking to the Receiving Manager at a growing retailer’s distribution center to find out how he handled scheduling of his inbound carriers for both domestic and international deliveries, and to understand how he dealt with inbound “collect” vs. “prepaid.” While he said he “had things under control,” he also admitted — much to my surprise — that he did not utilize any key KPIs to measure inbound carrier performance (or compliance for that matter), and did not utilize any carrier related information for management reporting and analysis. I guess this could be called the “Management by the Seat of My Pants” approach.
What made this conversation particularly revealing was the fact that this company had just experienced a virtual supply-chain meltdown during the Black Friday to Christmas holiday peak season. This led to their their inability to get inbound shipments received into the DC in a timely and coordinated fashion to facilitate store order fulfillment out the other side of the DC. This just reinforces the old saying, “If you can’t get it into the DC, you ain’t gonna have it to sell in the stores.”
The receiving manager appeared to be a very sharp and enthusiastic individual, and he took great pride in his hands-on management approach. He had good, experienced staff manning the receiving docks, and the sheer willpower they applied to shoving things across the dock to “put away” kept them from coming to a total standstill. But What If they had done some pre-planning for receipt of this “product surge” to meet peak season demand? And what if they had some key KPIs that helped them organize and smooth out the receiving schedule to make the flow of merchandise more manageable for the inbound receipts?
Several key contributing factors became evident as we talked.
⦁ For inbound import containers, he relied on Corporate to schedule the deliveries into his yard. His yard was “capacity constrained” in that he only had room to stage 15–20 containers. At one point during peak season, he had a backlog of 70-plus containers waiting at his door. A key KPI to measure here would be Yard Capacity vs. Corporate Inbound Container Scheduling. Creating gridlock in the DC receiving yard during peak season only exacerbates an already ugly situation. Tracking of such a KPI would aid in timely delivery and processing of import containers … and a significant reduction in the stress put on the Receiving Manager and his staff during critical peak season surges.
⦁ For inbound “collect” shipment, he relied on the carriers to call in and get a dock appointment. This was a good thing. The fact that 80 percent of his inbound was “collect” was not such a good thing, as his “visibility” — his ability to see up the supply chain — was constrained. This limited his ability to plan for and prioritize inbound carriers based on purchase-order priority to meet in-store Ad and Sales priorities. A key KPI to track here would be “On time Delivery to the DC by Carrier.” Carrier Non-Compliance feedback to management and the carrier are logical follow-up actions.
⦁ For inbound “prepaid,” the system worked in the same fashion as for “collect,” in that the carriers would call in for a dock appointment. While this was okay, it was far less than optimal for inbound planning and scheduling purposes. Ideally, inbound “prepaid” shipment notification should start with the vendor confirming shipment dispatch to the pick-up carrier. This is a key KPI that needs to be managed and monitored by the Receiving Manager, who provides feedback to his management on compliance...just one way to make life easier for everyone.
Bottom line: You Can’t Effectively Manage What You Don’t Measure. This Receiving Manager got no significant recognition for his and his staff’s heroic efforts during this peak-season surge. In part this was due to an Upper Management expectation that whatever needs to be done will get done by working some extra hours and throwing a few extra bodies at the problem. Perhaps the situation would have been different if there had been a daily flow of feedback and reporting on key KPIs. This would have helped smooth out the flow of inbound deliveries and would have highlighted inbound carrier performance (both good and bad) to upper management (and corporate schedulers) on a daily basis.
If you are a Transportation Manager, do yourself a favor and make sure you identify, track, and provide feedback to your management on a select few KPIs, and also to other departments that touch or influence your key performance processes, so that you do not find yourself or your department being blamed for poor performance that resulted from things beyond your scope of control and responsibility.
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