Transportation KPIs: key indicators to improve your fleet operations

KPI de Transporte

In this blog we have highlighted the importance of KPIs in logistics, but due to the breadth of the topic, we want to delve deeper into transportation KPIs. Knowing them in detail will allow you to implement them efficiently and, thus, improve your fleet’s operations and performance.

As a reminder, KPIs or Key Performance Indicators are essential tools for measuring the performance of a specific area of the company. In the case of transportation KPIs, they are used to evaluate performance in terms of costs, operations, customer service, compliance and maintenance.

These indicators are essential to ensure that the company operates efficiently and effectively. All KPIs must be aligned with the goals established by the company and each goal must be SMART (specific, measurable, achievable, relevant and time-bound). In this sense, it is recommended:

  • Select indicators that are adapted to a specific activity, which will be discussed later.
  • KPIs should identify areas requiring improvement to optimize the supply chain. Notes operations that need corrections or further focus and assigns a corresponding indicator.
  • When we say that KPIs must be specific and relevant, it means that not all indicators are suitable for your company. Learn to identify those that really align with your strategy.

What KPIs should the transportation area measure?

Among the transportation KPIs that every company should consider are the following:

  • Delivery time: measures the duration from the time an order is received until the product or service is delivered to the customer.
  • On-time delivery rate: indicates the percentage of deliveries made within the deadline agreed with the customer.
  • Cost per delivery: calculates the total cost of making a delivery, including operating expenses, transportation, insurance and labor.
  • Accident rate: measures the frequency of accidents during transport operations.
  • Inventory turnover rate: evaluates the speed at which stored products are sold.

Now that you know these indicators, how are the transportation KPIs calculated?

First, you must collect relevant data and use specific formulas to calculate each indicator. For example, to calculate the on-time delivery rate, the number of on-time deliveries is divided by the total number of deliveries. In addition to formulas, it is essential to set challenging but achievable goals that are aligned with the company’s overall objectives and general strategy. It is also important to compare results with previous periods and with similar internal operations to identify which areas or centers are performing better and why.

For example, you can set a three-month period to measure the fuel consumption of vehicles at a specific site. This will help you make decisions to reduce costs, such as implementing a micro-warehouse where customers can pick up the merchandise or offering shipments in closer areas to avoid long trips.

In addition, it is advisable to establish both internal and external benchmarks to evaluate the competition and other companies. KPIs help us focus our improvement efforts according to operational priorities.

Types of transportation KPIs

There are different types of KPIs depending on the means of transport used. For example, for road transport, indicators may include fuel consumption per 100 km, average travel time, cost per mile and payload rate. For air transport, indicators may include flight punctuality, percentage of cancelled flights, cost per mile flown and occupancy rate.

In the case of maritime transport, indicators may include transit time, freight cost, cargo handling efficiency and port dwell time. It is important to bear in mind that the indicators must be relevant to each mode of transport and adapted to its particularities.

Another relevant indicator is OTIF (On Time/In Full), which combines two quality metrics: the timeliness of orders and their completeness upon arrival at the customer. Although the transportation area is not solely responsible for this, it plays a key role in OTIF compliance.

How to establish transportation KPIs?

To define your transportation KPIs effectively, you must focus on the key components of the operation, such as cost, service, compliance and maintenance. Once you have evaluated these components, the company will be able to analyze performance in each area more efficiently and define KPIs to make informed decisions and improve performance.

Once the KPIs have been established, the work has just begun. You must constantly monitor and analyze results, identify problems and opportunities for improvement, set goals and objectives to drive better performance. It is important to share the results with all areas of the company, including employees, customers and shareholders, to evaluate the performance and progress of the strategies and take actions accordingly.

Measure to know your company's real progress

A strategy cannot be successful if results are not quantified. Disregarding transportation KPIs is like driving a long way blind. You can’t see the road, you won’t be able to avoid potential obstacles and you won’t know when vehicle problems arise.

The best way to consciously evaluate the evolution of a strategy is by establishing KPIs to monitor and correct errors or deficiencies on the fly. KPIs are tools that allow you to make informed decisions to improve your company’s performance.

If you want to know the types of transportation KPIs that are ideal for your company, contact us and our consultants will provide you with advice on how to optimize your company’s logistics.

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