5 Commonly Used Road Transportation Performance Indicators

As with most aspects of supply chain and logistics operation, it can be hard to identify exactly which road transportation KPIs you should select as your key metrics. There are quite a few to choose from and of course much depends upon the specific characteristics of your operation.

I’ve lost count of the number of times I’ve walked into a transport manager’s office and seen whiteboards covered in metrics. Dozens of them. The thing is, when you’re measuring everything, you’re really measuring nothing. The data becomes noise rather than insight.

Take a look at the following list (in no particular order) of five commonly used road transportation KPIs. Many companies use a combination of the metrics mentioned below, so some of them at least should be able to serve as reliable measurements of your own transportation performance.

1. On Time Pickups

If you use carriers rather than, or in addition to, your own transportation fleet, this metric serves as a measurement of carrier performance. It’s calculated by taking the number of pickups which were made on time (in a week, month, or other time period) by a particular carrier and dividing by the number of shipments which that carrier hauled on your company’s behalf.

This one gets overlooked surprisingly often. Companies obsess over delivery performance but forget that a late pickup almost guarantees a late delivery. If your carrier is consistently missing pickup windows, that’s a conversation you need to have. And if multiple carriers are missing them, honestly, you might need to look at whether your pickup windows are realistic in the first place.

2. Road Transportation Cost per Unit

The “unit” referred to in this road transportation KPI might be a kilogram, a litre, a case, cage, or pallet. This metric is calculated by dividing the total costs of road transportation (per period) by the number of units shipped.

I worked with a building materials distributor a few years back who had been tracking total transportation spend but not cost per unit. Their costs were going up, which concerned them. But when we broke it down per tonne delivered, their efficiency had actually improved. Volume had just grown faster than they realised. Context matters.

3. Vehicle Turnaround Time

This is an average of the time elapsed between a vehicle arriving at your DC and its departure. Vehicle turnaround time can be used for both inbound and outbound transportation and helps to monitor the efficiency of your receiving and dispatching processes.

What makes this particular transportation KPI interesting is that it sits at the intersection of warehouse and transport operations. A poor turnaround time might indicate problems with your dock scheduling, your receiving process, your load planning, or simply that drivers are arriving outside their allocated windows. You need to dig into the data to understand which.

4. Vehicle Fill Percentage

This metric tells you how well you are utilising your vehicle load space. You can calculate this road transportation KPI from the perspective of weight or cage/pallet spaces. You just need to know the weight or number of units that your vehicles can legally carry, along with the weight or number of units that you shipped on the fleet in a given period.

There’s a tension here that’s worth acknowledging. High vehicle fill rates are great for cost efficiency but can create problems if you’re running at 95% capacity and then get a spike in orders. Some slack in the system isn’t necessarily a bad thing. I generally tell clients that if you’re consistently above 85% on weight or volume, you’re doing well. Chasing 100% usually creates more problems than it solves.

5. On-Time Delivery

Forming one half of the all-important DIFOT key performance indicator, on-time delivery measures the percentage of orders in a given time period which were delivered to customers at the time you promised, or within an agreed time window (depending on the service levels you have agreed with your customers).

This is the one that customers care about most, obviously. But be careful about how you define “on time.” I’ve seen companies pat themselves on the back for 98% on-time delivery when they were measuring against a three-day window. Their customers, meanwhile, were expecting next-day service. Make sure your internal definition matches customer expectations.

Just Five of Many

The list of road transportation KPIs is long and the five I’ve detailed here are purely meant to serve as examples of some which are commonly used. Some further light reading on the topic will reveal many more possibilities.

Ultimately, you’ll need to identify a suite of transportation KPIs that most closely matches the needs of your organisation. Just remember not to generate too many key metrics for your KPI suite. Getting deeply involved in the minutiae of your road transportation performance will probably muddy the waters, when what you really need is a clear view of performance.

My rule of thumb is this: if you can’t fit your key transportation metrics on a single page, you’ve got too many. Five to seven is usually the sweet spot. Enough to give you a rounded picture, not so many that you lose focus on what actually matters.