Does your transportation network need a check-up?

Network Design, Supply Chain, Transportation Management
February 11, 2013

transportation networkIn today’s day and age healthy living is a primary goal for many, especially as we enter into a new year.    Proper fitness, along with an appropriate diet, is a key ingredient for developing and maintaining a healthy lifestyle.  As a matter of fact, we often go to the family doctor regularly for “check-up’s” to ensure all the vitals are functioning as expected.  Similarly, a transportation network also requires regular check-up’s to monitor and maintain desired cost and service performance levels.  This can be a daunting endeavor as networks become more complex and the associated data becomes larger and larger.

Every shipper or third-party partner sets out with a common objective: to safely ship the most amount of freight at the least amount of cost, while meeting delivery expectations, minimizing damage or defects — and still understanding and addressing associated supply chain impacts.  Simple, right?

A common mistake often made is looking at high level measures of productivity, such as cost per unit (i.e. $/pound, $/case, $/load, $/ton mile), and immediately deep diving into the data in an attempt to diagnose. That path typically leads to more questions than answers.  Before becoming quickly overwhelmed, it is critical to establish a standard approach or management system for determining network performance, but more importantly how to determine root cause in order to drive improvements.  No different than a medical doctor, you must develop a systematic process and corresponding probe points to measure your network that will provide insight and evaluation of the network’s health.

Here are five key elements of a Network Performance Management System:

  1. Baselines – Develop effective baselines that can be used for comparison to actual results.  It’s difficult to quantify progress if you don’t know where you started.  You should make it a point to understand monthly, quarterly and annual performance baselines and the accompanying network profile.  The profile (order size, supplier / customer location changes, modal mix, etc.) is an important variable to consider in diagnosing network ailments.
  2. Business Intelligence Tools – Utilize business intelligence tools to enable swifter analytics of the data.  There are many cost-effective tools available in the marketplace today that can turn ‘Big Data’ into actionable information very quickly.  This will enable your team to spend more time spent interpreting the data versus data gathering and reporting.
  3. Methodology – Establish a 4-step approach as the basis for managing and controlling network cost and service performance: Performance + Variance to Plan + Root Cause = Action. Utilize Pareto charts to focus on the areas driving the greatest impact to the issue.  It is important that you are able to break data down to business unit, lane, carrier, origin, destination/consignee levels to drive effective actions.
  4. Tell the Story – When developing your weekly/monthly performance bundle for management reviews, the information, charts, dashboards, etc. that you put together should answer the question, “So what?”  Too many times interpretation of the information is left in the hands of the audience with no direction from the subject matter experts. This could lead to misinterpretation and the development of misguided action plans. Include callouts, goals, and specific improvement actions right on the metrics views themselves to enable the recipient to understand the story.
  5. Rhythm – Lastly, get into a rhythm of review.  Establish a weekly and monthly cadence for a network check-up.  Consistency of review will eliminate network performance issues lingering for several weeks before being addressed.

Even though you may never have a ‘M.D.’ behind your name, deploying this approach will enable you to become a more effective transportation network performance manager.  In an upcoming post, we will explore the specific cost performance vitals / probe points that transportation managers should be reviewing in determining the health of the network.

Written by Scott W. Nemeth 

Mr. Nemeth is a Group Director of Transportation Management (TM) at Ryder. He is a logistics and operations professional with 18+ years of experience in transportation management solutions, business development, implementations, product development and account relationship management.  Throughout his career Mr. Nemeth has implemented and operated numerous TM solutions for customers across a variety of industry segments.


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