What is a Carrier Scorecard? 12 Critical KPI's for Carrier Scorecards
By Komal Puri | June 22, 2023
What is Carrier Scorecard?
A carrier scorecard is a performance evaluation tool to assess and measure the performance of transportation carriers. Following a systematic approach, companies can track and evaluate various KPIs to gauge how effective and efficient their carriers are based on specific logistics criteria. Typically, a carrier scorecard highlights major shipping KPIs, such as on-time service, claims ratio, compliance, cost/pricing, etc. When you can compare and rank carriers based on such KPIs, it becomes easy to make informed decisions on carrier selection, contract negotiations, and overall supply chain optimisation. Let’s see how analysing a carrier scorecard benefits companies in supply chain optimisation.
7 Benefits of Carrier Scorecard Analysis
1. Standard Performance Evaluation: Instead of any random performance analysis approach, the scorecard offers a structured and standardised approach to evaluate and compare essential shipping KPIs. For instance, you can evaluate the safety of carriers based on crash ratios, regulatory compliance and training certifications. This standard comparison gives actual clarity on areas of improvement related to carrier safety.
2. Informed Decisions: Carrier scorecards provide objective and quantifiable data to make informed decisions. For instance, shippers assign consistently high-scoring carriers for critical shipments and target low scorers for improvements. The collected data also aids shippers in renegotiating contracts or changing carriers for specific routes.
3. Supply Chain Optimization: Performance evaluation across different metrics highlights bottlenecks, inefficiencies, and areas for improvement in the supply chain. Let’s say the analysis can help you identify bottlenecks at regional distribution centres due to delayed shipment by a few slow carriers. With this information, you can now pinpoint the exact problem areas to focus on and optimise logistics processes.
4. Transparent Collaboration: Carrier scorecards promote transparency and accountability between companies and their carriers. Through carrier scorecards, shippers set clear performance expectations for all their carriers. This transparency between both parties set the stage for joint efforts on solving root problems, such as route optimisation and staff training, through a transparent feedback channel.
5. Trend Analysis: Carrier scorecards provide data over time to identify trends and patterns with ease. For instance, an analysis may reveal seasonal fluctuations in delivery times or identify underperforming carriers out of the mass to take corrective measures immediately. As a result, shippers feel confident in addressing any service anomalies with real-time trend analysis to retain high service standards in the market.
6. Risk Management: Meeting safety and regulatory compliance have constantly challenged shippers with transportation operations. Carrier scorecards set clear metrics for accident frequency, transportation compliances, and driver training requirements to minimise the risk of legal issues or litigations. It also helps companies to develop robust emergency response plans for dealing with accidents or safety breaches.
7. Enhanced customer satisfaction: Imagine managing your supply chain with high-performing carriers with high on-time delivery scores, low damage rates, and positive customer feedback. Also, imagine building trust with your customers by resolving their shipment issues on a quick note. Wouldn’t this entire synchronicity translate to high customer satisfaction? Carrier scorecards not only help you improve carriers’ performance with KPI analysis but also enable you to work closely with customers to resolve their issues with a robust feedback loop.
Now, let’s understand what KPIs a carrier scorecard evaluates to help shippers make informed decisions.
What Are the Carrier Scorecard KPIs?
A company can choose KPIs on its own to evaluate its carrier performance. The selection of KPIs may vary depending on the industry type, logistic plan, and other objectives. However, here are some common KPIs that are often used in carrier scorecards.
On-time Delivery: It shows the total number of shipments delivered on time per agreed-upon schedule in percentage.
Transit Time: It is the average time a carrier takes to deliver shipments from the pickup point to the end address.
Freight Damage and Loss: This data shows the percentage of shipments damaged or lost during transit under the carrier's custody.
Claims Ratio: It is the ratio between freight claims filed against the carrier against the total number of shipments. The score shows how much liable the shipper is for damaged or lost goods.
Cost and Pricing: The scorecard compares each carrier's based pricing and other fees to industry benchmarks. It helps shippers choose budget-friendly carriers.
Invoice Accuracy: This score shows the accuracy and transparency of carrier invoices. The score is calculated based on many factors, such as the accuracy of quotes in line with agreed-upon rates, services rendered, and discounts or surcharges, if any.
Customer Service Responsiveness: You can know how fast a carrier is responding to inquiries related to orders, information or an issue from this KPI. The higher the score, the better the customer service.
Communication and Visibility: This score evaluates how timely and accurately a carrier provides shipment tracking information to the shipper. It also shows the carrier is proactive regarding potential delays or disruptions.
Safety Performance: This KPI will analyse whether the carrier's safety record complies with standard regulations and industry best practices. A good score ensures the safe handling and transportation of goods
Compliance with Service Level Agreements (SLAs): The score evaluates a carrier’s ability to meet proposed SLAs with the shipping company. For instance, the scorecard shows a carrier’s ability to meet delivery time windows and specialised handling requirements against the SLAs.
Carrier Capacity and Reliability: This KPI evaluates a carrier's maximum and minimum handling capacity in volumes over time. It helps companies shortlist carriers to honour big commitments during fluctuating demands.
Overall Customer Satisfaction: It is a happy index based on feedback on carrier performance and service quality from internal stakeholders and customers.
Transform Your Carrier Performance Tracking with FarEye
FarEye's logistics platform transforms how shippers evaluate carrier performance. FarEye offers shippers advanced analytics and tracking capabilities to automate their carrier scorecard process with real-time insights into carrier performance. Companies can make data-driven decisions to streamline on-time delivery, shipment accuracy, budget and more. Streamlining carrier accountability becomes easy as FarEye replaces many manual processes with sophisticated automation. Furthermore, shippers achieve unparalleled supply chain transparency to identify top performers and reroute underperforming carriers with accurate, actionable data. That said, FarEye not only transforms carrier evaluation but also streamlines your supply chain with ease.
Komal Puri is a seasoned professional in the logistics and supply chain industry. As the Senior Director of Marketing and a subject matter expert at FarEye, she has been instrumental in shaping the industry narrative for the past decade. Her expertise and insights have earned her numerous awards and recognition. Komal’s writings reflect her deep understanding of the industry, offering valuable insights and thought leadership.