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How to Evaluate Carrier Performance Across Diverse Networks

by Sifted Team

Jun 5, 2024

12 min read

Carrier Diversification allows businesses to:

1.  Compare and choose the most cost-effective shipping rates.
2.  Reduce the risk of delays by having alternative options if one carrier faces issues.
3.  Access additional shipping capacity during peak times.
4.  Offer customers a broader selection of shipping and tracking options, enhancing service flexibility and satisfaction.
 

However, with these benefits come a myriad of operational challenges. Therefore it’s crucial for businesses to have a comprehensive strategy for assessing the efficiency, reliability, and cost-effectiveness of their chosen carriers.

In this blog, we will explore the key factors to consider when evaluating carrier performance and provide actionable insights to help you optimize your logistics operations.

 

Key Metrics for Evaluating Carrier Performance

 

1. Network Coverage and Reach To Maximize Connectivity

Evaluating a carrier’s network coverage and ability to access less populated locations helps determine its ability to maintain service quality, cost-effectiveness, and reliability across diverse locations.

  Geographical Coverage: Examine the carrier’s coverage maps to understand their service areas and evaluate their network reliability and efficiency. Frequency of delivery services (e.g., daily, multiple times a day)
  Urban vs. rural performance: Compare the carrier’s network performance in urban and rural areas to identify delivery disruption patterns, delivery speeds, and customer service response times. Evaluate factors like the number of delivery points within the urban area and frequency of delivery services (e.g., daily, multiple times a day).
  Global connectivity: This involves assessing the carrier’s network presence in various countries, the quality of partnerships with local delivery providers, and the efficiency of their international logistics operations.

Key factors to consider include:

•  Speed and reliability of international deliveries
•  Customs clearance efficiency
•  The ability to offer real-time tracking for global shipments
•  Compliance with international shipping regulations
•  Their capacity to handle a diverse range of shipment types, from standard parcels to oversized and hazardous materials
By analyzing these aspects, businesses can ensure they choose a carrier that not only meets their domestic needs, but also supports their global expansion efforts with reliable and cost-effective solutions.

 

2. Delivery Lead Time

Delivery lead time is the total time taken from the moment an order is placed until the package is delivered to the customer. This metric encompasses all stages of the order fulfillment process, including order processing, picking, packing, transportation, and final delivery.

Delivery lead time is a critical performance indicator in supply chain and logistics management, as it directly impacts customer satisfaction and operational efficiency.

Key components of delivery lead time include:

•  Order processing time: The time required to receive, confirm, and process the order in the system
  Picking and packing time: The time taken to retrieve the items from inventory and prepare them for shipment
•  Handling time: The period needed for any additional handling, such as quality checks or special packaging
•  Transportation time: The duration of the actual transit from the warehouse or distribution center to the delivery destination
 

3. Service Quality and Customer Support

Evaluating a carrier’s performance goes beyond just on-time delivery. It also involves assessing the overall quality of service and the effectiveness of customer support. Key aspects to consider include:

 

Customer service response times

  Speed of response: Measure the average time it takes for customer service representatives to respond to inquiries, whether through phone, email, or chat. Quick response times indicate a high level of service readiness and commitment to customer satisfaction.
  Availability: What suits your product and deliveries? Is it 24/7 support or 24/5 support? Evaluate the hours of operation and the availability of customer support to minimize downtime and offer continuous support.

Resolution Efficiency

  Time to resolution: Assess the average time taken to resolve customer issues and complaints. What is the average time to resolution across different types of issues? What is the median time to resolution? The median time can provide a clearer picture by mitigating the impact of outliers.
  First contact resolution rate: Determine the percentage of issues resolved during the first customer interaction. Higher rates suggest well-trained staff and effective problem-solving protocols.
  Follow-up actions: Examine the follow-up procedures to ensure that issues are resolved thoroughly and customers are satisfied with the solutions provided.

Customer Satisfaction Scores

NPS or Net Promoter Score is an indicator of customer loyalty. It measures how likely customers are to recommend a carrier to others. A high NPS indicates strong customer loyalty, which suggests reliable service and a positive customer experience.

To find a carrier’s NPS score, you can refer to industry reports, third-party benchmarking services, and customer review platforms. Websites like Gartner, Forrester Research, and CustomerGauge often provide detailed NPS scores and analyses for various carriers.

Additionally, logistics and shipping industry reviews on Trustpilot and Glassdoor can offer insights into customer satisfaction and loyalty metrics for specific carriers.

 

4. Cost Efficiency

  Pricing models: Examine the different pricing models, such as fixed versus variable costs, to determine the most financially viable option for your business, that suits your shipment frequency and cadence.
  Hidden fees and surcharges: Find out what surcharges apply to your shipments and evaluate their impact on your business to avoid inflation of costs later on.
  Cost-benefit analysis: Conduct a thorough cost-benefit analysis to weigh the financial outlay against the benefits received, ensuring that the chosen carrier offers the best value for your money. This comprehensive approach to cost efficiency ensures that logistics operations remain within budget while maximizing service quality and performance.

 

Methods for Evaluating Shipping Carrier Performance

 

Data Collection and Analysis

To gather meaningful carrier insights, it’s essential to collect various types of data, including performance logs that track delivery times, accuracy, and incidence of delays or damages, as well as customer feedback that provides direct insights into customer satisfaction and service quality.

Utilizing tools such as logistics intelligence platforms, transportation management systems (TMS), customer relationship management (CRM) software, and advanced analytics platforms can streamline the data collection process and facilitate in-depth analyses. To ensure optimal data collection and analysis, a parcel shipper should ask the following questions:

•  What specific performance metrics are most critical for our business needs?
•  How frequently should we collect data to capture accurate and relevant information?
•  Which data collection tools and technologies will best support our analysis objectives?
•  How can we integrate data from multiple sources (e.g., performance logs, customer feedback) into a cohesive analysis framework?
•  What methods will we use to ensure data accuracy and reliability?
•  How can we track and measure customer satisfaction effectively?
•  What key performance indicators (KPIs) should we establish to monitor carrier performance?
•  How will we visualize and report the collected data to facilitate decision-making?
•  What historical data do we need for benchmarking and trend analysis?
•  How will we continuously update and refine our data collection processes to adapt to changing needs?

By addressing these questions, a parcel shipper can develop a robust data collection and analysis strategy that provides actionable insights into carrier performance. This helps optimize logistics operations and enhance overall service quality.

 

Ensuring Data Privacy and Security:

  Anonymization: Ensure that any shared data is anonymized to protect customer identities and sensitive information.
  Data Protection Policies: Adhere to strict data protection policies and compliance with regulations such as GDPR or CCPA to safeguard all collected data.
  Confidentiality: Establish confidentiality agreements with all parties involved in data sharing to ensure that the data is used only for the intended purposes.
By leveraging these methods, you can access the necessary data to evaluate shipping carrier performance while respecting privacy concerns and maintaining data security.

 

Challenges in Carrier Diversification and Multi-Carrier Operations

 

Managing Multiple Carriers Comes With Complex Moving Parts: Coordinating multiple carriers requires robust systems and processes to manage different contracts, service levels, and operational workflows. Ensuring that all carriers operate seamlessly together can be challenging. However, if you’re looking for a platform that can do just that, check this out.

Data Integration and Normalization: Integrating data from multiple carriers into a single system can be complex due to varying data formats, protocols, and standards. But, it’s possible, and the ability to manage all your carriers in one place is a game-changer for cost management and reporting.

Inconsistent Service Quality: Different carriers may offer varying levels of service quality. Managing and maintaining consistent performance across multiple carriers directly impacts overall customer satisfaction.

Cost Management: Balancing cost efficiency while using multiple carriers can be complex. Negotiating favorable rates with each carrier and managing the overall transportation budget requires careful planning and constant monitoring.

Risk of Service Disruptions: Relying on multiple carriers can introduce risks such as miscommunication, delays, or failures in service coordination. Mitigating these risks requires robust contingency planning and proactive management.

Managing Multiple Carriers Comes With Complex Moving Parts: Coordinating multiple carriers requires robust systems and processes to manage different contracts, service levels, and operational workflows. Ensuring that all carriers operate seamlessly together can be challenging. However, if you’re looking for a platform that can do just that, check this out.

Data Integration and Normalization: Integrating data from multiple carriers into a single system can be complex due to varying data formats, protocols, and standards. But, it’s possible, and the ability to manage all your carriers in one place is a game-changer for cost management and reporting.

Inconsistent Service Quality: Different carriers may offer varying levels of service quality. Managing and maintaining consistent performance across multiple carriers directly impacts overall customer satisfaction.

Cost Management: Balancing cost efficiency while using multiple carriers can be complex. Negotiating favorable rates with each carrier and managing the overall transportation budget requires careful planning and constant monitoring.

Risk of Service Disruptions: Relying on multiple carriers can introduce risks such as miscommunication, delays, or failures in service coordination. Mitigating these risks requires robust contingency planning and proactive management.

 

Implementing a Carrier Management System

 

Features of an effective multi-carrier management system:

1. Centralized Dashboard

A robust multi-carrier management system provides a unified interface to manage multiple carriers and allow users to monitor and control all shipping activities from a single platform. It enables re-rates, cost savings and visibility.

2. Optimization Dashboards

Optimization dashboards allow shippers to model different “what-if” scenarios before making the big investment. By using advanced predictive analytics, these tools ensure that businesses can optimize their logistics operations, reduce shipping costs, and/or improve delivery times, ultimately enhancing overall customer satisfaction and operational efficiency.

3. Shipment Planning and Network Optimization

Network Optimization tools like Sifted can help shippers optimize their distribution network by identifying where to add regional carriers or new distribution centers to reduce zones, transit times, and costs.

The platform analyzes the current distribution patterns to identify high-cost zones. These zones are typically areas where shipping costs and transit times are disproportionately high due to the distance from the shipper’s current distribution centers.

4. Performance Analytics and Reporting

A comprehensive multi-carrier management system generates in-depth reports and analytics on various aspects of carrier performance, providing actionable insights that drive data-driven decision-making. For example, it can highlight trends and identify carriers that consistently meet or exceed delivery promises.

Detailed cost analysis reports break down shipment expenses, allowing businesses to pinpoint cost-saving opportunities by comparing the performance and pricing of different carriers. These analytics are presented in customizable dashboards and automated reports, enabling logistics managers to monitor performance easily, identify areas for improvement, and negotiate better terms with carriers.

5. Scalability and Flexibility

True scalability in a multi-carrier management system means the ability to adapt to the growing needs of a business without requiring additional human resources. Such systems are designed to autonomously handle increasing loads of shipment data, whether that involves scaling operations up during peak periods or down during quieter times, ensuring seamless efficiency and cost-effectiveness.

For example, during peak seasons like holidays or major sales events, the system can automatically process a surge in shipment data and manage increased interactions with various carriers. This means that even as shipment data volumes spike, the system maintains high performance and accuracy, ensuring that all shipping information is up-to-date and easily accessible.

 

Build a Scalable, Risk-Avert, Adaptable Logistics Network

 

Discover a better way to track and evaluate your shipping performance across diverse networks. Get in touch to find out your overall shipping health and how you can drive continuous parcel cost savings.

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