Measuring carrier and shipper performance is vital for building lasting relationships and growing business partnerships. It allows companies to benchmark themselves and create strategic relationships that are optimized for price and service. Today, performance is primarily measured through scorecards. While scorecards may be the defacto standard for measuring overall performance, there’s a huge data collaboration, standardization, and integrity problem that isn’t being addressed with the current process.
The ISO team sat down with William Kerr, CEO of Edge Logistics, and Sarah Gray, Senior Account Operations Manager at Edge Logistics to dig into the limitations of the current scorecarding process, challenges with data accuracy, and how performance measurement needs to evolve.
Performance measurement has a data problem
Scorecarding as we know it today is a very manual, time-consuming, error-prone task that varies from partner to partner. It requires shippers and carriers to sift through various spreadsheets from siloed systems and attempt to create a cohesive narrative of what happened during a shipment. Data often doesn’t match from shipper to carrier and is ultimately untrustworthy. This leads to inefficient conversations with business partners during QBRs and makes it challenging for procurement teams to compare rates and service during the RFP process.
Gray states, “What we’ve seen in the past across all customers is their metrics may show one thing and ours may show another. So, it’s good to make sure you have the correct data so you can be more proactive as opposed to reactive.” Without accurate scorecard data, it’s incredibly challenging to identify trends and spot where inefficiencies arise.
Kerr adds on, “The most important thing is the accuracy of the information. I’ve seen many companies try to tackle this, but accuracy is still an enormous problem.”
The need for standardized performance measurement
For Gray and Kerr, there is a need for standardized scorecarding across the industry. Kerr says, “Being able to align on a standardized set of metrics allows for partners to compare each other, as well as open up opportunities for swaps and other types of advanced capacity trading.”
Standardization creates a benchmark by which carriers and LSPs can fairly measure themselves against competition and secure new business. Without it, the team at Edge Logistics states that sourcing capacity can become a “you get what you pay for” scenario. Many companies want to pay lower costs for transportation, and because they aren’t able to truly measure performance (or the impact of performance), they end up going with the cheapest option with unreliable service because they can’t justify paying more. Consequently, shippers open themselves up to more risk and penalty exposure which can cost them more in the long run.
Kerr goes on to say that, “If we had pre-agreed upon metrics in which to measure each other, based on bids, statement of work, and service agreements, it would be a much more effective world. I think that the negativity, mistrust, and the lack of being able to take action on data is what has led to poor performance.”
The future of performance measurement
Kerr states that the foundation for effective performance measurement is data transparency and quality. “If we have that, then we can secure more stable capacity. We could avoid a lot of inefficiencies in the market that cost all of us a lot. It will allow us to do things faster and more accurately, meaning we can do them more cost effectively.”
Kerr and Gray both agree that being able to scorecard themselves, scorecard their carriers, and provide case-specific scorecards for their customers helps showcase their value, making it easier to trade on that reputation.
The future of performance measurement should be guided by digitizing the scorecard workflow, standardizing metrics across the industry, and improving data accuracy. These pillars will allow companies to spot anomalies and patterns quicker, create benchmarks for competition, and foster relationships built on trust.
The team at Edge Logistics has found that Isometric Technologies (ISO) helps them improve performance measurement and data accuracy. Gray, a frequent user of the ISO platform says, “Before, on the scorecard you would have to manually type in every single dispute where now [with ISO] it’s much more cohesive.…If you need to look for what [an] issue is, you can easily organize that information and better help your customer.”
ISO also streamlines the team’s internal operations. “We can make notes to our team and it’s just an easier way for us to track information. Additionally, it helps us remove bad apples from the network. If there are spikes and non-compliance we can look at who we’re working with and identify a specific ongoing issue that needs to be addressed.”
When asked if the Edge Logistics team would recommend ISO, Gray stated, “Absolutely. We want all shippers to be on the ISO platform. It’s one of the easiest ways of doing the scorecard I’ve ever come across.”
Where to go from here
It’s clear the current scorecarding process has its challenges. Supply chain partners lack trust and transparency when it comes to accurately measuring their own performance, as well as that of their partners and customers, resulting in huge monetary and operational waste.
Performance standardization across the industry is crucial to improving that trust and transparency. By aligning on a set of metrics upon which one can measure their network, shippers and carriers can benchmark their performance and leverage this data to secure new business. Standardization can also help companies take proactive steps to address underperformance and become more competitive. Ultimately standardization creates a system where top performers are rewarded and underperformers have clearer insight into how to course correct.
To address the standardization and data accuracy problem, some of the world’s most renowned shippers and carriers leverage ISO. With a neutral platform for shippers and carriers to measure performance, ISO brings transparency and alignment to both, helping each party identify issues and work towards solutions faster. Through ISO’s modernized Performance Management workflow, partners align on a standardized source of truth, while simultaneously contextualizing and correcting their flawed data.
For more info, contact us: https://www.iso.io/