Best Practices Consortium Supply Chain Best Practices Consortium Performance Metrics for Truck Carriers Executive Seminar Track 3, Session C September, 2006

Scope This session covers performance measurement strategies and trends: Measurement Processes Truck Load (TL) Carrier Performance Performance Scorecards Carrier Compliance Programs

On-time Performance Factors For 2004-2006, on-time appointment expectations, measurement responsibility and windows for live load pickup at vendor location: Appointment Expectations Measured by? On time performance, while the most common metric, is defined in various ways. Responsibility for measurement varies as well.

On-time Performance Factors For 2004-2006, on-time appointment expectations, measurement responsibility and windows for live unload at DC: Appointment Expectations Measured by? Surprisingly, about half of respondents report DCs that do not require a delivery appointment.

On-time Performance Factors For 2004-2006, on-time appointment expectations, measurement responsibility and windows for live unload at customer/store: Appointment Expectations Measured by? As expected, delivery to the store or customer is the most frequently measured on-time metric.

TL Carrier Performance Ratings Selected TL carrier performance ratings over the past 3 years: Importance: Increasing Performance: Mixed Target: Decreasing Rating Importance: Mixed Performance: Decreasing Target: Decreasing Rating Importance: Increasing Performance: Increasing Target: Increasing Rating

TL Carrier Performance Ratings (continued) Selected TL carrier performance ratings over the past 3 years: Importance: Mixed Performance: Decreasing Target: Mixed Rating Importance: Mixed Performance: Decreasing Target: Mixed Rating Importance: Increasing Performance: Mixed Target: Mixed Rating

TL Carrier Performance Ratings (continued) Selected TL carrier performance ratings over the past 3 years: Importance: Increasing Performance: Decreasing Target: Decreasing Rating Importance: Mixed Performance: Mixed Target: Mixed Rating Importance: Increasing Performance: Increasing Target: Increasing Rating

Carrier Performance Scorecards Trends for the last 3 years: % of Shippers Using Scorecards Frequency scorecards provided to carriers % of Shippers Using Scorecards 1= more frequent than quarterly; 2= quarterly; 3= less frequently It appears that use of carrier scorecards is on the rise and that they are provided more frequently to carriers.

Carrier Compliance Programs Approach to carrier compliance programs (2004-2006): Overwhelmingly, reducing a carrier’s volume is the primary recourse for addressing performance shortcomings. Recognition programs and tying rate increases to performance follow. Financial penalties and bonuses are less frequently utilized.

Your Expectations What would you like to learn from this session? Important issues? What’s working? What’s not working? What’s changing? Shared good and bad experiences? Reasonable performance expectations?

Potential Discussion Points What are the top two or three factors in achieving a successful performance measurement and accountability strategy? What techniques do you use to collect data? To what degree do you rely on carrier reporting for metrics? What metrics do you track to monitor your performance relative to truck carriers (i.e., equipment utilization, core carrier usage, etc.)?

Potential Discussion Points (continued) How do you leverage carrier performance metrics? What techniques do you use to hold carriers accountable? How often do you meet with carriers to review performance? Do you have a formal carrier recognition program?

Important Takeaways Some important Benchmarking & Best Practices takeaways on performance metrics for truck carriers include: Define objectives – Ensure that performance measures are aligned with organizational goals and are meaningful. Establish a manageable number of metrics – Ensure that the value of key metrics is not diluted through tracking an excessive amount of performance measures. Keep it simple – Metrics should be easy to understand and track. Automate Tracking – Where possible, leverage internal or carrier systems to track data.

Important Takeaways (continued) Expectations and accountability – Establish a periodic meeting schedule to review performance with core carriers. Develop action plans and a process to follow up on improvement commitments. Recognize success – Establish a process to recognize excellent performance. A balanced approach of accountability and recognition will enhance core carrier relationships. Update metrics as needed – Eliminate metrics if not meaningful or are not worth the effort required to track. Add metrics to support new initiatives.

Questions?

Benchmarking & Best Practices References Information on strategies relating to performance metrics for truck carriers can be found in the following references: