Top Dedicated Contract Carriage Metrics You Should Know
Dedicated contract carriage (DCC) ensures committed capacity, and there are several metrics that measure the efficiency of an operation and help control costs.
"Shippers are leaning on us now for more capacity as they struggle with non-contracted dedicated carriers, and we work together with our customers on DCC metrics and the reason codes. We want to get better, we want to keep costs down, and a collaborative effort keeps the energy going for everybody," said Tom Scollard, vice president of dedicated contract carriage for Penske Logistics.
While there are several critical metrics, Scollard said on-time delivery is the No. 1 figure everyone tracks. The definition of on-time delivery can vary by shipper based on their performance criteria. "With some shippers, if you tell them you're going to deliver Friday, as long as you get there Friday, it is on time. Other shippers are much more specific, and if you're a minute early or a minute late, it is considered a not on time," he said.
For on-time deliveries to occur, on-time departure is essential. "One of the metrics that we're finding useful for the whole supply chain is that on-time departure with reason codes. It helps us understand if we're not off to a good start, why and how to mitigate that in the future," Scollard said. "Lots of things can happen once you're on the road that may be out of our control, but the driver being on time, the truck being there and ready to be loaded, then getting loaded and out the gate is the first step to ensure on-time delivery."
Equipment must be reliable, and Penske utilizes a rigorous preventive maintenance program to drive uptime. Penske has 24/7 roadside service and rental vehicles to keep products moving in the event of a breakdown.
Once drivers are en route, Penske's ClearChain® technology uses real-time visibility and proactive tools, such as turn-by-turn directions with traffic and weather, to help keep loads moving. "We look at the variables and mitigate the impact on our on-time delivery. We have to overcome as many variables that are thrown at us as we possibly can," Scollard said. "We also use geofencing for our departure and our arrivals, so the information is reported back and recorded in that dispatch platform. We know exactly what time product is leaving and what time product is delivered."
Most transportation expenses are generated by the mile. "Fuel is consumed by the mile and drivers are paid by the mile, so it is important to understand what your cost-per-mile is," Scollard said, adding that cost-per-mile goes hand in hand with cube percentage. "You may have a low cost-per-mile, but if you have trailers pulling out a quarter full, you're not necessarily efficient."
In a multi-stop fleet configuration environment, the cost-per-stop can drill down into expenses associated with each delivery. However, it can be more helpful to look at the cost-to-serve. "Cost-per-stop is you take your total expense and divide it by the number of stops. Cost-to-serve is much more specific to an individual customer," Scollard said. "You're taking into account really that portion of the route that truly is dedicated to that customer."
If the customer has a 1,000-mile route with four stops, and the third stop is 300 miles out but the fourth stop is 700 miles out, the cost-to-serve for each location is different. "It isn't fair to take four stops divided by the cost of that route and allocate that cost to each one of those stops. We can determine the cost-to-serve for each stop to give you the true barometer of your costs," Scollard said. "It gets down to much more specifics."
Tractor, driver and trailer utilization provide insights into efficiency. "Tractors are very expensive, and they don't have to rest. Ideally, you can run them 24 hours a day if it fits with your delivery windows," Scollard said.
Driver utilization, whether monitored by hours or miles, requires a balance. "It is no longer advantageous to look at an entire workforce and use them up to their total available hours-of-service," Scollard said, adding that Penske targets about 55 hours a week to avoid burning drivers out. "Even if the driver doesn't feel like they're burned out, they could be fatigued and lose some of their capability to operate the vehicle safely."
Monitoring trailer utilization can ensure the right amount of equipment is available. "Many times, the trailer-to-tractor ratio can become pretty high. You want to make sure that trailers aren't sitting idle too much or being used to store product instead of used on the road," Scollard said.
Some customers want to focus on minimizing empty miles. Tracking those empty miles can help shippers and Penske collaborate to optimize the network or find backhaul opportunities.
Detention costs money, and customers want to know how much detention they're experiencing and where it is coming from so they can investigate it and try to mitigate it in the future, Scollard said.
Safety is paramount, and Penske tracks several metrics, such as speed and hard brakes, to drive continuous improvement. "If we see an incident, we want to be able to get with a driver and provide coaching in the minimal amount of time, so it is still fresh in their mind before they make the same mistake again," Scollard said, adding that Penske has on-board cameras that aid in coaching.
With all metrics, the usefulness ties back to the quality of the data. "You have to have systems and processes in place that make sure the data is accurate. You lose credibility with your metrics if people are questioning the data," Scollard said. "It is very important that the carrier has controls established around the quality of the data. We have our 24/7 Transportation Support Service that helps our operations make sure their data is accurate."