Parcel - November 2008 - (Page 17) continue to be amazed at how many large shippers take a broadbrush approach to managing their parcel network. Many shippers report their numbers each month to senior management using educated guesses or what they “think” happened as explanations instead of fact-based reporting. Shippers should be able to explain bottom line cost variances by understanding the network drivers that affect the overall cost equation. Variances in volume, cost and mix of service should be tracked and explained on a monthly basis. Parcel networks are not static entities. They are constantly changing and difficult to predict. Shippers who manage their network understand the elements that create financial fluctuations and can accurately report and manage the variability. Mix of service issues (shipping more overnight shipments than planned), changes in average zone (opening new retail stores in new geographic region) and changes in package characteristics (change in master case quantities) can all wreak havoc on a parcel budget. By understanding these elements as the drivers of their parcel network, shippers are able to separate actionable issues from business conditions. the delivery component. The best practice for measuring the performance of a parcel network is through a balanced scorecard process. Volume, Cost, Service, Quality and Innovation are summary categories that collectively can tell the story of how a parcel network is truly performing. The initial setup can be complex and difficult to implement. Defining performance across carriers, services and even internal divisions can seem like a daunting task at first. But the setup process can be used as a strategic tool to improve your parcel network. Involving the carriers is a big part of the process of defining the performance indicators that will ultimately drive your parcel network. Using a balanced scorecard to manage a parcel network creates a common goal across internal divisions, the parcel carriers and the logistics professionals who are responsible for execution. Parcel management is about being able to perform accurate analysis, understanding the business drivers and having detailed metrics across all areas of the network. It doesn’t happen overnight. But selecting the right third parties and carriers to support your network can put you on the right track in no time. Mike Williams is the Vice President of Consulting Services for Green Mountain Consulting. You can contact him via email at mike@gmcps.com or visit www.greenmountainconsulting.com. Measuring Performance If you asked most shippers what performance means, they will probably respond with something related to the on-time performance of their parcel carrier. That answer is not wrong, but managing a parcel network is about much more than just www.PARCELindustry.com November 2008 17 http://www.greenmountainconsulting.com/ http://www.datatrac.com http://www.datatrac.com http://www.PARCELindustry.com
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