What is the perfect shipment? Many times we tend to simplify and we believe that a shipment complies if it has arrived on time. However, the reality is that a shipment that wants to be perfect needs to meet many more requirements. Manufacturers, logistics operators and suppliers are giving increasing importance to this concept and the reason is simple: knowing how close you are to the perfect shipment gives you an accurate picture of what is happening in your business and the quality you are offering to your customers. customers.
Elements of a perfect shipment
The components of a perfect shipment can vary according to each company. However, the four most common indicators are the following:
Deliveries on time
Another problem with on-time delivery is that shipper and consignee often don’t have the same idea what on-time means. The merchandise can be delivered before the indicated date and, in certain cases, that will also be a problem. Or it may happen that the recipient not only needs the material on a specific day, but also in a precise time interval, while your provider cannot guarantee that accuracy or is unaware that they have this need due to poor communication.
To avoid this, it is essential to maintain good communication between the different parts of the supply chain about the real needs and about the possibilities of delivery.
We may have delivered on time, but if we have not taken all the material to its destination, we are far from the perfect shipment. In this section it is necessary to differentiate several reasons that may cause the delivery to have been incomplete. The problem may have arisen in the preparation of the order, because the picking was carried out incorrectly, because there is no stock of any of the requested products – the order being sent in several parts; an increasingly frequent option in sectors such as ecommerce-or it can also be due to some loss during distribution. In any case, we will not be able to consider it as correctly delivered.
It is also important that merchandise is not left over, as this will cause economic losses, stock errors and/or unnecessary reverse logistics.
Deliveries without damage
Again, at this point there is an important distinction to make: the possibility that the damages are external or internal responsibility. There are many companies that differentiate both indicators to know more easily where they need to improve the most. It is also important to discover the causes of this damage, since aspects such as incorrect packaging can be the real key when we focus on handling or transport.
Invoices and correct documentation
A shipment could have arrived perfectly on time, but if you don’t have all the paperwork with you, it won’t be the perfect shipment either. The invoice, the detailed contents of the shipment, the delivery receipts and any other type of documentation that is necessary to continue on its way (for example, to follow its transport) are essential for the successful outcome of the shipment.
Make the calculation of the perfect shipment
Once you have measured the percentage of the indicators that you have established, to know your level of perfect shipments you have to multiply the results together. For example, suppose your shipments arrive on time 95% of the time, 97% arrive complete, 98% arrive without damage, and 93% arrive with all the necessary documentation. The result will be that 83% of your shipments can be considered perfect.
This is especially useful because it helps to show that despite the fact that our processes work correctly in the vast majority of cases, the failures add up throughout the chain and can finally mean that a significant number of the total have some kind of problem.
Consequences of not achieving the perfect shipment
It is important to know that this number of failed shipments has a direct translation into two aspects: customer discontent and cost overruns. All those shipments in which we leave loose ends are a potential source of problems and if, as in the example given, 17% of our shipments fall into that category, it is easy to recognize the importance of improvement.
On the other hand, these mistakes are often accompanied by additional expenses. Returns, claims, new shipments, staff hours spent correcting problems that are generated and correcting failures, increasing safety stock… Solving an error is often much more expensive than not having made it in the first place.
For example, we will be less efficient in our costs if we have had to separate an order into two deliveries due to not having stock of any of the requested products. Or our client will be unhappy about it, despite having accepted the option of receiving the products in different shipments.
And it is that the scale of these problems can become very large. There are companies to which the safety stock problems derived from their errors can cost them millions in extra costs.
Other indicators you can use
As we have commented, although the four previous points are the most common, companies usually adapt them to their particularities, including and removing those they consider necessary. Here are some you can also include in your calculation:
Accuracy in receiving and processing orders
To get to the origin, there are many firms that measure their ability to start shipments on the right foot. The correct reception and implementation of the order includes concepts ranging from the transfer of information -from a salesperson to the operating team- and the digital entry of the purchase, to the correct documentation and recording of the shipment.
Picking is one of the main causes of incomplete shipments, but not the only one. That is why it is important to be able to discern how much responsibility you have. To improve picking data, one of the most common tools is to help operators with technological systems such as voice guidance, lighting systems, radio frequency, etc.
Within the documentation, invoices are a particularly sensitive element. And this is due to its proximity in the chain with the moment of collection. The less we fail in this aspect, the sooner we will get paid, the fewer discrepancies we will have to resolve and the fewer things we will leave unpaid.
Can a perfect shipment include the presence of customer service? The answer is yes. Even if we have not failed in anything, it is possible that the client needs to consult us the status of the shipment, change the address, give us additional instructions, etc. That is why you will do well not to underestimate customer service if you want to accurately measure the overall quality of your processes.
Keep in mind that calculating the perfect shipment is something that everyone in the supply chain can do. Whether you are the origin of the merchandise or a logistics provider, your responsibility with the merchandise does not end when it leaves your hands. You need to know the quality you receive from your collaborators and suppliers to know what quality you are giving to your customers.
Here, close and truthful communication between the different actors and the traceability and visibility systems that these partners offer you will be important.
If we plan for our shipment to have a certain price and it is finally altered (due to having to contract an urgent transport service due to some delay, due to a misinterpretation of the rates with which we work, etc.), it will be difficult to be able to consider it. like a perfect shipment.
How to integrate the philosophy of perfect shipping
It’s clear that achieving the perfect shipment is a concern of many people in companies. For this reason, if we do not manage to mentalize the entire company, it will be difficult for us to obtain results. These are some of the steps that will help you install this philosophy:
Choose metrics: select which are the keys that constitute the ideal shipment in your company. Define them, specify what will be considered correct and what will raise the red flag.
Establish measurement method: knowing what you want to measure will be of little use if you do not have a how. Define the mechanism with which you are going to do it and standardize the process. The more automated, the better.
Appoint responsibility: controlling various indicators -and some of them so diverse- is a complex task. Appoint those in charge of doing so and, if applicable, a final person in charge of gathering and obtaining the final data. This person will be in charge of sending the data to the appropriate positions in the company’s management, which you will also have to define.
Set periodicity: how often you measure the results and how often you analyze their evolution are also important variables.
Set goals: whenever you measure it is to improve, so you will have to set goals that serve as a guide for the company. These must be credible and feasible, so surely at the beginning you will have to measure for a while to know where to place those objectives to be achieved.
Explain to the company the importance of this metric: the best way to implement something is to convince people that it is useful and that it is necessary. Start with those responsible for the firm and explain to them how knowing your percentage of perfect shipments will be a great guide to know what things to change, how to give better service and where we can save costs.
Promote communication between supplier and recipient: to fully measure your quality, you will need the collaboration of the rest of the elements of the supply chain. Whether they are intermediaries or the final customer, you will need information from them to be able to know the reality of what is happening, after all, in your company. Knowing how to involve the client is key to measuring well and it will also help us to strengthen our relationship.