Data-driven logistics: more data than you can handle?

Logistics is one of the engines of the Dutch economy. Whether it's large-scale storage and transshipment in the port of Rotterdam or the lightning-fast delivery of a parcel from your favorite web shop: without logistics processes, the enormous flow of goods through our country would be impossible to control. Alongside that flow of goods there is also an (even larger) flow of data coming from those logistics processes. But how do you use that data to improve your logistics process? In this blog, Data Strategy Leader Louis de Roo explains.

Logistics isn't difficult: you move a product from A to B with as few intermediate steps as possible. Simple – or is it? Doing logistics well and being successful at it is a lot harder. All logistics processes generate data, and all that data gives us information we can use to optimize our processes. Every bottleneck in the process produces measurements, which we use to support decisions: our KPIs. But with even a modest logistics process, you quickly face dozens, if not hundreds, of KPIs.

Anyone who has to focus on that many figures at once isn't really focusing. You can try to keep an overview of all those figures, but how do you decide which ones to steer by?

Customer promise

First of all, it's important to know what you want to stand out for as a company: are you the fastest? The cheapest? The most reliable? That customer promise is the foundation of your data strategy. In your data strategy you define which data is important for knowing whether you are still living up to your customer promise, and which data you need to succeed at it. Having the right data available helps you as a company decide better which steps to take to reach your goal.

All other data

But what about all that other data? Standing out is wonderful, but ultimately there are endless processes that can disrupt things if we ignore them. They may touch less on what makes your company special to the customer, but they do contribute to good operations – and enable us to keep delivering for the customer. This is exactly where that enormous amount of data is an advantage: most of those processes deliver good, usable data, and in many cases the decision in your process is a simple choice from a handful of options that you can easily turn into a logical, data-driven decision. Reorder points, bin sizes, delivery quantities, lead times: the logistics puzzle consists of many pieces. The art is mainly knowing how those pieces fit together. Once you know that, a small technical step lets you automate many of the decisions in your process so you no longer have to think about them.

KPIs

When all those relatively simple, logical decisions no longer demand your attention, you have time to look at the areas where more complex decisions are needed. Here your data helps you make the right choice, but that choice can't be made on the basis of predefined parameters. It is important to steer by the right KPIs. By looking at KPIs that tell you where the exceptions in your process occur, rather than simply reporting the results you achieved, you can improve and optimize your process every time. And by knowing how your KPIs contribute to fulfilling the customer promise, you also make sure you stay relevant to your customers as a company.

Which KPIs those are depends on your business processes and how they are set up, and on what you specialize in as a logistics organization. If you are 'the fastest', your attention should go to the KPIs that help you prevent delays, and the fill rate of your transport may be slightly less important. If you are 'the cheapest', you make sure the factors that influence price get plenty of attention.

The right KPIs help you focus on the data you need to make a difference to your customer. And focus also means choosing what to give less attention. By keeping your KPIs clearly in view and letting the other decisions happen automatically – data-driven – you avoid neglecting everything else. And you get from A to B with as few intermediate steps as possible. Simple!

How logistics KPIs do work

Want to know more about how to get started successfully with KPIs in the logistics sector? During our session 'How logistics KPIs do work' on November 8 at the ICT & Logistiek trade fair, Data Strategy Leader Louis de Roo will tell you more about how to define the right KPIs for your logistics company. The event is free, so register quickly via the button below.

ICT & Logistiek