Using a TMS to Aid in Building A Carrier Scorecard to Hedge Compliance Risk

Using a TMS to Aid in Building A Carrier Scorecard to Hedge Compliance Risk
Technology has led many shippers to live in the digital world. Despite automation and efficiency protocols to meet all shipping needs, companies need to develop a carrier scorecard, analyzing specific metrics to determine what carriers are best. A carrier scorecard and a company’s bottom line are best friends. And as explained by Inbound Logistics, “By relying on simple data captured over time, over‐the‐road shippers are better positioned to make informed decisions on‐the‐fly or in future bids to ensure their desired mix of cost, coverage, and performance.”

Shippers can use a transportation management system (TMS) to create an effective carrier scorecard with applicable metrics, no matter the size of the operation.

Maintaining a successful fleet requires the vigilant tracking of performance scorecard offers. They also help shippers determine a positive return on investment and lower compliance risk.

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The problem with carrier compliance

Modern technology and a global market amp up the issues of carrier compliance. Throw in cybersecurity risks, trade wars, government sanctions, foreign exchange markets, bankruptcies, and a global pandemic—the result: a compliance risk nightmare for the supply chain and transportation network management.

Mitigating risk and successful operation should be synonymous with compliance and preparation. When a company needs to prove compliance, it’s often too late, so being prepared can stave off disasters, including fines and operational delays or forced shut down.
Shippers need to check regulations and research requirements that ensure smooth operation and constant adherence to protocols. Proactive measures and checks and balances need to be put in place to stave off the unforeseen.

Using a TMS helps with end-to-end compliance management

A TMS is a platform designed to streamline shipping processes and offers effective supply chain management solutions. TMS can create a carrier scorecard that analyzes various metrics, including claims handling, the accuracy of billing, on-time pickup, and delivery performance.

A TMS allows shippers to automate and results in valuable time-savers comprehensively and lays out plans for the future of efficient, compliant operations.
In addition to scorecards, most TMS features include advanced analytics, financial management, and advanced shipment management, which leads to end-to-end compliance management and lowers overall compliance risk.

Tips for building a scorecard to manage compliance risk

Not all carrier scorecards are created equally. Generating a checklist will ensure the carrier scorecard fits the shipper, no matter the size of the operation.
A good scorecard will include metrics for the following: billing and invoicing accuracy, a performance timeline, driver performance, load preferences (will vary by carrier), responsive customer service, transparency during audits, equipment maintenance, overall score per carrier, and reevaluation timeline for updating the carrier scorecard.

Successful carrier scorecards allow quantitative rankings for each carrier, making an easy determination of what carriers should remain and why. Here are some helpful steps:

  1. Connect all partnering LSPs to the TMS.
  2. Leverage EDI and API to track carrier data and performance.
  3. Use data to validate annual RFP terms, changes, or processes.
  4. Remember to include invoicing data accuracy too.
  5. Think about pickup timeliness and driver performance.
  6. Continuously update the TMS.
  7. Repeat and improve.

Increase supply chain value with proactive carrier scorecard management today

Mitigating compliance risk is a constantly evolving challenge for the supply chain. The solution is understanding performance analytics measured by an effective scorecard. Building a carrier scorecard doesn’t have to be a difficult task. Utilizing the right TMS and selecting specific metrics for the shipper will result in a carrier scorecard that minimizes compliance risk and adds to every company’s bottom line.

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