Supply Chain Definitions .com
Transportation Definitions (coming soon)
Assessorials: Extra charges for transportation services such as packing, unpacking, long haul fees and extra pick-ups. Freight carriers may charge extra fees for trailer detention/demurrage, re-delivery, fuel increases, and other expenses or extra services.
Accessorials as percent of total freight: Calculated by dividing accessorial and surcharges by total freight expenditures for the period.
Demurrage - additional fees charged by a carrier when rail freight cars and ships are held beyond a pre-agreed to time.
Freight bill accuracy. Calculated by dividing the number of error-free freight bills by the total number of freight bills in the period. Errors can include incorrect pricing, incorrect weights, incomplete information,etc. Generally measured in total and for each carrier.
Freight cost per unit shipped: Calculated by dividing total freight costs by number of units shipped per period. Useful in businesses where units of measure are standard (e.g., pounds). Can also be calculated by mode (barge, rail,ocean, truckload, less-than-truckload, small package, air freight, intermodal, etc.).
Mode selection vs. optimal: This is calculated by dividing the number of shipments sent via the optimal mode by the total number of shipments for the period. To measure this, each traffic lane must have a designated optimal mode, based on freight costs and customer service requirements.
Number of carriers per mode:
Calculated by counting the total number of freight
carriers used in a given period, by mode (ocean, barge, rail,
intermodal, truckload, LTL, small package, etc.). This is an indication
of your volume leverage and control over the
Outbound freight costs as percentage of net sales: Calculated by dividing outbound freight costs by net sales. Most accounting systems can separate "freight in" and "freight out." Percentage can vary with sales mix, but is an excellent indicator of the transportation financial performance.
Percent of truckload capacity utilized: Generally used for shipments over 10,000 lbs. Calculated by dividing the total pounds shipped by the theoretical maximum. For example, assume your trucks can hold 40,000 lbs. of product. During the prior month, there were 675 shipments totaling 22.95MM lbs. The percentage utilization was 85%. The 15% unused capacity is an opportunity for more efficiency.
Shipment visibility/traceability percent: Calculated by dividing the total number of shipments via carriers with order tracking systems, by the total number of shipments sent during a period. This is an indicator of the relative sophistication of your carrier base, and one measure of the non-price value available from your carrier base.
Transit time: Measured by
the number of days (or hours) from the time a shipment
leaves your facility to the time it arrives at the customer's
location. Often measured against a standard transit time quoted by the
carrier for each traffic lane. Unless you are integrated into your
customers' systems, you will have to rely on freight carriers to report
their own performance. This is often an important component of leadtime.
Transit times can vary substantially, based on freight mode and carrier
The definitions contained on this website are the opinions
of the webmaster. Different businesses may have different definitions. Please
check numerous sources to ensure that you have the correct definitions.
SupplyChainMetric.com - an overview of various measurements used in a supply chain.
SupplyChainPurchasing - a review of purchasing in a supply chain.
Inventory Definition - a basic overview of inventory terms.
GermTherapy.com- a website that gives an overview of germ therapy, germ line cell therapy and cancer treatments.