Understanding the impact of on-time percentages

Pegasus Logistics GroupInsider

All too often I’m asked, what is your on-time percentage as an organization? I consistently respond, “We pursue business where one failure is too many!” This means by the time we’re reviewing on-time percentages it could be too late! We challenge all stakeholders within Pegasus to understand the true impact of failure for all our clients. Not having a detailed understanding could lead to poor decision-making and, quite frankly, less commitment to mitigate risk at all costs. It’s critical that we all understand the consequences of failure and support limited disruptions.

Let’s take a look at a few reasons we cannot fail for our clients:

Marketing Deadlines
Lost sales, displays not set-up, products not on shelves….could you imagine the big picture impact of millions of dollars spent on a marketing campaign and then on the day of release, no products or displays on shelves at the retail level?

Lost Revenue
Everyone is beholden to some sort of revenue goal. It could simply tie to a bonus structure or be as visible as reporting to shareholders. No matter what the case is, logistics providers simply cannot be part of the problem in capturing revenue. Whether bringing in raw materials to manufacture goods to ship out or delivering on the last day of the month, it’s critical to those organizations’ earnings. 98% on-time doesn’t sound all too bad, does it? Well, try missing 2 deliveries out of 100 at EOQ valued at $5M? Sounds a little more painful when you view it that way. One load of server racks could be easily valued at $3M. Failure is not an option!

SLA / Overtime Penalties
How often have you heard, “But we were only a few hours late?” This lack of understanding can result in major consequences, a few simple examples include going into trade shows or delivery of IT services equipment to a location. First, if a delivery is 2 hours late to a show, it could miss a target move-in which could cost thousands depending on the booth size. At the same time, what if there were four employees on site for the scheduled installation? Multiple [4 employees] X [2 additional hours at $50+ per hour] and costs start adding up quickly. IT service contracts also have installers scheduled for deliveries, which cost money and will accrue overtime penalties when a delivery is late. They also deal with SLA penalties as “go live” or “downtime” can have stringent dollar figures associated to them.

The “Non-Professional Receiver”
Similar to on-time percentage is the “clear POD.” Many retail locations do not have logistics experts receiving shipments. Our people understand this and make sure we go the extra mile to prevent complications at the final mile. Pictures, pre-calls and site profiles act as a protection for our clients. It puts our clients and their clients in a bind when the process is not micromanaged.

These simple examples are endless. At Pegasus, we exhaust time and effort to educate all our great stakeholders about the true cost of failure and the impact to the client. The integrated sequence of events tied to a late shipment can be very costly. Behind the scenes, we’re proactively managing any network disruption to limit the true impact to our client.