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Automating Logistics

Why 99.9% On Time Delivery is the Wrong Metric in Time-Critical Shipping

Anyone familiar with time-critical shipping is familiar with the promise of a 99.9 on-time percentage. It is the number that almost every time critical forwarder boasts. I argue that not only is 99.9% a fabricated number that gives shippers a false sense of security, it is also the wrong number to set as a goal for the industry.

I look at this number from a pretty unique perspective. As the Chief Technology Officer of Airspace Technologies, my team is responsible for the software that actually generates the time that the piece will arrive. A user simply fills out a form with the origin and destination address and the software finds the absolute fastest path based on flights, traffic, and more, which is used to generate the quoted delivery time. The ability to get a quote in less than a second has certainly had a huge impact. Not only can we make earlier flights, but we can also quote our customers automatically over API or even power their own logistics platform. 

However, how that number is calculated is a very important business decision. What if the software generates a quote that is too aggressive and we are late? What if it is too conservative and results in additional cost to the customer? We spend an enormous amount of time talking about this balance. We deliver a large number of human organs for transplant. In the case of organs, if you can make an earlier flight by maybe thirty minutes, you may be able to deliver several hours faster. That gives the organ a higher chance of success in the recipient so every single minute we can save matters. 

The Paradox

This creates a paradox. Take the case of an organ for transplant. Let's say flights leave every two hours. At the time the piece is ready and the order comes in, we are one hour from the cutoff to make the first flight. If I want to optimize the chances that the organ is a successful transplant for the recipient, we need to minimize the cold ischemia time and take the first flight. However, that flight is inherently harder to make because the cutoff time is two hours earlier than the second. So if I want to optimize for my on time percentage, I take the later flight, which puts the patient at risk, but protects my metrics.

I will add that most forwarders do not intentionally weigh patient safety vs service level. However, setting 99.9% on time as a service level makes that decision for them. The forwarder will intentionally pad quotes and choose the conservative option because it is the path to achieving the metric even if it costs the shipper money in downtime or worse.

Controllable vs Uncontrollable

How do forwarders achieve 99.9% on time percentage if that is the metric they are advertising? The short answer is they do not. Most forwarders, Airspace included, do not own the airplanes in the supply chain. Most forwarders also do not even interact with the drivers that are moving the pieces on the ground. If the airline is impacted by the weather or if the driver gets a flat tire, that is deemed as an uncontrollable failure. It is an act of God that should not count against them. The question is then, if the forwarder does not have planes or drivers in its personal control, what is controllable? 

What is the right metric?

We know 99.9% on time is the wrong metric to strive for. It incentivizes the forwarder to use longer delivery windows and to point fingers at their vendors. It causes them to use creative measuring that is hard to fact check and ultimately leads to worse service. It is also a glaring discrepancy with IATA who cites only 67% of all orders with a delivery window inside of 24 hours are delivered on time. As an industry, time critical logistics needs more than a single number to evaluate success. Forwarders should be evaluated by how they perform when the transportation infrastructure breaks down. They should be evaluated by how well they are able to use leading indicators from the field to detect delays. During this pandemic, Airspace saw hundreds of flight cancelations on time critical orders and our average delay was 48 minutes. Even more importantly, all of our customers were notified of the delays immediately thanks to great software and even better people behind it.

Time-critical logistics is a four minute mile. It is a two hour marathon. It is the hardest and most white knuckled form of logistics. Sometimes we miss and when we do, we own it. As an industry we need to be honest about our metrics so we can actually drive them up. We started Airspace because so many of the world’s most important shipments were not making it on time. It has been our mission to make logistics safer and faster for those who need it most. I am very proud of what we have created and even more excited about what is to come.

 

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