Differentiating Leading Versus Lagging Indicators In Logistics

Having the ability to track time-critical shipment is a necessary asset for most companies. Knowing where you aviation part is while your plane is grounded or having the ability to staff lab technicians to accurately meet specimen shipments being delivered to the hospital is an easy way to reduce operational costs and better schedule daily tasks. Currently, there are two ways to track time time-critical shipments: 1) a traditional method using lagging indicators and 2) a tech-enabled method using leading indicators.

1 - Traditional Method

First of all, let’s breakdown what a lagging indicator means in logistics: a lagging indicator is anything that happens past your expectations or after you expected notification time. This means shippers aren’t getting notified of important updates in real-time.

In traditional methods, lagging indicators are often paired with milestone updates. This means the logistics company updates the customer based on predetermined steps in a delivery either through email or phone notifications. These notifications are a manual process and can be delayed. This means if a package is late tendering to an airline, the operational team and customer won’t know about it until after the flight has left.

The operational team is now reactively trying to reroute the shipment and still make quoted delivery time before updating the client. This is a time-consuming process that often leaves companies making reactive decisions.

2 - Tech-Enabled Method

As technology continues to advance, more companies like Amazon or Airspace are using leading indicators instead of lagging indicators to accurately predict events in the delivery process.

A leading indicator is anything you can use to predict your expectation. An example of how tech-enabled logistics companies are using leading indicators is if a package is supposed to be tendered to an airline within 15 minutes, but the drivers gps is showing he’s more than 30 minutes away, the logistics platform will inform an operations expert that a potential routing issue has occurred and a new route is needed.

The logistics team now can proactively make the decision to continue with the current routing or reroute the package with the most information possible. If a new route is chosen, the system will automatically notify the customer and update the quoted delivery time. By informing companies of potential delays faster, they can proactively staff their employees based on this new information.

When comparing both models, a tech-enabled method allows for all parties to stay up to date with real time information and proactively react to unforeseen circumstances faster.


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