tina.khanna
New member
hi ppl
i need some info on performance measurement in logistics
plzzz send me if possible
i need some info on performance measurement in logistics
plzzz send me if possible
performance measurement in logistics
- Thread starter tina.khanna
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getsetgoal
New member
Re: performance measurement
LOGISTICAL PERFORMANCE MEASUREMENT AND REPORT
After this unit you should be able to answer following questions
A. Concept Questions & B. Short notes
51. Logistical performance measures
52. Logistical Performance appraisal
53. Internal/ External performance measurement
54. Explain various Logistical performance measures used in Logistical performance measurement
55. Benchmarking
56. Comprehensive supply chain measurement
57. Performance auditing
C. Section II descriptive questions [10 marks each]
1. Comment on Internal/ External performance measurement and relevant measures
2. Explain Comprehensive supply chain measurement Performance Appraisal [Measurement]
3. Explain different objectives of developing and implementing performance measurement systems in Logistics
4. How is performance appraisal carried out in Logistics Function?
5. What are key measures of performance of logistics?
6. What is bench marking? How is it used for performance appraisal in logistics management?
7. Explain the concepts of logistical performance measurement & controlling
8. Objectives of logistical performance measurement systems
9. Explain comprehensive supply chain measurement
10. What are various levels of measurement and information flow
11. Explain various report Structures used in logistical performance reporting
Logistical performance measurement and controlling
[L/M-Bowersox, pages 668 onwards]
In a highly competitive business environment logistical competency is critical to the survival and growth of the organization. Logistical resources are scarce and right allocation of such resources is vital. Logistical performance measurement is to ensure right allocation and to monitor utilization of the resources. Performance measurement is required to ensure careful evaluation and review of logistical performance of a company. Importance of logistical performance can never be overstated in competitive environment.
Objectives of logistical performance measurement systems:
Monitoring, controlling and directing are said to be three objectives of measurement systems for logistical performance. Specific measures are developed to keep fulfillment of the above measurement objectives for logistical performance measurement.
Monitoring measures: are used to track historical performance for reporting to management or customers
Controlling measures: track ongoing performance for refining logistical system if it goes below the performance standards
Directing measures: are developed to encourage performance by employees. Based on assessment done using these measures good performance is rewarded.
Perspectives of measurement: based on perspectives of measurement two types of measures are developed. The measurement perspectives are activity based and process based.
Activity based measures measure performance at individual activity level. These activities are small tasks performed to execute customer orders. Activity based performance measures indicate efficiency and effectiveness of first level efforts in the process of customer satisfaction.
Process based performance measures measure effectiveness and efficiency of customer satisfaction process. They examine total performance cycle time, or total service quality. These two examples collectively indicate effectiveness and efficiency of customer satisfaction process.
Internal performance measurement: comparing activities and processes to operations and or goals to previous year. For example customer service may be compared to previous years performance and current years goal. All the information necessary to calculate these internal measures is available internally. Hence they are called internal performance measures.
Internal performance measures are classified into following categories
Cost, customer service, productivity, asset management and quality.
Cost measures: logistical cost is a measure very popularly used to measure logistical performance. It is a reflection of logistical performance as this indicates the resources expended to meet specific operating objectives. It is measured in rupees or dollars as a percentage of sales or as a cost per unit of volume
Some of the cost measures commonly used are
Total Cost Per Unit, Cost as a Percentage of Sales, Inbound Freight, Outbound Freight, Ware House Costs, Administrative Costs, Order Processing, Direct Labor, Comparison Of Actual Vs Budget, Cost Trend Analysis, Direct Product Profitability.
Customer service measures: Service levels are common Customer service measures. They indicate a firm’s ability to meet customer expectations
Some of the customer service measures commonly used are Fill rate, Stock outs, Shipping errors, On-time delivery, Back orders, Cycle time, Customer feedback, Sales force feedback, Customer surveys
Productivity measures: Productivity measure are normally easily understood and extensively used although some times it may become difficult to obtain all relevant details. This measure gives an indication of resource utilization. Productivity measures are static, dynamic and surrogate. Static measures take all factors of out put and input into account. This is also called total productivity. As the measurement is across only one span of time it is called static productivity measure.
Dynamic measures compare one static measure against another. Total productivity of one period is compared to static productivity of another time period.
Surrogate measures take into account such factors not normally included in productivity calculations but correlated with the concept. For example, customer satisfaction, profit, effectiveness, quality, efficiency etc.
Some of the surrogate logistics productivity measures commonly used are :Units shipped per employee, Units per labour dollar, Orders per sales representative, Comparison to historical standards, Goal programs, Productivity Index.
Asset Management: ROI and inventory turns are the measures used for asset management. They indicate utilization of fixed as well as current assets. Logistical fixed assets and inventory put together account for major portion of company’s assets.
Some of the commonly used measures are inventory turns, inventory carrying costs, inventory levels, number of days supply, obsolete inventory, return on net assets, return on investment
Quality: ‘perfect order’ is treated as a concept for assessing quality of logistics. Features of a perfect order are complete delivery of all items requested, OTD with a mutually acceptable tolerance [of one day], complete and correct documentation, product faultlessly installed.
Obstacles in achieving perfect order are order entry errors, incomplete information, damaged shipment, invoice error.
Examples: number of customer returns, dollar amount of damage, frequency of damage.
External performance measures: maintain an externally focused perspective. Performance of the organization is measured through the perception screen of customer. These measures are used to gain insight into the practices in other industries. The two concepts for the above measures are customer perception measurement and bench marking. These two are the focus areas of external performance measures.
Customer perception measurement
Customer perception is measured by carrying out surveys sponsored by the organization interested in measurement or by the industry. Either the firm, or consultants or delivery agents or industry organizations carry out these surveys. Information surveyed is about firm’s and competition’s performance in specific areas. Generally, information generated by these surveys is customer’s perception of availability of firm’s products, performance cycle time, information availability, and performance in the areas of problem resolution and product support.
Best practice bench marking
This is a tool to calibrate logistical operations of the firm. Bench marking review focuses on measures, practices and processes of a comparable organization. Review committee identifies key performance measures to improve in the firm and tracks historical and current performance levels
Benchmarking methods
1. Sources of information for performance measures are published logistical data, published by periodicals and university research. This information being public knowledge lacks in competitive advantage.
2. Bench marking a non-competitive company. This leads to a comprehensive study, and being bilateral, proprietary knowledge adds value mutually. As one organization is studied the information lacks broadness of perspective.
3. Alliances of organizations: share each others bench-mark data. This yields comparatively better data. But it is difficult to maintain such alliances.
Examples of bench marking: asset management cost, customer service, productivity, quality, strategy, technology, transportation, warehousing, order processing
Comprehensive supply chain measurement:
Four types of metrics developed for outcome and process in a supply chain are customer satisfaction, time, cost and assets.
Characteristics of an ideal measurement system
Cost/Service Reconciliation: as cost and service [eg. freight bill and shipment] are separated by time, cause/effect relationship between them is not established. These get apportioned to different heads of cost and benefit. An ideal measurement system should reconcile them.
Dynamic Knowledge Based Reporting: performance reports generally report performance characteristics for a particular time period. They do not reveal current situation. They do not reveal data in the extended past nor do they reveal the trend in future. An ideal system should do all these to enable appropriate action proactively.
Exception based reporting: logistical management desires a report on exception from anticipated results. This is like a deviation from standard that is an indicator of process deviating from desired course. An ideal report enables manager to act proactively.
Levels of measurement and information flow
Measurement is expected to yield information at various levels to facilitate proactive decisions rather than reactive. This is achieved by signaling a process deviation or break down for action to prevent recurrence. Information should be reported in different levels for hierarchy as per the decision-making needs of that level.
Various levels of measurement and information flow are direction, variation, decision and policy
Direction level: this level is concerned with execution of operational plan. The focus is on day to day transactions to implement predetermined program. Measurement is concerned with detection of trends and exceptions. Exception is a change from desired result of a micro level plan in the process. Measurement covers broad area and information provided serves as data-base for subsequent levels. Managerial utility is limited.
Variation level: accumulated deviations from plan are measured. At direction level these variations appear to be exceptions. Variation measurement is identification of trends that may result into problems. Concerned manager is expected to interpret the trend, identify appropriate action at his/her level and issue instructions or seek help from higher in the hierarchy. Decisions at this level are generally on specific transactions.
Decision Level: at this level measures help decision -maker make modifications to operational plan after appraisal of exceptions and deviations of previous levels. Information is more selective and manager friendly. Modifications to plan need additional resources. At this levels system objectives are not changed if the operational plan is unable to meet them. But existing plan is reinforced to meet these objectives by additional resource allocation.
Policy Level: policy level measurement focuses on change in system objectives. Need for change in policy may be triggered by any level in the logistical management. It may be done by functions outside the department. Marketing department may initiate a change in the service levels in view of competition. The information at this level is much less in volume but high in importance. Ref. To fig.15 in logistical visuals
Report Structures
Reports are an important part of any measurement system. They are generated from management information system. These reports are expected to give rapid and accurate information or else decision making becomes ineffective. Three types of reports used in logistical system are status, trend and ad hoc.
Status Reports: give information about status of a particular logistical aspect. The report is in detail and enables line manager to ascertain current situation. The report may cover several locations with respect to the aspect under measurement. If the aspect selected is inventory, in detail information about inventory levels at all locations is given. This type of report is relevant to the direction level in the earlier discussion. Trend Reports: are required at a higher level as compared to the last and more manager friendly, in the sense they help in decision making. They indicate the trend in future with respect to the chosen logistical aspect
Ad hoc Reports: ad hoc reports are ordered at some time to make available information in detain on specific areas of performance for some decision making need. There are two types of Ad hoc Reports. They are diagnostic report, position paper and policy report.
• Diagnostic report: detailed information about some phase of logistical performance. if back orders are the chosen phase then information about current back orders and planned corrective actions on them.
• Position paper: this report contains alternative courses of action for an anticipated or current problem. Lower levels of management prepare these reports for executives at higher levels. An alternative suggested may need additional resources. When these resources are approved the operational plans are modified. Position reports request additional resources but do not suggest change in system objectives.
• Policy Report: Policy reports are ordered by CEOs whenever a policy modification is requested where change in objectives is suggested. These reports contain information outside the realm of logistics. They are highly specific and tailor made to the need of the organization
LOGISTICAL PERFORMANCE MEASUREMENT AND REPORT
After this unit you should be able to answer following questions
A. Concept Questions & B. Short notes
51. Logistical performance measures
52. Logistical Performance appraisal
53. Internal/ External performance measurement
54. Explain various Logistical performance measures used in Logistical performance measurement
55. Benchmarking
56. Comprehensive supply chain measurement
57. Performance auditing
C. Section II descriptive questions [10 marks each]
1. Comment on Internal/ External performance measurement and relevant measures
2. Explain Comprehensive supply chain measurement Performance Appraisal [Measurement]
3. Explain different objectives of developing and implementing performance measurement systems in Logistics
4. How is performance appraisal carried out in Logistics Function?
5. What are key measures of performance of logistics?
6. What is bench marking? How is it used for performance appraisal in logistics management?
7. Explain the concepts of logistical performance measurement & controlling
8. Objectives of logistical performance measurement systems
9. Explain comprehensive supply chain measurement
10. What are various levels of measurement and information flow
11. Explain various report Structures used in logistical performance reporting
Logistical performance measurement and controlling
[L/M-Bowersox, pages 668 onwards]
In a highly competitive business environment logistical competency is critical to the survival and growth of the organization. Logistical resources are scarce and right allocation of such resources is vital. Logistical performance measurement is to ensure right allocation and to monitor utilization of the resources. Performance measurement is required to ensure careful evaluation and review of logistical performance of a company. Importance of logistical performance can never be overstated in competitive environment.
Objectives of logistical performance measurement systems:
Monitoring, controlling and directing are said to be three objectives of measurement systems for logistical performance. Specific measures are developed to keep fulfillment of the above measurement objectives for logistical performance measurement.
Monitoring measures: are used to track historical performance for reporting to management or customers
Controlling measures: track ongoing performance for refining logistical system if it goes below the performance standards
Directing measures: are developed to encourage performance by employees. Based on assessment done using these measures good performance is rewarded.
Perspectives of measurement: based on perspectives of measurement two types of measures are developed. The measurement perspectives are activity based and process based.
Activity based measures measure performance at individual activity level. These activities are small tasks performed to execute customer orders. Activity based performance measures indicate efficiency and effectiveness of first level efforts in the process of customer satisfaction.
Process based performance measures measure effectiveness and efficiency of customer satisfaction process. They examine total performance cycle time, or total service quality. These two examples collectively indicate effectiveness and efficiency of customer satisfaction process.
Internal performance measurement: comparing activities and processes to operations and or goals to previous year. For example customer service may be compared to previous years performance and current years goal. All the information necessary to calculate these internal measures is available internally. Hence they are called internal performance measures.
Internal performance measures are classified into following categories
Cost, customer service, productivity, asset management and quality.
Cost measures: logistical cost is a measure very popularly used to measure logistical performance. It is a reflection of logistical performance as this indicates the resources expended to meet specific operating objectives. It is measured in rupees or dollars as a percentage of sales or as a cost per unit of volume
Some of the cost measures commonly used are
Total Cost Per Unit, Cost as a Percentage of Sales, Inbound Freight, Outbound Freight, Ware House Costs, Administrative Costs, Order Processing, Direct Labor, Comparison Of Actual Vs Budget, Cost Trend Analysis, Direct Product Profitability.
Customer service measures: Service levels are common Customer service measures. They indicate a firm’s ability to meet customer expectations
Some of the customer service measures commonly used are Fill rate, Stock outs, Shipping errors, On-time delivery, Back orders, Cycle time, Customer feedback, Sales force feedback, Customer surveys
Productivity measures: Productivity measure are normally easily understood and extensively used although some times it may become difficult to obtain all relevant details. This measure gives an indication of resource utilization. Productivity measures are static, dynamic and surrogate. Static measures take all factors of out put and input into account. This is also called total productivity. As the measurement is across only one span of time it is called static productivity measure.
Dynamic measures compare one static measure against another. Total productivity of one period is compared to static productivity of another time period.
Surrogate measures take into account such factors not normally included in productivity calculations but correlated with the concept. For example, customer satisfaction, profit, effectiveness, quality, efficiency etc.
Some of the surrogate logistics productivity measures commonly used are :Units shipped per employee, Units per labour dollar, Orders per sales representative, Comparison to historical standards, Goal programs, Productivity Index.
Asset Management: ROI and inventory turns are the measures used for asset management. They indicate utilization of fixed as well as current assets. Logistical fixed assets and inventory put together account for major portion of company’s assets.
Some of the commonly used measures are inventory turns, inventory carrying costs, inventory levels, number of days supply, obsolete inventory, return on net assets, return on investment
Quality: ‘perfect order’ is treated as a concept for assessing quality of logistics. Features of a perfect order are complete delivery of all items requested, OTD with a mutually acceptable tolerance [of one day], complete and correct documentation, product faultlessly installed.
Obstacles in achieving perfect order are order entry errors, incomplete information, damaged shipment, invoice error.
Examples: number of customer returns, dollar amount of damage, frequency of damage.
External performance measures: maintain an externally focused perspective. Performance of the organization is measured through the perception screen of customer. These measures are used to gain insight into the practices in other industries. The two concepts for the above measures are customer perception measurement and bench marking. These two are the focus areas of external performance measures.
Customer perception measurement
Customer perception is measured by carrying out surveys sponsored by the organization interested in measurement or by the industry. Either the firm, or consultants or delivery agents or industry organizations carry out these surveys. Information surveyed is about firm’s and competition’s performance in specific areas. Generally, information generated by these surveys is customer’s perception of availability of firm’s products, performance cycle time, information availability, and performance in the areas of problem resolution and product support.
Best practice bench marking
This is a tool to calibrate logistical operations of the firm. Bench marking review focuses on measures, practices and processes of a comparable organization. Review committee identifies key performance measures to improve in the firm and tracks historical and current performance levels
Benchmarking methods
1. Sources of information for performance measures are published logistical data, published by periodicals and university research. This information being public knowledge lacks in competitive advantage.
2. Bench marking a non-competitive company. This leads to a comprehensive study, and being bilateral, proprietary knowledge adds value mutually. As one organization is studied the information lacks broadness of perspective.
3. Alliances of organizations: share each others bench-mark data. This yields comparatively better data. But it is difficult to maintain such alliances.
Examples of bench marking: asset management cost, customer service, productivity, quality, strategy, technology, transportation, warehousing, order processing
Comprehensive supply chain measurement:
Four types of metrics developed for outcome and process in a supply chain are customer satisfaction, time, cost and assets.
Characteristics of an ideal measurement system
Cost/Service Reconciliation: as cost and service [eg. freight bill and shipment] are separated by time, cause/effect relationship between them is not established. These get apportioned to different heads of cost and benefit. An ideal measurement system should reconcile them.
Dynamic Knowledge Based Reporting: performance reports generally report performance characteristics for a particular time period. They do not reveal current situation. They do not reveal data in the extended past nor do they reveal the trend in future. An ideal system should do all these to enable appropriate action proactively.
Exception based reporting: logistical management desires a report on exception from anticipated results. This is like a deviation from standard that is an indicator of process deviating from desired course. An ideal report enables manager to act proactively.
Levels of measurement and information flow
Measurement is expected to yield information at various levels to facilitate proactive decisions rather than reactive. This is achieved by signaling a process deviation or break down for action to prevent recurrence. Information should be reported in different levels for hierarchy as per the decision-making needs of that level.
Various levels of measurement and information flow are direction, variation, decision and policy
Direction level: this level is concerned with execution of operational plan. The focus is on day to day transactions to implement predetermined program. Measurement is concerned with detection of trends and exceptions. Exception is a change from desired result of a micro level plan in the process. Measurement covers broad area and information provided serves as data-base for subsequent levels. Managerial utility is limited.
Variation level: accumulated deviations from plan are measured. At direction level these variations appear to be exceptions. Variation measurement is identification of trends that may result into problems. Concerned manager is expected to interpret the trend, identify appropriate action at his/her level and issue instructions or seek help from higher in the hierarchy. Decisions at this level are generally on specific transactions.
Decision Level: at this level measures help decision -maker make modifications to operational plan after appraisal of exceptions and deviations of previous levels. Information is more selective and manager friendly. Modifications to plan need additional resources. At this levels system objectives are not changed if the operational plan is unable to meet them. But existing plan is reinforced to meet these objectives by additional resource allocation.
Policy Level: policy level measurement focuses on change in system objectives. Need for change in policy may be triggered by any level in the logistical management. It may be done by functions outside the department. Marketing department may initiate a change in the service levels in view of competition. The information at this level is much less in volume but high in importance. Ref. To fig.15 in logistical visuals
Report Structures
Reports are an important part of any measurement system. They are generated from management information system. These reports are expected to give rapid and accurate information or else decision making becomes ineffective. Three types of reports used in logistical system are status, trend and ad hoc.
Status Reports: give information about status of a particular logistical aspect. The report is in detail and enables line manager to ascertain current situation. The report may cover several locations with respect to the aspect under measurement. If the aspect selected is inventory, in detail information about inventory levels at all locations is given. This type of report is relevant to the direction level in the earlier discussion. Trend Reports: are required at a higher level as compared to the last and more manager friendly, in the sense they help in decision making. They indicate the trend in future with respect to the chosen logistical aspect
Ad hoc Reports: ad hoc reports are ordered at some time to make available information in detain on specific areas of performance for some decision making need. There are two types of Ad hoc Reports. They are diagnostic report, position paper and policy report.
• Diagnostic report: detailed information about some phase of logistical performance. if back orders are the chosen phase then information about current back orders and planned corrective actions on them.
• Position paper: this report contains alternative courses of action for an anticipated or current problem. Lower levels of management prepare these reports for executives at higher levels. An alternative suggested may need additional resources. When these resources are approved the operational plans are modified. Position reports request additional resources but do not suggest change in system objectives.
• Policy Report: Policy reports are ordered by CEOs whenever a policy modification is requested where change in objectives is suggested. These reports contain information outside the realm of logistics. They are highly specific and tailor made to the need of the organization
ankitgokani
Ankit Gokani
well u will also get a lot of info from the textbooks or refer vishal sirs notes its explained beautifully
jagannaths
Jagan Seshaiyer
hi all ... am doin my final year project on the topic "customer satisfaction in banks" pls do help with details and questionnaire .
Developing a performance measurement system for world-class distribution logistics by using activity-based costing and management. Case: basic metal industries
hey even this is nice check this out k bye n all the best
hey even this is nice check this out k bye n all the best
Hi Tina ,
Speaking of KPI in logistics. smartKPIs.com - The smart choice in performance management. Database of KPIs, KPI examples in practice, performance management resources and more. may be a good resource for you. It contains a user friendly library of well-documented performance measures. At the moment it lists over 3300 KPI examples, grouped in 73 functional areas, as well as 83 industries and sub-categories.
KPI examples for the logistics are available on this page smartKPIs.com - KPIs in Logistics / Distribution functional area
They include but not limited to:
% Damage free transport service
% On time pick-ups
# Total warehouse storage space
In addition to examples of performance measures, smartKPIs.com - The smart choice in performance management. Database of KPIs, KPI examples in practice, performance management resources and more. also contains a catalogue of performance reports that illustrate the use of KPIs in practice.
Examples of such reports for logistics are available on smartKPIs.com - KPIs in practice from Supply Chain, Procurement, Distribution functional area
The website is updated daily with new content, so check it from time to time for additional content.
Please note that while examples of performance measures are useful to inform decisions, each performance measure needs to be selected and customized based on the objectives and priorities of each organisation.
Best regards,
Anita Liang
Research Analyst
smartKPIscom - The smart choice in performance management. Database of KPIs, KPI examples in practice, performance management resources and more.
Speaking of KPI in logistics. smartKPIs.com - The smart choice in performance management. Database of KPIs, KPI examples in practice, performance management resources and more. may be a good resource for you. It contains a user friendly library of well-documented performance measures. At the moment it lists over 3300 KPI examples, grouped in 73 functional areas, as well as 83 industries and sub-categories.
KPI examples for the logistics are available on this page smartKPIs.com - KPIs in Logistics / Distribution functional area
They include but not limited to:
% Damage free transport service
% On time pick-ups
# Total warehouse storage space
In addition to examples of performance measures, smartKPIs.com - The smart choice in performance management. Database of KPIs, KPI examples in practice, performance management resources and more. also contains a catalogue of performance reports that illustrate the use of KPIs in practice.
Examples of such reports for logistics are available on smartKPIs.com - KPIs in practice from Supply Chain, Procurement, Distribution functional area
The website is updated daily with new content, so check it from time to time for additional content.
Please note that while examples of performance measures are useful to inform decisions, each performance measure needs to be selected and customized based on the objectives and priorities of each organisation.
Best regards,
Anita Liang
Research Analyst
smartKPIscom - The smart choice in performance management. Database of KPIs, KPI examples in practice, performance management resources and more.
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New member
Where is vishal sir's notes?.... can you please send me...
Dear friends
Thanks for all. I like performance measurement in logistics very much.
It's good
If you have some time, pls visit my blog at: Logistics KPIs
Rgs
Thanks for all. I like performance measurement in logistics very much.
It's good
If you have some time, pls visit my blog at: Logistics KPIs
Rgs
Business-education
Business Education
Hello, this is one of the most important concept, usually company tries to get indulge on the concept of how to appraise but they tend to track the effectiveness on it. However sometimes it is very easy to track because when the result increases and the outcome of the profit hike.
bhautik.kawa
Bhautik Kawa
Hey Friend,
Here i am sharing information on Performance Measurement and Control in Logistics Service Providing, please check attachment for download topic