Benefits of using BSC in logistics
Strategic planning has become tremendously popular in different business areas. One of the reasons of growth in popularity of strategic planning is a tough competition in the market, which has become tougher over last decade. It is very important for any company to know where it is going and what results should be achieved. But sometimes there is a real gap between company strategy and its operational management. In other words the company sets ambitious goals but really does nothing to achieve them.
That was the major precondition for emergence of strategic management tools. Of business owners and scholars came to understand that there should be clear cause and effect ties between operational in strategic management, or in other words the strategy must be transferred into action. Balanced Scorecard developed by Norton and Kaplan has become the most popular performance evaluation tool that communicates strategy and operational management.
It has a very simple principle: the company chooses key performance indicators in the four categories. KPIs are those indicators that represent the most important success factors for the company. In such a way, top managers of the company can focus on most important issues.
BSC implementation cycle
In logistics strategic planning is especially important as timely delivery of products and cargoes creates a positive image for the logistics company. Logistics is about timely and inexpensive delivery of products. Some logistics managers are too focused on shipment time and timely delivery that they forget about cost factor. As a result, shipment costs may exceed the cost of products themselves.
With the help of Balanced Scorecard it will be possible to find compromise between time for shipment and shipment costs. In such a way customers will receive their products on time and logistics company will spends minimal amount of money to deliver them.
During implementation of Balanced Scorecard in logistics it is important to find the right indicators. As already said above, shipment time per unit and shipment cost per unit are considered to be the most important and widely used indicators. Of course, one should pay attention to such indicators as truck turnaround time, customs procedures, truck load capacity usage, etc.
Major logistics KPIs
One should always remember that use of Balanced Scorecard and peculiarity is of this system have to be understood to ordinary employees. Logistics managers must understand why the use Balanced Scorecard and what benefits this system is buffering. Only in such a way use of Balanced Scorecard would be profitable both for company shareholders, top management and ordinary employees.
Tags: logistics evaluation, logistics kpis, logistics metrics, transport kpis
