Logistics Management

Balanced scorecard system is generally recognized as the most effective tool to automate business management processes and evaluate business performance.  One of the most prominent differences of Balanced Scorecard System as compared to other performance evaluation tools is that balanced scorecard system started to evaluate operational indicators which are also called nonfinancial.  Before, only financial indicators where measure.  But in order to achieve financial results something needs to be done on the operational level.

Balanced scorecard system will help business owners and managers create strategy maps, formulate strategic plans, develop instruments and measures to reach strategic goals.  However, the system is not very easy to use, implement and maintain.  Balanced scorecard is the tool that gives competitive advantage in the long term only in case it is properly used.

Training program will give answers to many questions

Developers from AKS-LABS offer audio training which will answer many questions concerning balanced scorecard, stages of its implementation, tips for managers as well as testing issues.  In fact, this 5-hour training will provide managers who are in charge of implementing balanced scorecard with great support and assistance.

What issues are covered in this training?  The material is sorted out according to the stages of implementation and maintenance of balanced scorecard.  So, the first stage is designing balanced scorecard system itself.  It is very important that all employees in the company understand their contribution to implementation of balanced scorecard.  The training will give answers on how to motivate employees and involve them in the evaluation process.  Also, general questions on balanced scorecard will be answered.  These are questions like what balanced scorecard system is, or what issues will be covered in the training.

The next step involves selection of the right KPIs.  The problem is that the wrong choice of KPIs will result in wrong actions which makes it impossible to reach strategic goals.  The training will help you select the right KPIs and learn to use them to measure business performance.  In other words, you will hear answers to questions like “How many KPIs do I need”,  “What KPIs should I evaluate” and so on.

The last stages refer to building strategic maps and testing balanced scorecard, i.e. using it in real business.  This action will cover issues of cascading schemes, relations between different company levels, etc.

Parts of training program

By purchasing this training program you’ll get access to valuable firsthand information from specialists in the field of balanced scorecard business performance evaluation tools.

In the modern age of technology business is run at a very high pace. There is not time to look around. Every market is full packed, and thus there is tough competition. As result, businesses need to be constantly developing and improving. In order to expand or improve one’s business one needs to know what is wrong with the business at the moment. Let’s make such a comparison. Imagine that you have started building a house and you failed to construct a decent basement. Will you continue building such a house? If you do, this house is sure to collapse. The same is with business. If you have small problems and decide to expand your business, these problems will all of a sudden turn really big. As known, big problems in business often lead to bankruptcy.

Well, we hope you already understood that evaluation of business performance is very important. Moreover, such an evaluation should be carried out from time to time to track positive and negative trends.

If often happens that problems occur in logistics department. Nowadays many customers wish to receive purchased products at home. So, this job of logistics managers to send the product or cargos. But the most important task is to minimize costs for shipping.

Evaluation of transportation indicators helps in measuring business perofrmance

Use transportation indicators to measure performance of logistics center

Evaluation of logistics department is a must for all big companies. It is very interesting to know much your logistics managers spend to send one item. If shipping costs exceed cost of a product, then you are certainly in a trouble.

But with the help of Balanced Scorecard system you will be able to evaluate performance of a logistics department. Moreover, it will be possible to see what causes problems. Thus you will deal with the root of the problem but not with its consequences.

Balanced Scorecard system evaluates KPIs which are known as key performance indicators. These values represent performance of a company. Moreover, it is possible to measure different aspects in work of a logistics department. The point is that many KPIs are interrelated. For instance, increased shipping time increase freight cost per unit. Low customer satisfaction will result in decreased numbers of orders, and so on.

Balanced Scorecard system offers information on company performance based on current performance values. If you want to evaluate performance of a logistic department you need to measure such KPIs as freight cost per unit, transit time, load capacity, losses, truck turnaround time and others.

Every big company producing or selling products must have own supply chain or at least use services of independent logistics companies. Logistics is a popular service nowadays since customers prefer receiving products at the doors of their homes. Moreover, customers choose between companies with the shortest delivery terms.

As any other branch of business logistics department needs to be evaluated from time to time. But before evaluation process one needs to decide how he or she will measure performance of logistics managers? In other words, a manager needs to decide what he or she will evaluate and in what values?

Balanced Scorecard system is a helping hand for all top managers and people who need to measure business performance. This system measures individual KPIs which differ depending on the business type. Why is Balanced Scorecard system valuable? It makes possible to find weak point in the work of a company. In fact, you will be able to find the root of your problems.

Supply chain kpi will show you business performance

Supply chain kpi evaluate performance of a logistic department

Performance evaluation is also important because it is impossible to plan anything before knowing what is going wrong in the company, otherwise small problems will grow into big ones.

If we are talking about logistic, we should evaluate only those KPIs relevant to delivery and supply chain. What are these indicators?

The most important and representative indicator is freight cost per unit. Sometimes, it happens that delivery costs exceed the cost of the delivered product which is nonsense. If you are delivering shoes ($50 per pair) and you have to pay another $50 to deliver them to end customer, think of the ways to decrease transportation costs.

Transit time is known as the second most important indicator. This is the time from taking order to delivery of product to the end customer. The less time you need the less money you spend to deliver products and cargos.

Load capacity is the amount of cargo all your means of transportation can carry. If a 20 ton truck carries just 5 tons of cargo, then your logistics manager did a poor job. You need to make sure that your trucks carry as much cargo as possible.

Losses. As a rule some cargos are lost or spoiled during transportation. Make sure the shipment is safe and tracked at all stages.

Sure, there are many more KPIs that can be evaluated. The more KPIs you measure, the fullest picture you will have.

It is really important to timely and from time to time evaluate performance of your business? Why? Well, there is a tough competition in all markets these days. Thus, in order to survive your business need to develop. You should improve performance and look for unusual and creative way to expand it. But how can you plan anything if you do not know what is happening to your business and what problems and challenges you have.

Thus, evaluation of business is a cornerstone for measuring business performance. Moreover, you need to know what needs to be measured. If you are just looking at the net profit or expenses for compensation you will not learn much. But with the help of Balanced Scorecard system you will be able to evaluate individual KPIs known as key performance indicators.

Nowadays, most businesses deliver products to customer’s homes just to find new customers. Logistics is popular as never. Logistics has two ultimate goals – to deliver products and cargos and use as little money as possible at that. It is not easy because of rising fuel costs and inflation.

Evaluate supply chain indicators to test performance of logistic center

Use Balanced Scorecard System to evaluate supply chain indicators

However, timely evaluation of logistics department performance can really help you out. Balanced Scorecard system will measure only those KPIs which really show real performance on the logistic managers and supply chain system.

Evaluation of logistics department can be divided into several stages. First, you need to decide which KPI you want to evaluate. Keep in mind that you should pick only major KPIs. This is important as you will have to consider all evaluations and make decisions as to “correction of mistakes”.

Which KPIs are relevant to logistics business? Firs of all, you need to pay attention to freight cost per unit, transit time, losses, load capacity, truck turnaround time etc. These indicators reflect financial performance of a logistics department.

It needs mentioning that having used Balanced Scorecard system you will be able to take counter measures as you will be aware of existing problems. Moreover you will fight against roots of the problems but not consequences.

Besides, your personnel is sure to feel more confident as people will be aware of own mistakes and imperfections. This also adds to staff motivation and better performance.

Logistics metrics and Balanced Scorecard system is recommended to logistics and top manager who wish to improve performance of supply chain. This automated software tool is really easy to use and extremely effective.

Evaluation is a very important process in any company. In order to develop and expand business it is necessary to measure current performance. Indeed, who can you further build business and invest funds if there are serious problems that will simply ruin it? Evaluation is quite helpful in this sense. Being aware of all problems and weak points it will be easier to make a strategic development plan.

Sometimes, it is very difficult to understand what is going wrong in the company, especially a big one that consists of many departments. For example, your sales department may show excellent performance while logistics will leave much to be desired. By the way, logistics is becoming increasingly popular. These days, customers are very picky and companies have to introduce additional services in order to attract new clients. So, delivery of products is one of the most popular services. But timely delivery is something that is valued most of all.

Supply chain dashboards will indicate strengths and weaknesses

Use supply chain dashboards in performance evaluation

As known, logistics is all about delivering product and using costs/transport in an efficient way. For instance, it is possible to deliver mps player for $50 which is its initial cost. Such a logistics department will soon run the company into bankruptcy.

As you can see, it is very important to evaluate logistics efficiency. Logistics is a very complex business and a product or cargo undergoes many stages before it is delivered to a customer. At each stage it is necessary to make sure the product is safe and transported to end user. However, the art of logistics is to make shipment as cheap as possible.

If you want to know how your logistics department is performing you should definitely use Balanced Scorecard System which is a popular tool to measure performance of any business types. BSC system tests individual indicators, commonly known as key performance indicators (KPI). Why KEY indicators? Because these values vividly show business performance and represent main processes in the company.

As to logistics, KPIs here include freight cost per unit, turnaround time, transit time, inventory carrying rate, on time shipment rate, perfect order management, average losses per unit and many others.

In measure logistics performance it is necessary to focus on major KPI that really represent performance of a logistics department. At the same time, it needs saying that most KPIs are interrelated. For instance, increase of transit time decreases customer satisfaction and increase freight cost per unit, and so on.

We are living in a rapidly developing world. Customers became very picky, and everybody wants to get products delivered within a minimum amount of time. For this reason, logistics services are becoming increasingly popular. In order to attract customers companies promise to deliver products to their homes. Moreover, there are millions of Internet shops offering cheap products and prompt delivery.

Logistics is all about delivering products to end customers. But logistic company may be doing great if it efficiently uses facilities and transportation means. At the same time logistic department can suffer big losses, if for instance a huge cargo truck is used to deliver just 1 ton of products.

It is well known that any business should be constantly developing and improving. Logistics companies are not exception here. Even if production facilities give of 100% of output and sales department works perfectly, logistics manager can spoil everything by untimely or too expensive delivery of products.

Use logistics indicators to evaluate performance of logistics department

Major Logistics Indicators

It is very important to evaluate performance of a logistics department. But there are so many aspects and factors that influence its work. What is the solution here? Use Balanced Scorecard system to properly measure logistics performance.

The point is that Balanced Scorecard system complexly evaluates performance. It means that the program measures different aspects of work. Analysis of different indicators makes it possible to get the whole picture. These indicators are commonly known as key performance indicators (KPI). Sure, they differ from business to business.

What are the main goals of a logistics department? Logistics managers need to make sure products are timely delivered and the company spends minimum possible amount of money. Excellent service is OK, but if delivery means huge losses for business, then who needs such a logistics company?

Balanced Scorecard system evaluates only major KPI that directly represent performance of a logistic department. Let’s make a brief overview of some KPIs in logistics.

Freight cost per unit. This is perhaps the most important indicator. If this value exceeds the cost of the product itself, fire your logistics managers! Try to keep costs low, but do not save on shipment quality, other wise you will pay more in losses.

Average transit time. Of course, the sooner you deliver products, the better your logistics department works. Decreasing transit time is a direct way to improve customer satisfaction and loyalty.

Load capacity. If your trucks and ships can carry xxx tons of cargo a week, but they carry less, look for ways to find new orders and customers.

Any organization needs to know where it is moving and what goals it wants to achieve. If you do not know what you are doing and what methods are relevant for achieving certain goals, you are destined to lose. There are no excuses in the world of business. Without strategic planning you have very few chances to succeed.

There is a rule applicable to any business type – if you stop developing your business will seize to exist someday. Taking into account modern realities, this will happen very soon, as there is a tough competition in all markets.

Organization strategy map is a must for all businesses. This document (in fact this is a scheme) outlines major directions of company development. Sometime it is very difficult take into account everything that a company needs to do to be successful. Different businesses should have different strategy maps that consider peculiar features of a certain business type. But in general, all strategy maps cover 4 major directions in the company development. They concern financial perspective, relations with customers, internal processes and training of personnel.

Organization strategy map helps in finding company's unique way

Use organization strategy map to develop a comprehensive development plan

It needs saying that it is often impossible to reach certain goals without completion of secondary objectives. Thus, everybody seems to be focused on net profits only. But a strategy maps will point out that in order to increase net profit you need to improve a number of key performance indicators. It is not wise to thing that you may have more revenue without improving relations with customers or paying much attention to processes taking place inside your company.

In logistics business strategic planning in a must, since business environment changes very often. Besides, as a rule major logistic companies have thousands of customer customers. Strategy map in logistics would cover financial perspectives such as increased revenue, decreased cost per freight unit. However, these goals are unachievable without paying due attention to relations with customers, losses, average shipment time and other important factors.

Logistics strategy map should be equally focused on different perspectives, otherwise imperfections in work can overweight advantages. To make your strategy map more effective, use of special automated software is highly recommended. A computer program will not only make the entire process more time efficient, but will also help in making choices.

A decent strategy map should cover all business aspects and automated systems will make sure you have considered all key issues.

What do you usually do when you plan to do something important? As a rule, you take a pen or pencil and draw a plan. It does not matter what you are about to do: go to the supermarket or finish your studies at college. With a comprehensive plan or a roadmap it is always easier to achieve goals. By the way, it is impossible to achieve goals if they have not been set.

When we are talking about business (it does not matter what business type) planning is a MUST. Business environment changes and so do strategic goals of a company. But in order to efficiently allocate resources it is imperative to create a company strategy map. What kind of a map is it?

Well, if for what purposes do we use geographic maps? Right! We have a look at directions, or in other words we want to know how to get from pointy A to point B. The same applies to business. Strategy map shows how to improve business and develop/expand it. In business terms, a map shows how to optimize organization performance and earn more money.

Develop company strategy map using special software

Company strategy map will show your directions in development

A strategy map can be complex and contain numerous issues. At the same time a simple comprehensive strategy diagram will be equally helpful. Sometimes, it is difficult to draw a virtual scheme of the company future development. There are many factors that need to be considered and taken into account.

Traditionally, strategy maps tend to cover 4 main aspects in the company performance. These are things that happen inside and outside the company. If a business focuses only on the net profits without giving due attention to relations with customers or training of personnel, it will be difficult to achieve high financial goals.

Strategy maps help focus on al aspects influencing business performance and set relevant goals in all directions. As said above, there are 4 perspectives: financial, customer, internal processes and training. In terms of logistic, a company needs to concentrate both on what is happening inside the company (efficiency of personnel, transfer of cargoes inside the organization) and outside it (relations with customer, improvement of shipment conditions etc).

A strategy map for logistic company should certainly cover such issues as decrease of cost per one shipment, decrease of shipment time and losses, improving relations with all customers.

If top managers use special software to create strategy map, this process will be fast and enjoyable. The program will make suggestions and help in establishing key development directions.

For big, middle sized and small businesses we are merely customers who got used to get products shipped to our houses. We like to make online purchases and we like to get products on time. When two companies have business together, one of the companies is a customer while the other is a contractor that needs to make sure that products/goods are delivered on time. There is a separate department that assumes responsibility for shipment of products. This is logistics department. There are even separate logistics companies that offer their services to different companies. These days logistic managers are using special software to evaluate business performance.

Customer satisfaction pretty much depends on timely delivery of products. If you ordered something on the Internet you expect the product to arrive on time. Logistic managers are the people who are in charge of this. But of course, they have more other tasks other than making sure you receive your products.

Logistics is about 100% use of transport and warehouse facilities. A logistic manager needs to contact producers (to ask when the new batch of produce will arrive), end customers which may be huge companies that accept no delays (to negotiate delivery terms), warehouse managers (to negotiate storage capacities) and drivers/airlines (to negotiate shipment terms). One delay may destroy the entire delivery chain.

Logistics is also about saving money. It may be not profitable to deliver goods from town A to town B, using trucks. But if the trucks take some products on board on the way back, your logistic department can have big profits. It is not profitable to have trucks and drivers wait too long for new batches of produce as this costs money. Logistics is about making sure that all elements of delivery chain are efficiently used.

In order to evaluate logistic department of your company you should not look only at revenue. There are numerous factors that influence the work of a logistic company. These factors are commonly called KPIs – key performance indicators. Every business has its own indicators. Logistic is using Supply Chain Balanced Scorecard which includes 4 elements: financial issues, customer matters, internal business and training. Balanced Scorecard system evaluates KPIs which are parts of the abovementioned 4 groups. In order to evaluate performance of logistic department one needs to asses the following KPIs.

1. Customer order cycle time. This is a figure represented by difference between creation date of the order and delivery date. Cycle time can be promised and actual. If the values have only slight differences then your logistic company is doing OK.
2. Line count fill rate. This is amount of order lines delivered on the shipment versus the number of lines which have been ordered.
3. Inventory carrying rate. This figure includes costs for storage, handling, damage, administrative costs, costs related to loss of shipment.
4. On time shipment is calculated as a ratio of orders delivered on time and all line orders delivered. In simple words, this indicator shows how fast your logistic department is working and if you can live up to delivery terms.
5. Perfect order measurement. An order is undergoing many stages in its cycle. Thus, if you calculate how many orders have passed all stages without any mistakes you will have a clear understanding of how logistic department works. When an error occurs a corrective credit is issued. There should be a reason code, or simply a reason for error. You can group these reasons to see what the most common causes of problems are. Isn’t it the best way to evaluate performance of a logistics company?
6. Transportation KPIs

a)      Freight cost per unit. The program divides all costs related to shipment by total number of units. It is also possible to group costs by means of transportation (truck, train airplane).

b)      Transit time. This is the time calculated from the moment a product leaved facility of a logistic department to the time it arrives to customer’s location.

c)      Losses. These are expenses related to damage or loss of units. If this figure is too high take urgent measures.

d)     Load capacity. This is a very interesting indicator. Imagine that your trucks can deliver  50,000 lbs of product, but yesterday they carried only 40,000 lbs. By dividing these figures you get utilization percentage. The higher the percentage, the more efficiently your logistics company works. However, it needs saying, that 100% remain a dream!

e)      Truck turnaround time. This is the time a truck spends at warehouse facility before departure. This is an indication of how your warehouse personnel work.

Pros of using logistics metrics tools

Most important KPIs in logistics

Sure, this is only a short list representing major KPIs influencing performance of a logistic company. Balanced Scorecard system focuses on the main factors and indicators, which makes it possible to find the root of a problem.

Use of balanced scorecard system is highly recommended for logistic managers as the software performs a thorough analysis and offers results which can be used in development planning. If you are inefficiently use logistic facilities you decrease profits gained by producers. Perfect work of a logistic department is MUST for all companies that want to have long lasting business relation with business partners and customers.

Focusing on most important KPIs is extremely important. You may focus on things that do not deserve too much of attention, forgetting about major problems. Balanced Scorecard is closely connected with the strategy of future development. It is impossible to develop and increase capacities without being sure that the company has chosen the right path.

With Balanced Scorecard a logistic manager can locate problems at all stages. Thus, everyone would be aware of company’s weaknesses: office clerks, warehouse workers, drivers, shipment agent etc. If all employees know own weak point they will be additionally motivated to work better. Besides, you can use Balanced Scorecard to evaluate organization climate which is also very important in a big company.

Using business metrics is highly recommended for logistic companies and departments, especially those handling great amount of orders.

Take advantage of business metrics methods

Evaluation of business performance is a never-ending process

Nowadays, logistics management is amongst the most action-packed fields all over the world. One of the unbelievable aspects of logistics management is that it is over and over again known as a science of planning, organization, and implementation. It comes into view when any industry wants to deliver the mandatory products or services to the obligatory party on the dot at the right location. These days it has made its importance documented due to its individuality and worth worldwide. Adding to that, it can lend a hand you to improve your military operations considerably.

In fact, military logistics management will engross the military groups to map, regulate, innovate, assign, and maintain resources for their military operations prolifically. In addition, it will harmonize all the actions and presentations of business employees professionally. Subsequently arrangements of military groups and bludgeon measures for accomplishing military operations are documented and determined by comprehensive logistics management.

Most importantly, logistics management in the commercial sector makes use of advanced technology for safety, assessment, case study, forecasting, asset tracking, development and implementation. Therefore art of logistics would play an essential role in organizing plentiful companies with others for carrying out distinct goals and objectives productively. Accounting, short-term analyses, performance judgment, transportation of products and services, and distribution of resources are indisputably come in collective logistics management. Consequently it will represent an insight to boost measures for matching the commercial operations and efficacy efficiently. Perfect strategy, means & possessions, ways and carters for transportation at a cut rate will be professionally determined by extensive logistics management.

Commercial operational procedures are acknowledged for organizing different activities of the business sector proficiently. Market surveys to weigh up the buyer needs also come under top logistics management. Defense options in business and military group are enclosed to make available friendly settings for enhanced performance. Unprejudiced and money-spinning supply chain in trade can be determined by a precious service of outsourcing, transport, distribution, and property organization. Logistics management would then show a single-minded performance knack that can be accomplished by a thriving contribution.

In short, logistics management is mandatory for a booming operational procedure of order processing, manufacturing, delivery, financial planning, allocation, distribution of resources, and judicious consignment of obligatory wares and services at the right location. Thus a flourishing logistics and supply chain management can provide plentiful benefits to the business sector for example enhanced delivery process, increased sales volumes, instant revenue generation, customer & employee satisfaction, and business identity development.