Evaluate supply chain kpi to measure performance of a logistic center
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.
Tags: logistics benchmarking, logistics kpi, logistics metrics, supply chain kpi, transportation indicator, transportation kpi
