Evaluate the righ logistics indicators
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.
Tags: logistics indicator, supply chain dashboards, supply chain indicators, supply chain kpi, transportation indicator
