How should one evaluate performance of logistics department
Nowadays customers became very picky. By customers winning also companies not only individuals. Everyone wants his products or services to be delivered immediately. Customers ordering products hope to get them at their doorway. Customers form their judgment based on how fast they got ordered products or services. This is to say that logistics plays a very important role in the overall success of the company. Efficient logistics department needs to make sure that the company spend minimum amount of money to deliver products. Moreover, the products are to be delivered as fast as possible.
It is imperative to control and evaluate logistics in any company. Sometimes it happens that shipping cost for a product is higher than the product price itself. It is not a secret that sometimes companies include shipping costs to the product price. Thus, the lower this cost the cheaper the product. If logistics department suffers losses, this will hurt well being of the entire company.
Major logistics kpi
Use of balanced scorecard is highly recommended to logistics managers. This popular business performance evaluation system measures key performance indicators of different businesses, including logistics. There are a number of KPIs (key performance indicators) that help control functioning of logistic department. Moreover, balance scorecard will help communicate strategic goals of logistic company with this operational management.
So, let’s have a closer look at the most important KPI in logistics.
- Freight cost per unit. This is perhaps one of the most important KPI in logistics. By managing to keep this indicator low the company makes sure it doesn’t overpay to deliver products to its customers.
- Average time for procedures. This includes time spend to go through formal and legal procedures that customs, borders etc.
- Speed. This is the average speed of the transport in the inland. The higher the speed, the better.
- Number of documents and signatures. This indicator is very easy to understand. The less paperwork required to send one item, the better.
- Damage costs. Logically, the company should strive to keep this indicator low.
- Load capacity. The company should try to use their vehicles load capacity at maximum. For example, if the truck can carry 20 tons but takes only 5 tons on board, this is a poor performance.
- Number of agencies and inspections. As known different agencies and gov’t bodies can inspect cargoes.
Of course this is not a full list of KPI relevant to logistics, but they represent the general picture of how performance of logistics department is evaluated.
Why develop logistics department?
