Logistic deparment should be ready for BSC implementation
It is very important to know whether or not the company is ready to implement balanced scorecard as well as to find out whether the company actually needs it. Balanced scorecard, despite its popularity and excellent reviews, can become a waste of money and time. This usually happens when the company is not ready to use this system or it doesn’t need it (that sometimes happens to small business). It is even more difficult to implement balanced scorecard in separate departments of a company. Any business has certain goals all at least should have these goals. All actions and measures of department should be subordinated to the company strategic goals. This is not easy to do, especially in the large companies consisting of many departments and branches.
Logistics BSC in 4 perspectives
For example, most large companies either have own logistics departments or use services of logistics companies. Logistics services are very popular these days. Individual customers as well as companies prefer to have products delivered to their locations. This is what logistics departments deal with. At that a logistic manager should make an effective use of all resources, facility is and transportation means to minimize shipping costs for delivered units.
An inefficient logistics department may become the source of losses for a company. That’s why it is extremely important to perform a continuous control and evaluation of logistics efficiency. It is imperative to find those indicators that directly represent performance of logistics department as well as factors (both internal and external) that influence logistics performance.
Balanced Scorecard offers managers a unique opportunity to communicate operational management (what they’re doing everyday) with strategic goals of logistic department as well as the entire company. As said above, the right choice and the right number of key performance indicators is very important. The wrong choice of logistics KPIs will lead to wrong response action and wrong analysis. This may result in losses and misbalancing of the delivery system.
Logistics managers as well as ordinary employees should clearly understand the concept of BSC and why this system is used. They should also understand their contribution to implementation of strategic goals both for the logistic department and for the company.
It is not recommended to concentrate only on financial indicators like cost per unit or losses per unit. It is important to take into account all factors and elements in the supply chain.
BSC implementation process
Tags: bsc implementation, kpi evaluation, logistics kpi, logistics management
