Logistics Management

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.

Customer satisfaction is not achieved without the implementation of a competent delivery system. There is then a need to conduct transportation analysis.

The success of a business does not end with the production of the best product or service. This is because that product or service still has to be delivered to the company’s target market. Only then would the customer be able to see for himself or herself whether or not your business does deserve the credit it claims to be worthy of. There should then be a need to conduct transportation analysis, for the business to determine if their existing delivery system is really up to par.

Of course, you cannot expect a business’s delivery system to be foolproof, much to the dismay of the lot of businessmen in the corporate world. There is always room for improvement, as the popular adage goes, and no business is exempted from this at all. To determine the underlying causes of interruptions in the order cycles of an enterprise, in-depth analysis should really be conducted.

In a nutshell, this analysis focuses on the measurement of associated costs that can hamper stock deliveries. These associated costs are related to the freight business, so much focus should be placed on this particular business. For the most part, the commonly shared problem of even the major players in the industry is actually the product being out of stock or being absent. Usually, this problem surfaces when cargo and freight face various roadblocks and barriers. These aspects then keep the existing delivery system from distributing products and services in the timely manner that it is supposed to.

In America alone, there are actually various groups that dedicate themselves to the analysis of transportation and delivery – one of which is the SFTA, or the Strategic Freight Transportation Analysis. Through this analysis, extensive data is gathered regarding the transportation and delivery systems of companies, and this gathered data is then interpreted and used towards the improvement of freight movement. The use of existing roads is then maximized, as well as choke points being analyzed so that delivery systems can avoid such points that can severely hamper the flow of goods and cargo. Apart from that, the effectiveness of costs is also analyzed, as well as the partnership that exists between the private and public sectors, for the achievement of goals.

Understandably, there are many points and aspects to consider when conducting such an analysis – the most important ones are the point of origin as well as the final destination of the goods and cargo. Through this, you would then have a rough sketch of the possible causes behind the delay in freight deliveries. Mind you, do not limit the analysis to just goods and cargo because other resources have to be considered as well, which include minerals and mining products. This OD study or origin and destination study places more focus on surveys from the delivery trucks themselves, so that freight movements can be better understood via key points in delivery routes. Interview sessions and survey are used to gather data and only then can proper transportation analysis can be conducted. For obvious reasons, such an analysis is really vital to the success of any business. This should indeed be something businesses should conduct for their own welfare.