Use of nonfinancial indicators in logistics measurment
There has been much debate on how are nonfinancial indicators and their evaluation can benefit the company and help it achieve financial goals. Let’s be frank – every commercial organization aims at making as much money as possible. Very often, strategic goals concern financial results – increase of net income, increase of cash flow, increase of market share, increase of company capital etc. Naturally, business owners and investors want return on their investment. But how nonfinancial indicators help in implementation of financial goals?
Transportation benchmarks
You should know that balanced scorecard system was the first include nonfinancial indicators to the total set of KPIs. It became understood that intangible assets are very valuable for any company. Besides, nonfinancial indicators represent future events. They are also called leading indicators which means that after fulfillment of certain goals the company may expect positive financial results. Most financial indicators are lagging indicator which tell us about past events. In combination these two types of indicators work greatly.
The point is that all indicators and all the categories/perspectives in balance scorecard are interrelated. This means that in order to achieve positive financial results the company should implement goals set in the other three categories: customer, internal processes, learning and growth. For example, in order to get increases revenue you it is necessary to win favor of new customers through introduction of innovative products at competitive prices.
How customer satisfaction implements strategic goals
In terms of logistics, nonfinancial indicators played a great role. Of sure thing, customer satisfaction can improve financial results of a logistics company. How? The answer is very simple. Let’s view a hypothetical example. A logistics company always delivers cargos and products on time. This means that the company leaves customer satisfied. But there is a reverse side of the medal. Logistics managers may overpay to deliver products and time. This means that a certain balance between shipping costs and timely delivery should be found. But anyway, a satisfied customer is likely to use services of such a company again.
It is extremely important to find the right key performance indicators and logistics otherwise timely delivery may cause massive losses for the logistics company. There will be no sense in timely delivery if the shipping cost per unit will exceed the cost of the product itself. Logistics, is about smart use of available human resources and transportation means. That’s why, key performance indicators should focus on them.
Tags: logistics evaluation, logistics kpis, nonfinancial KPIs
