Logistics Performance Metrics - PowerPoint PPT Presentation

Loading...

PPT – Logistics Performance Metrics PowerPoint presentation | free to view - id: 486216-ZmJiZ



Loading


The Adobe Flash plugin is needed to view this content

Get the plugin now

View by Category
About This Presentation
Title:

Logistics Performance Metrics

Description:

Ing. Andrea Campagna Logistics Performance Metrics 2009 Corso di Trasporto delle Merci e Logistica * Corso di Trasporto delle Merci e Logistica * Questions What are ... – PowerPoint PPT presentation

Number of Views:608
Avg rating:3.0/5.0
Slides: 30
Provided by: And585
Category:

less

Write a Comment
User Comments (0)
Transcript and Presenter's Notes

Title: Logistics Performance Metrics


1
Logistics Performance Metrics
Ing. Andrea Campagna
  • 2009

2
Questions
  • What are logistics metrics?
  • Why to measure?
  • How can metrics be classified?
  • Which metrics are commonly used?
  • How to develop metrics?
  • How to measure?

3
Logistics metrics
  • Measure the performance of various logistics
    functions (internal and external)
  • Focus on time, quality, availability, cost,
    profit and reliability
  • May be financial (cost and revenue) or
    non-financial (service and productivity)
  • Include the critical success factors for all
    levels of the business

4
Trends in logistics measurement
  • Most United States firms do not comprehensively
    measure logistics performances
  • Even the best performing firms fail to realize
    their productivity and service potential
    available from logistics performance measurement
  • Logistics competency will increasingly be viewed
    as a competitive differentiator and a key
    strategic resource for the firm
  • (Council of Logistics Management, 2001)

5
Why to measure logistics performance?
  • To reduce operating costs
  • Measuring operating costs helps identify whether
    and where to make operational changes to control
    expenses and identifies areas for improved asset
    management
  • To drive revenue growth
  • To attract and retain valuable customers, the
    price/value of products offered can be enhanced
    through cost reductions and service improvements
    in logistics activities
  • To enhance shareholder value
  • The returns on shareholder investments and the
    market value of the firm are impacted by the
    performance of firm logistics

6
The context of logistics metrics
7
Classification of logistics metrics
Logistics Metrics
External
Internal
  • Internal metrics measure the performance of the
    system or the internal components of the
    logistics system (production plant, warehouses,
    transportation equipment)
  • External metrics reflect the expectations of the
    organization by external entities (customers,
    stockmarkets, government, third-party agencies)

8
Example of metrics
  • Internal metrics
  • External metrics

9
Internal metrics drive the external
  • For example, the of on-time deliveries of
    shipments by a carrier is an external metric.
  • However it is driven by internal metrics
  • on time departure of delivery trucks,
  • reliability of trucks,
  • of time on road,
  • etc.
  • External metrics are tipically financially and
    service oriented

10
Strategic and operational level
  • Metrics are strategic and operational depending
    on the focus and level of detail
  • Strategic metrics focus on overall system-level
    performance
  • Operational metrics focus on unit-level or
    machine-level performance
  • Example
  • of travel time with full load can be measured
    regarding the entire fleet (Strategic) or the
    single vehicle (Operational)
  • In both cases metrics can be the same

11
Analysis of commonly used metrics
Logistics Metrics
External
Internal
System-level
Function-level
Customers
Government
Investors
Financial
Non-Financial
12
Internal/System-level metrics
  • Example of metrics at system-level. They can be
    divided into
  • Financial
  • Inventory turnover ratio
  • Non-financial
  • of demand met

13
Financial inventory turnover ratio
  • Useful to evaluate the speed of movement of goods
    through a company. It determines the number of
    times inventory is turned over during the year.
  • Higher ratio is better!

14
Non-financial of demand met
  • It is an indicator of the operational
    capabilities of a company
  • Reasons for low can be poor forecasting,
    insufficient capacity, low inventory levels, poor
    quality and unreliable production and
    distribution system

15
Internal/Function-level metrics
  • Example of metrics related to the main logistics
    functions in the supply chain
  • Transportation
  • Warehousing
  • Production
  • Maintenance
  • Vendor selection

16
Transportation transit time variability
  • Non-financial metric that captures the variation
    in transit time (TTV)
  • Indicates the reliability of the transportation
    function
  • Less variability in transit time helps customers
    plan the work more efficiently

17
Warehousing operating cost per unit
  • Financial measure of the cost-effectiveness of
    operating a warehouse depends on warehouse size
    and throughput
  • Fixed cost (increases with size)
  • Building, equipment, fixed payroll
  • Variable cost (increases with loads processed)
  • Contract manpower, variable utilities, fuel
  • Overhead cost
  • Heating, lighting, insurance, taxes

18
Production defectives
  • Defectives not fixable have to be scrapped,
    bringing down the production rate
  • The unit cost of production increases
  • cost of repair cost of labor cost of material
  • The related metric is

19
Maintenance mean time to repair
  • The average active maintenance time to perform
    corrective maintenance
  • It depends on the type and frequency of failures

20
Vendor selection of good parts
  • Measure of the reliability of the supply in terms
    of the quality of the delivered parts
  • If not 100 it leads to shortage of parts and
    additional costs (reverse logistics)

21
External/Customers
  • Customer service has 3 dimensions
  • Quality (Number of good parts sold, of
    shipments delivered on time,)
  • Time (Leadtime)
  • Cost (unit cost of providing a service)
  • Metrics
  • Service reliability
  • Customer complaints

22
External/Government
  • Governments tend to measure industry performance
    based on
  • Number of new jobs created
  • Revenues from taxes
  • New infrastructures development
  • Impact on other industries
  • They also evaluate negative aspects such as
  • Pollution
  • Congestion
  • Crimes

23
External/Investors
  • View in monetary terms of the company
    performances
  • Metrics

24
How to design the metrics?
  • Define the system that has to be measured and its
    components
  • Determine the functional requirements or
    expectations of the system
  • Identify metrics that can quantitatively measure
    the functional requirements
  • Make sure to understand the relationship between
    metrics!

25
Issues in logistics metrics
  • Simple and easy to understand in terms of
    measuring, calculating and interpreting
  • Measurement units
  • Data availability
  • Reporting on measures (charts or graph, trend
    analysis)
  • Quality of measures (perceived accuracy,
    actionability, and internal comparability and
    compatibility )
  • Understanding the drivers of the performance

26
How to measure the metrics?
  • Manually
  • Data collection by means of paper forms
  • Time measurement of logistics processes
  • Financial documents analysis
  • Automated
  • Information System (ERP, DB analysis)
  • Communication Technology (TrackingTracing)
  • Dedicated software (Cockpit of Key Performance
    Indicators, KPI)

27
Exercise
  • The Trucker Case

28
The Trucker Company
  • Road carrier owning a fleet of 100 trucks, 50
    trailers and 60 swap bodies
  • Main customers belong to the automotive supply
    chain
  • In 2005 Trucker signed a contract with an
    important car manufacturer concerning a
    door-to-door car tyres transport service between
    the tyre suppliers warehouse and the production
    plant of the customer
  • The contract started in 2006 and endured 1 year,
    and has not been renewed

29
Questions and data
  • Try to explain why the car manufacturer has not
    renewed the contract to Trucker
  • Note that during 2006
  • Trucker was asked to transport on average
    300tonn/week (10 maximum)
  • The distance between the tyre warehouse and the
    plant is 2300 kms
  • Trucker could use 15 of the fleet to this
    service
About PowerShow.com