We can define logistics as the management of the company materials flow from suppliers to customers, in a way that the customer is reached in due time and at the lowest possible cost. Therefore, logistics is responsible for planning, implementing and monitoring the storage, the flow of goods and services, and the information regarding origin and destination, always according to the customer’s needs.
In logistics, like in many other fields, it is also essential to measure how we do things, as this is the only way to know where we are and how to improve our performance.
If we bear in mind that logistics accompanies the product or service throughout the process, measuring and knowing how to measure it is a key aspect. Indeed, one of the greatest challenges for companies is to implement indicators that allow for an efficient and effective measurement: real, useful data that can be easily interpreted. Only thus can we make the right decisions that lead to a continuous improvement of the service we provide to our customers.
In addition to using the data to make comparisons, both within the company and in front of competitors, data are also essential for organizational strategies.
The new technologies also play a crucial role in the logistics performance measurement. Thanks to these technologies, relationships and communications with suppliers and customers are closer, processes are much more flexible and agile, the information is more updated and accurate, and the most important –we dramatically reduce the effort to achieve it.
No doubt, when we talk about logistics performance, the companies with the most effective performance measurement system are those that are committed to innovation and have the right indicators, in line with their corporate strategies.
Through the logistics performance knowledge, assessment and continuous measurement, the aim is to ascertain the efficiency results and reach solutions to attain the highest performance possible within the supply chain. In short, it is to identify problems or areas for improvement and act accordingly, to determine the degree of competitiveness in the market, to maximize the use of resources and assets to boost productivity and efficiency and, of course, to reduce costs.
Integration of a logistics measurement system in the company
It is important to note that the aspects to be measured are only those that are important to the company. Therefore, the development of indicators should be only implemented on those activities and processes essential to achieve the company logistics objectives.
What activities or processes are to be considered as relevant to the objectives? The characteristics, needs and goals of each company will determine where to tip the balance, but we could generalize that the relevant processes are those related to receipt, storage, inventory, distribution, delivery, invoicing and information flows. We need to take into account that the indicators we implement have to be measurable, comparable and that enable us to take action to improve the quality of services.
Continuous improvement is also essential in this regard, as setting the indicators is not just defining them, but innovating in the metrics and improving performance. We shouldn’t be afraid to define indicators and realize after a while that they are not adequate. What we should totally avoid is not defining indicators for the fear of getting them wrong.
Benefits of logistics performance measurement
Perhaps the most obvious is that these measures allow to visualize the state of the supply chain, optimising the time spent diagnosing its health. Besides, it contributes to making the right decisions so that the improvements can be made in a shorter period of time; it helps to improve the service, which will have a positive impact on the relationship with the customer; and it allows the departments involved to take the necessary time to put the focus on global impact decisions and act on that basis.
In times like these of constant change and permanent crisis, it is more important than ever to optimize our resources and focus on what’s critical for our customers and our business, where the definition of indicators, monitoring and continuous improvement are key points to achieve it. Come on then!