11. perf[1]. measrs (1)


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  • 07/07/11
  • 07/07/11
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  • 11. perf[1]. measrs (1)

    2. 2. 07/07/11 <ul><li>What is logistical performance measurement? </li></ul><ul><li>Assessment of logistical performance </li></ul><ul><li>Auditing logistical performance </li></ul><ul><li>An activity of Logistical Management </li></ul><ul><li>Why logistical performance measurement is done? </li></ul><ul><li>To improve level of logistical competency </li></ul><ul><li>To gain competitive edge in business </li></ul><ul><li>To raise the level of Customer Service </li></ul><ul><li>To identify weak areas of performance </li></ul>
    3. 3. 07/07/11 When is it done? Measurement/Assessment/Auditing is an on going scheduled activity
    4. 4. 07/07/11 <ul><li>Why logistical performance measurement is important? </li></ul><ul><li>Logistical competency is crucial </li></ul><ul><li>Logistical resources are scarce </li></ul><ul><li>Measurement is important for achieving objectives </li></ul><ul><li>Direct </li></ul><ul><li>Control </li></ul><ul><li>Monitor </li></ul><ul><li>Measure </li></ul><ul><li>Measurement leads to improved performance-periodic tests </li></ul>
    5. 5. 07/07/11 <ul><li>How is this done? </li></ul><ul><li>By following logistical performance </li></ul><ul><li>measurement system </li></ul><ul><li>Measurement system is a set of </li></ul><ul><li>mathematical measures like ratios, percentages </li></ul>
    6. 6. 07/07/11 <ul><li>Objectives of logistical performance measurement systems </li></ul><ul><li>Monitoring: tracking historical performance </li></ul><ul><li>Controlling: tracking ongoing performance </li></ul><ul><li>Directing: encouraging performance by employees </li></ul><ul><li>Measures to track above dimensions of performance </li></ul><ul><li>Monitoring measures </li></ul><ul><li>Controlling measures </li></ul><ul><li>Directing measures </li></ul>
    7. 7. 07/07/11 <ul><li>Types of measures based on perspective of measurement </li></ul><ul><li>Activity based & process based </li></ul><ul><li>Activity based measures measure first level efforts in performance at individual activity level </li></ul><ul><li>No of trucks loaded per day </li></ul><ul><li>Orders booked per day </li></ul><ul><li>Delivery time per order </li></ul><ul><li>Delivery time per product </li></ul>
    8. 8. 07/07/11 <ul><li>Process based performance measures measure customer satisfaction process </li></ul><ul><li>Total performance cycle time (customer lead time/order cycle time) </li></ul><ul><li>Response time to customer query </li></ul><ul><li>Number of O T Ds </li></ul><ul><li>Number of perfect orders </li></ul>
    9. 9. 07/07/11 <ul><li>Types of measures based on availability of information </li></ul><ul><li>Internal Performance Measurement & External Performance Measurement </li></ul><ul><li>Internal Performance Measures </li></ul><ul><li>Measurement is done inside the organization </li></ul><ul><li>Activities of customer satisfaction process </li></ul><ul><li>Internal customer satisfaction </li></ul><ul><li>Classification of Internal performance measures in categories </li></ul><ul><li>Cost, customer service, productivity, asset management & logistical quality </li></ul>
    10. 10. 07/07/11 <ul><li>Cost </li></ul><ul><li>Logistical cost as percentage to sales or as cost per unit of volume </li></ul><ul><li>Resources expended to meet specific operating objectives. </li></ul><ul><li>Examples: Cost per unit, Cost as a percentage of sales, Inbound freight, Outbound freight etc </li></ul><ul><li>Customer service Service levels indicating a firms ability to meet customer expectations </li></ul><ul><li>examples: Fill rates, Stock outs, Shipping errors, On-time delivery etc </li></ul>
    11. 11. 07/07/11 <ul><li>Productivity </li></ul><ul><li>Easily understood and extensively used. </li></ul><ul><li>Some times difficult to obtain all relevant details </li></ul><ul><li>Indicate resource utilization </li></ul><ul><li>Classification of productivity measures </li></ul><ul><li>static, dynamic and surrogate </li></ul><ul><li>Static productivity measures are calculated across one span of time, example: total factor productivity </li></ul><ul><li>Dynamic productivity measures compare one static measure against another representing another span of time. </li></ul>
    12. 12. 07/07/11 <ul><li>Surrogate productivity measures consider factors correlated to productivity like customer satisfaction, profit, quality, efficiency. </li></ul><ul><li>Examples: OTD, Lead time, ROI etc </li></ul><ul><li>Asset Management indicate management performance of fixed as well as current logistical assets. Logistical fixed assets and inventory are major portion of company’s assets </li></ul><ul><li>Examples: inventory turns, inventory carrying costs, inventory levels, return on investment </li></ul>
    13. 13. 07/07/11 <ul><li>Logistical Quality Perfect Order </li></ul><ul><li>Complete delivery of all items requested </li></ul><ul><li>OTD within tolerance range </li></ul><ul><li>Complete and correct documentation </li></ul><ul><li>Product faultlessly installed </li></ul><ul><li>Obstacles in delivering Perfect Order </li></ul><ul><li>order entry errors, incomplete information, damaged shipment, invoice error, problems in installation. </li></ul><ul><li>Examples: number of customer returns, rupee amount of damage, frequency of damage </li></ul>
    14. 14. 07/07/11 <ul><li>External performance measures </li></ul><ul><li>Customer perception </li></ul><ul><li>Bench marking </li></ul><ul><li>Customer perception measurement </li></ul><ul><li>Surveys and polls sponsored by firm or industry </li></ul><ul><li>Done by the firm, by consultant </li></ul><ul><li>Information about firms and competition’s performance in specific areas </li></ul><ul><li>Product availability </li></ul><ul><li>Performance cycle time </li></ul><ul><li>Information availability </li></ul><ul><li>Problem resolution </li></ul><ul><li>Product support </li></ul>
    15. 15. 07/07/11 <ul><li>Best practice bench marking </li></ul><ul><li>As a tool to calibrate logistical operations </li></ul><ul><li>Bench mark a comparable organization </li></ul><ul><li>Bench mark a competitor company </li></ul><ul><li>Analyze the competitor’s product </li></ul><ul><li>Attract competitor’s resources </li></ul><ul><li>Bench-marking a non competitor company </li></ul><ul><li>Comprehensive study being bilateral </li></ul><ul><li>Proprietary knowledge adds value mutually </li></ul><ul><li>Systems </li></ul><ul><li>Practices </li></ul>
    16. 16. 07/07/11 <ul><li>Bench-marking methods </li></ul><ul><li>Published logistical data, published by periodicals and university research </li></ul><ul><li>Data sharing by alliances of organizations </li></ul><ul><li>Closely examining a non competitors practices with mutual consent </li></ul><ul><li>Information received from </li></ul><ul><li>Vendors </li></ul><ul><li>3 rd party service providers </li></ul><ul><li>Customers </li></ul><ul><li>Examples of bench-marking: asset management, </li></ul><ul><li>cost, customer service, productivity, quality, strategy, technology, transportation, warehousing order processing </li></ul>
    17. 17. 07/07/11 <ul><li>Characteristics of an ideal measurement system </li></ul><ul><li>Cost/Service Reconciliation : </li></ul><ul><li>An ideal measurement system should reconcile cost and service [eg. freight bill and shipment] </li></ul><ul><li>Time separation </li></ul><ul><li>Cause/effect relationship </li></ul><ul><li>Dynamic knowledge based reporting: </li></ul><ul><li>To reveal current situation. </li></ul><ul><li>To reveal data in the extended past </li></ul><ul><li>To reveal trend in future. An ideal system should do all these to enable appropriate action proactively. </li></ul>
    18. 18. 07/07/11 <ul><li>Exception based reporting </li></ul><ul><li>Exception from anticipated logistical results. </li></ul><ul><li>Indicator of process deviating from desired </li></ul><ul><li>Ideal report enables manager to act proactively </li></ul>
    19. 19. 07/07/11 <ul><li>Levels of measurement and information flow </li></ul><ul><li>Measurement provides information </li></ul><ul><li>Information is reported for various levels of management hierarchy for decision making </li></ul><ul><li>Information need is dependent on management hierarchy level </li></ul><ul><li>To signal a process deviation or break down for action to prevent recurrence </li></ul><ul><li>Management hierarchy levels are direction, variation, decision and policy </li></ul>
    20. 20. 07/07/11 <ul><li>Direction level </li></ul><ul><li>At this level operational plan is executed </li></ul><ul><li>Measures generate information on execution of operational plan </li></ul><ul><li>Data base for subsequent levels </li></ul>
    21. 21. 07/07/11 <ul><li>Variation level : </li></ul><ul><li>What is measured? </li></ul><ul><li>Accumulated deviations from plan </li></ul><ul><li>Identification of trends that may result into problems. </li></ul><ul><li>What is done? </li></ul><ul><li>Concerned manager interprets the trend and takes appropriate action at his/her level or seeks help </li></ul>
    22. 22. 07/07/11 <ul><li>Decision Level </li></ul><ul><li>Information is selective and manager friendly </li></ul><ul><li>What is measured? </li></ul><ul><li>Exceptions and deviations of previous levels </li></ul><ul><li>What is done? </li></ul><ul><li>Modifications to operational plan </li></ul>
    23. 23. 07/07/11 <ul><li>Policy level </li></ul><ul><li>What is measured? </li></ul><ul><li>Need for change in system objectives like customer service </li></ul><ul><li>Various levels of logistical management </li></ul><ul><li>Service levels and cost of maintaining service levels </li></ul><ul><li>Marketing inputs </li></ul><ul><li>Bench marks in competition </li></ul><ul><li>Information volume is less but high in importance </li></ul><ul><li>What is done? </li></ul><ul><li>change in the system objectives if required </li></ul>
    24. 24. 07/07/11 Logistical Reports Logistical reports Status report Trend report Ad hoc report Diagnostic report Position paper Policy report
    25. 25. 07/07/11 <ul><li>Report Structures </li></ul><ul><li>Reports are generated from information revealed by measurement for effective decision making </li></ul><ul><li>Three types of logistical reports are status, trend and ad hoc </li></ul><ul><li>Status Reports </li></ul><ul><li>Information in detail to ascertain current situation of a chosen aspect like inventory or material handling etc </li></ul><ul><li>Trend Reports </li></ul><ul><li>Required at a higher level, indicates trend in future with respect to the chosen logistical aspect </li></ul>
    26. 26. 07/07/11 <ul><li>Ad hoc Reports </li></ul><ul><li>Specifically ordered for decision making </li></ul><ul><li>Information in detail on specific areas of performance </li></ul><ul><li>Ad hoc Reports are diagnostic report, position paper and policy report </li></ul><ul><li>Diagnostic report </li></ul><ul><li>detailed information about some phase of logistical performance like backorders </li></ul>
    27. 27. 07/07/11 <ul><li>Position paper </li></ul><ul><li>Prepared by lower levels of management for executives at higher levels </li></ul><ul><li>Alternative courses of action for an anticipated or current problem with resource requirements </li></ul><ul><li>Policy report </li></ul><ul><li>Ordered by CEOs whenever a policy modification is requested for change in objectives </li></ul>