1<br />DEVELOPPING A LOGISTICS PERFORMANCE ASSESSMENT TOOL FOR SMEs: A Closer Look at Logistics Costs…<br />Ruth Banomyong...
2<br />Agenda<br />Background<br />Framework Development<br />Methodology<br />Findings<br />Some Comments...<br />A close...
3<br />Background<br />Logistics management is recognised as a key opportunity to improve profitability and firms’ competi...
4<br />Background<br />The purpose of this presentation is to introduce a logistics performance assessment tool (LPAT).<br...
5<br />Background<br />The literature on the subject of performance measurement in logistics had common theme (Bowersoxet ...
Framework: 9 Key Logistics Activities<br />Order processing & Logistics communications<br />Customer service & support<br ...
Framework: Performance Measurement Dimensions<br />
Framework Development<br />
Logistics Activities Development Framework<br />10<br />
Methodology<br />A questionnaire was developed based on the logistics activities performance framework. <br />25 SMEs resp...
Methodology<br />Respondents understood data requirement well. However only 2 were able to fill the whole questionnaire.<b...
Findings<br />The data collected was compared with an existing logistics and supply chain benchmarking database<br />http:...
14<br />Cost KPIs<br />Performance<br />Customer service <br />0<br />.<br />5 <br />-<br />5<br />%<br />< <br />0<br />....
15<br />Time KPIs<br />Performance<br />Avg order cycle <br />7 <br />–<br />10 <br />days<br />< <br />7 <br />days<br />...
16<br />Reliability<br />KPIs<br />Performance<br />DIFOT<br />80 <br />-<br />95<br />%<br />> <br />95<br />%<br />< <br...
Some Comments...<br />The LPAT tool could still be further simplified to make data collection easier.<br />Key logistics a...
Some Comments...<br />The objective would be to identify maybe not more than 2 or 3 key logistics KPIs per performance dim...
A Closer Look at Logistics Cost...<br />Difficult to identify all logistics activity cost. <br />ABC can support the ident...
20<br />Logistics costs relationship<br />
Ratio of selected export logistics cost (FOB) in ASEAN<br />21<br />Source: (USAID, 2006)<br />
22<br />Export Logistics costs component / Total Logistics costs<br />Procurement<br />Inventory<br />13<br />%<br />4<br ...
23<br />Macro Logistics Costs Framework<br />
24<br />National Logistics Cost Framework<br />
Thailand Logistics Costs/GDP<br />Source: Ruth Banomyong (2007)<br />
26<br />Some Future trends...<br />Macro Logistics cost is increasing<br />Transport cost <br />Inventory carrying cost<br...
27<br />The C2C cycle in the supply chain:Thai shrimp export to the US<br />
28<br />C2C definitions<br />Source: Farris II and Hutchison (2001)<br />
29<br />C2C time (days) in the US<br />Source: MDM (2000))<br />
30<br />The shrimp export supply chain<br />
31<br />Summary of C2C<br />
32<br />Thank you for your attention<br />Questions <br />& <br />Answers<br />
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Dr. ruth ecr08 lpat-1

  1. 1. 1<br />DEVELOPPING A LOGISTICS PERFORMANCE ASSESSMENT TOOL FOR SMEs: A Closer Look at Logistics Costs…<br />Ruth Banomyong<br />Centre for Logistics Research<br />Thammasat University, Thailand<br />
  2. 2. 2<br />Agenda<br />Background<br />Framework Development<br />Methodology<br />Findings<br />Some Comments...<br />A closer look at logistics costs...<br />
  3. 3. 3<br />Background<br />Logistics management is recognised as a key opportunity to improve profitability and firms’ competitive performance (Lambert et al., 1998).<br />However, It is important for firms to be able to assess their own logistics performance as a starting reference.<br />Current assessment tools are not user friendly.<br />
  4. 4. 4<br />Background<br />The purpose of this presentation is to introduce a logistics performance assessment tool (LPAT).<br />The objective of the LPAT is to measure the performance of a firm’s key logistics activities under different performance dimensions.<br />
  5. 5. 5<br />Background<br />The literature on the subject of performance measurement in logistics had common theme (Bowersoxet al., 1989; Byrne & Markham 1991; Keebleret al,. 1999; Griffiset al., 2004): <br />Most firms do not comprehensively measure logistics performance,<br />Even the best performing firms fail to realise their productivity and service potential available from logistics performance measurement, and;<br />Logistics competency will increasingly be viewed as a competitive differentiator and a key strategic resource for the firm.<br />
  6. 6. Framework: 9 Key Logistics Activities<br />Order processing & Logistics communications<br />Customer service & support<br />Demand forecasting & planning<br />Purchasing & procurement<br />Material handling & packaging<br />Inventory management<br />Transportation<br />Facilities site selection, warehousing & storage<br />Return goods handling and reverse logistics<br />Source: Grant et al., 2006<br />6<br />
  7. 7. Framework: Performance Measurement Dimensions<br />
  8. 8. Framework Development<br />
  9. 9.
  10. 10. Logistics Activities Development Framework<br />10<br />
  11. 11. Methodology<br />A questionnaire was developed based on the logistics activities performance framework. <br />25 SMEs respondents were selected to answer the questionnaire while one Thai multinational was also requested to answer the assessment questionnaire. <br />The 25 SMEs were composed of firms in the automotive sector, electronic, jewelry, furniture, and rubber industry.<br />11<br />
  12. 12. Methodology<br />Respondents understood data requirement well. However only 2 were able to fill the whole questionnaire.<br />Cost data was the most difficult to complete. Respondents with ISO have more available data.<br />Data provided by Thai MNE could serve as a reference point. <br />12<br />
  13. 13. Findings<br />The data collected was compared with an existing logistics and supply chain benchmarking database<br />http://www.benchmarkingsuccess.com<br />The logistics performance out put based on the 3 performance dimensions are illustrated in the following slides… <br />13<br />
  14. 14. 14<br />Cost KPIs<br />Performance<br />Customer service <br />0<br />.<br />5 <br />-<br />5<br />%<br />< <br />0<br />.<br />5<br />%<br />> <br />5<br />%<br />cost per sale<br />Procurement <br />0<br />.<br />5 <br />-<br />5<br />%<br />< <br />0<br />.<br />5<br />%<br />> <br />5<br />%<br />cost per sale<br />W<br />Info processing <br />0<br />.<br />5 <br />–<br />5<br />%<br />> <br />5<br />%<br />< <br />0<br />.<br />5<br />%<br />O<br />cost per sale<br />R<br />Transportation <br />1 <br />–<br />10<br />%<br />< <br />1<br />%<br />> <br />10<br />%<br />cost per sale<br />L<br />D<br />Warehousing <br />0<br />.<br />5 <br />-<br />8<br />%<br />< <br />0<br />.<br />5<br />%<br />> <br />8<br />%<br />cost per sale<br />C<br />Forecasting cost <br />0<br />.<br />5 <br />-<br />5<br />%<br />< <br />0<br />.<br />5<br />%<br />> <br />5<br />%<br />per sale<br />L<br />Inv holding cost <br />A<br />0<br />.<br />5 <br />-<br />5<br />%<br />< <br />0<br />.<br />5<br />%<br />> <br />5<br />%<br />per sale<br />S<br />Value damage<br />S<br />0<br />.<br />1 <br />–<br />3<br />%<br />< <br />0<br />.<br />1<br />%<br />> <br />3<br />%<br />per sale<br />Returned goods <br />0<br />.<br />5 <br />-<br />3<br />%<br />< <br />0<br />.<br />5<br />%<br />> <br />3<br />%<br />cost per sale<br />Disadvantage<br />Parity<br />Advantage<br />= <br />Group Average<br />= <br />Top Thai company<br />
  15. 15. 15<br />Time KPIs<br />Performance<br />Avg order cycle <br />7 <br />–<br />10 <br />days<br />< <br />7 <br />days<br />> <br />10 <br />days<br />time<br />Avg procurement <br />13 <br />–<br />18 <br />days<br />< <br />13 <br />days<br />> <br />18 <br />days<br />cycle time<br />W<br />Avg order processing <br />1 <br />–<br />2 <br />days<br />< <br />1 <br />days<br />> <br />2 <br />days<br />O<br />cycle time<br />R<br />Avg delivery <br />1 <br />–<br />3 <br />days<br />< <br />1 <br />days<br />> <br />3 <br />days<br />cycle time<br />L<br />D<br />Avg inventory <br />6 <br />hr <br />–<br />2 <br />days<br />< <br />6 <br />hours<br />> <br />2 <br />days<br />cycle time<br />C<br />Avg forecast <br />N<br />.<br />A<br />.<br />N<br />.<br />A<br />.<br />N<br />.<br />A<br />.<br />period<br />L<br />Avg inventory <br />A<br />10<br />–<br />40 <br />d<br />< <br />10 <br />days<br />> <br />40 <br />days<br />day<br />S<br />Avg material <br />S<br />> <br />7 <br />days<br />1 <br />–<br />7 <br />days<br />< <br />1 <br />days<br />handling and <br />packaging cycle time<br />Avg cycle time for <br />1 <br />–<br />3 <br />days<br />< <br />1 <br />days<br />> <br />3 <br />days<br />customer return<br />Disadvantage<br />Parity<br />Advantage<br />= <br />‡Group Average<br />= <br />Top Thai Company<br />
  16. 16. 16<br />Reliability<br />KPIs<br />Performance<br />DIFOT<br />80 <br />-<br />95<br />%<br />> <br />95<br />%<br />< <br />80<br />%<br />(<br />CS and Support<br />)<br />Supplier In Full and <br />80 <br />-<br />95<br />%<br />> <br />95<br />%<br />< <br />80<br />%<br />On<br />-<br />Time Rate<br />W<br />Order Accuracy <br />90 <br />-<br />98<br />%<br />> <br />98<br />%<br />< <br />90<br />%<br />O<br />Rate<br />R<br />DIFOT<br />> <br />95<br />%<br />< <br />80<br />%<br />80 <br />-<br />95<br />%<br />(<br />Transportation<br />)<br />L<br />D<br />90 <br />–<br />99<br />%<br />> <br />99<br />%<br />< <br />90<br />%<br />Inventory Accuracy <br />C<br />Forecast Accuracy <br />60 <br />-<br />90<br />%<br />> <br />90<br />%<br />< <br />60<br />%<br />Rate <br />L<br />A<br />Inventory Out of <br />2 <br />-<br />10<br />%<br />> <br />10<br />%<br />< <br />2<br />%<br />Stock Rate<br />S<br />S<br />< <br />1<br />%<br />1 <br />-<br />5<br />%<br />> <br />5<br />%<br />Damage Rate <br />Rate of Returned <br />0<br />.<br />1 <br />–<br />5<br />%<br />> <br />5<br />%<br />< <br />0<br />.<br />1<br />%<br />Goods <br />Disadvantage<br />Parity<br />Advantage<br />= <br />‡Group Average<br />= <br />Top Thai Company<br />
  17. 17. Some Comments...<br />The LPAT tool could still be further simplified to make data collection easier.<br />Key logistics activities are not equal in importance<br />Further refinement of the logistics activities performance framework is needed…<br />17<br />
  18. 18. Some Comments...<br />The objective would be to identify maybe not more than 2 or 3 key logistics KPIs per performance dimension that could illustrate firms’ overall logistics performance.<br />A composite performance metrics is currently under consideration.<br />The development of this tool is an ongoing process.<br />18<br />
  19. 19. A Closer Look at Logistics Cost...<br />Difficult to identify all logistics activity cost. <br />ABC can support the identification of cost of each logistics costing. However, difficult to implement.<br />Logistics cost ratio per sales is the most common indicator...<br />National Logistics cost?<br />C2C metric to reflect supply chain performance? An example.<br />19<br />
  20. 20. 20<br />Logistics costs relationship<br />
  21. 21. Ratio of selected export logistics cost (FOB) in ASEAN<br />21<br />Source: (USAID, 2006)<br />
  22. 22. 22<br />Export Logistics costs component / Total Logistics costs<br />Procurement<br />Inventory<br />13<br />%<br />4<br />%<br />Export<br />Warehousing<br />45<br />%<br />7<br />%<br />Transport<br />31<br />%<br />
  23. 23. 23<br />Macro Logistics Costs Framework<br />
  24. 24. 24<br />National Logistics Cost Framework<br />
  25. 25. Thailand Logistics Costs/GDP<br />Source: Ruth Banomyong (2007)<br />
  26. 26. 26<br />Some Future trends...<br />Macro Logistics cost is increasing<br />Transport cost <br />Inventory carrying cost<br />Thammasat Annual Logistics Index (3rd quarter)<br />
  27. 27. 27<br />The C2C cycle in the supply chain:Thai shrimp export to the US<br />
  28. 28. 28<br />C2C definitions<br />Source: Farris II and Hutchison (2001)<br />
  29. 29. 29<br />C2C time (days) in the US<br />Source: MDM (2000))<br />
  30. 30. 30<br />The shrimp export supply chain<br />
  31. 31. 31<br />Summary of C2C<br />
  32. 32. 32<br />Thank you for your attention<br />Questions <br />& <br />Answers<br />

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