logistics or key performance indicator logistics involves certain metrics that
are typical in the logistics industry. These metrics include cost and time, as
well as the risks. There are complexities involved in the transactions made
with different parties.
and time are two elements typical in logistics operation. For a logistics
business to be competitive, it must have the knowledge of the time of transit
in certain locations. Time is of the essence in logistics business. Delay in
delivery translates to inefficiency in the operation. The delay can also be
indicators that can come with logistics in relation to time include: the
average time to complete a typical shipping transaction; the time to finish
filing documents; the time to deal with customs; the average time to process a
shipping transaction; the total tine for shipping procedures and trade-related
processes; and the percentage of on-time delivery.
longer the time of the delivery, the more costly the transaction and operation
would be. Cost is inherent in many businesses. For a logistics business to be
competitive, it must minimize cost as much as possible. It must create shipping
procedures that are quantifiable and that must be within the level of budget.
to measure the performance of the logistics business in relation to cost
include: cost per case, transportation cost, fuel cost, warehousing cost, total
cost for sipping-related procedures, inland freight cost,
and average cost in processing typical shipping transactions.
against risks can be an indicator. Because of the ever-existence of risks in
shipping products, it is reasonable for a logistics company to integrate
insurance cost in its shipping price offer.
are certain risks that come in shipping goods by sea or on air. Risks, such as
calamities, temporary shutdowns of ports, delay in transit time, and canceled
transit can be seen as challenges of the logistics management.
To make the operation of shipping efficient and effective as much as possible,
the management must come up with performance dynamics and develop strategies to
resolve or counter problems and expected circumstances in shipping. Effective
procedures in shipping must be drawn while contingency cost may have to be
allocated to prepare for the risks, either God-will or manmade forces.
in logistics can help management identify and sort out problems during its
normal operation. These measurements can be seen as factors for the improvement
of the operation in the supply chain. Upon seeing
unfavourable results in the metrics, logistics can find the aspects that need
improvement and can identify the areas where the business is strong. Using the
metrics, logistics management can draw up solutions or plan to enhance its
performance and to make the management more effective in carrying out the
objectives of the organization.
logistics is a crucial tool in assessing the progress of logistics business. It
can also be a means to indicate the efficiency and effectiveness of the different
levels of management. Logistics management that provides effectiveness in the
operation leads the organization to its success. Mismanagement at one point of
the supply chain can lead to costly transactions that can eat up profits,
thereby jeopardizing the position of the logistics business in the supply