KPIlogistics or key performance indicator logistics involves certain metrics thatare typical in the logistics industry. These metrics include cost and time, aswell as the risks. There are complexities involved in the transactions madewith different parties.
Costand time are two elements typical in logistics operation. For a logisticsbusiness to be competitive, it must have the knowledge of the time of transitin certain locations. Time is of the essence in logistics business. Delay indelivery translates to inefficiency in the operation. The delay can also becostly.
Theindicators that can come with logistics in relation to time include: theaverage time to complete a typical shipping transaction; the time to finishfiling documents; the time to deal with customs; the average time to process ashipping transaction; the total tine for shipping procedures and trade-relatedprocesses; and the percentage of on-time delivery.
Thelonger the time of the delivery, the more costly the transaction and operationwould be. Cost is inherent in many businesses. For a logistics business to becompetitive, it must minimize cost as much as possible. It must create shippingprocedures that are quantifiable and that must be within the level of budget.
Indicatorsto measure the performance of the logistics business in relation to costinclude: cost per case, transportation cost, fuel cost, warehousing cost, totalcost for sipping-related procedures, inland ,and average cost in processing typical shipping transactions.
Costagainst risks can be an indicator. Because of the ever-existence of risks inshipping products, it is reasonable for a logistics company to integrateinsurance cost in its shipping price offer.
Thereare certain risks that come in shipping goods by sea or on air. Risks, such ascalamities, temporary shutdowns of ports, delay in transit time, and canceledtransit can be seen as challenges of the .To make the operation of shipping efficient and effective as much as possible,the management must come up with performance dynamics and develop strategies toresolve or counter problems and expected circumstances in shipping. Effectiveprocedures in shipping must be drawn while contingency cost may have to beallocated to prepare for the risks, either God-will or manmade forces.
KPI'sin logistics can help management identify and sort out problems during itsnormal operation. These measurements can be seen as factors for the improvementof the operation in the . Upon seeingunfavourable results in the metrics, logistics can find the aspects that needimprovement and can identify the areas where the business is strong. Using themetrics, logistics management can draw up solutions or plan to enhance itsperformance and to make the management more effective in carrying out theobjectives of the organization.
KPIlogistics is a crucial tool in assessing the progress of logistics business. Itcan also be a means to indicate the efficiency and effectiveness of the differentlevels of management. Logistics management that provides effectiveness in theoperation leads the organization to its success. Mismanagement at one point ofthe supply chain can lead to costly transactions that can eat up profits,thereby jeopardizing the position of the logistics business in the supplychain.