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Performance Measurement In Logistics Operations Essay

1508 words - 7 pages

1. Introduction
Due to the expanding diapason of performances required by the current emulous environment, performance measurement and monitoring, as a subject, has been arousing growing interest in various scopes, especially in the field of logistics operations. Explicit performance measurements provide a common groundwork for decision-making in companies.
For performance measurement in Logistics operations, Key Performance Indicators are applied. “Key Performance Indicators, also known as KPI or Key Success Indicators (KSI), help an organization define and measure progress toward organizational goals (John Reh, 2012).” Among numerous different KPIs, there have always been confusions on which ones and how many to use. The application of different KPIs now proves to be contextual: the “Key” in the name KPIs indicates that only a few significant areas that are directly linked to the main goal of the business should be concerned. The aims for using key performance indicators in the industry are optimizing logistics processes as well as building sustainable and environment-friendly logistics systems (Kumar S, 2013).
Furthermore, the quantity of the existing KPIs is excessively large since all extant performances in businesses need to be measured. As stated before, distinct key performance indicators are used under individual environment.
The paper systematically introduces the concept of KPIs for logistics operations and provides 3 examples on performance measurements using specific KPIs in different environments. The purpose of the paper is to demonstrate how the use of KPIs can differ among individual cases and what lessons can be learned from them.

Performance Measurement in Humanitarian Logistics
With the increasing scale and scope of operations in humanitarian logistics, the need for performance measurement and benchmarking is also growing (Davidson, 2006). An urging need to implement key performance indicators in this field is created. Although the advancement in information technology system has been backing the logistics function of these organizations and made it possible to measure and monitor relevant operations, the vital structure for measuring performances conforming with the strategic goals of the organizations is still yet to be determined.
As Davidson (2006) states, the first steps for any organizations that are implementing a measurement system should be determine elements of performance that are most crucial to them then construct the right metrics to support those significant elements. In order to raise his theory to a practical level, Davidson (2006) did an interview in the headquarter of International Federation of Red Cross and Red Crescent Societies (IFRC). He discovered that, contradicting to the traditional view that financial efficiency and timeliness of response to requests to the needs were of equal significance, a prompt response to the needs weighs much more in real-life operations. Thus, short...

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