I’ve always loved baseball and attribute my math skills to studying the back of favorite players’ cards. The basic statistics were batting average, home runs, and rbi for hitters. For pitchers it was wins-losses and earned run average. These measures don’t even scratch the surface compared to the sabermetrics used in today’s game.
Logistics and baseball have some common features. We play every day, errors can have a big impact , managers get criticized, and there are plenty of rules and regulations. Like sabermetrics in baseball, we can measure logistics performance in many different ways.
Measuring and managing logistics performance is a full time job for professionals and the volume of data can be daunting. Managers in other functions such as finance, marketing, or manufacturing may need a quick view of logistics data as it relates to their responsibilities.
Here are a few general measures for the dashboard:
Absolute Performance- monitor absolute logistics failures rather than percentages. For example, 99.5% on time performance appears very good. However, in a high volume operation, it could mean hundreds or thousands of late orders per day.
Inventory Turnover- common measurement in asset mgt.
Order Fill Rate- customer service and warehouse productivity measurement. Can also use item, line, or value fill rate.
Warehouse Utilization %- indicator of good asset mgt.
Warehouse Productivity- measure of units received, stored, picked, packed, and shipped per hour.
Order Cycle – reduced order cycle means less inventory in the system and greater customer satisfaction. Longer order cycle means more inventory in the system and reduced customer satisfaction.
Lost Sales- inverse relationship with inventory. Higher inventory costs, lower risk of lost sales. Lower inventory costs, higher risk of lost sales.
Transportation costs- always a trade off….bulk shipments can reduce transportation costs but leads to higher inventory levels in system. Higher transportation costs due to mode shift (air vs. ground or air vs. ocean) can reduce inventory in system by shortening the order cycle.
Commodity value- higher dollar value means increased transportation, inventory, and packaging costs.
Density of product- High density (lbs/ cubic ft or kgs/ cubic meter) means lower transportation and inventory costs since the product takes up less space in containers or warehouse.
Loss and Damage- greater susceptibility to loss or damage means higher transportation rates and higher warehousing costs due to special handling.
Location Decision- Distance from sources or markets = relative advantage or disadvantage vs. competitors. This is a C level responsibility.
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