Performance Measurement And Controls

PERFORMANCE MEASUREMENTS AND CONTROLS

NAME ROOPESH YADAV ASHWIN PATEL

MANMEET GILL

ROLL. TOPIC NO 5 Introduction. 15 Need for performance measurement and System Objectives. 55 Logistics Performance Levels.

PERFORMANCE MEASUREMENT AND CONTROLS. INTRODUCTION NEED FOR PERFORMANCE MEASUREMENT PERFORMANCE MEASUREMENT & SYSTEM OBJECTIVES LOGISTICAL PERFORMANCE LEVELS LOGISTICAL AUDIT LOGISTICS PERFORMANCE CONTROL

INTRODUCTION Irrespective of the size of operational business organizations whether big or small need performance measurement and control for efficient and effective utilization of resource. A well designed performance measurement system supported by logistics information will make cross functional coordination and integration easier. It is a process which keeps track of the health of the logistical system.

NEED FOR PERFORMANCE MEASUREMENT Performance is broadly judged on the basis of output with respect to input. When the ratio of output to the ratio of input is higher it indicates or is a measure of systems efficiency and effectiveness. But in accordance of output to input time period also has to be taken into consideration. In today's fast changing business environment organizations struggle to achieve competitive advantage for growth and survival.

Resources have to be deployed by system operations irrespective of its application in functional areas of marketing, procurement or logistics. Resources are very scarce so it becomes a major priority for companies to effectively and efficiently utilize them Logistical operations require deployment of a lot resources for movement of goods and information across the supply chain. Hence monitoring, controlling and improving performance of logistical operations is very important in order to achieve goals of cost reduction and customer satisfaction.

PERPORMANCE MEASUREMENT SYSTEM OBJECTIVES. There are certain criteria on the basis of which performance is measured, any performance measurement system shall have the following objectives: Monitoring Controlling Directing

MONITORING It refers to the present status of operation to the management. Monitoring system varies from one department to another department. E.g.: Financial monitoring system reports to the management regarding inflow and outflow of funds.

But in case of logistic monitoring system it reports on cost breakup across various logistical activities like:  Warehousing  Transportation  Packaging  Material handling etc.

CONTROLLI NG Every firm or business organization has a set standard for performance measurement. The objective of controlling measures actual performance or output with that of the set standards. It measures the variance, difference or deviation from the set goals. For e.g.: out of 100% if the control system has 60% of the order fulfillment rate then it indicates 40% deviation.

DIRECTING Without proper direction there can be no satisfactory output in spite of the input. Motivation plays an important role in enhancing and improving the performance measurement system. Rewards and incentives are one of the few motivators that enhance individual efficiency. For e.g.: the ware workforce engaged in material handling may be motivated through rewards for crossing the targeted dispatches in a specified time frame or even before that.

LOGISTIC PERFORMANCE LEVELS A. B.

In logistics performance measurement is done two different levels: Internal measure External measure There should be a balance between both internal as well as external measure. The internal and external measures include various factors which should also be taken into account they are:

1. 2. 3.

EXTERNAL MEASURES: Customer satisfaction After sale service Customer demand

1) 2) 3) 4)

INTERNAL MEASURES: Cost Quality Productivity Asset management

1. 2.

1. 2. 3. 4.

1. 2.

1.

FINANCIAL MEASURES: Operating Cost Return on investment NON-FINANCIAL MEASURES: Productivity Asset Management Order fulfillment Quality CUSTOMER PERCEPTION MEASURES: Customer feedback Value added services INNOVATIONS: Benchmarking

AUDIT The general definition of an audit is an evaluation of a person, organization, system, process, enterprise, project or product. Audits are performed to ascertain the validity and reliability of information; also to provide an assessment of a system's internal control. The goal of an audit is to express an opinion on the person / organization/system (etc) in question, under evaluation based on work done on a test basis.

LOGISTICAL AUDIT For enhancing the performance of the logistical system it is necessary to take stock of the efficiency and effectiveness status together, this process is called Logistical Audit. It reveals the weak link in the logistic supply chain. A logistic audit measures the capabilities and qualities of the logistic operations and highlights resources for rationalization and cost reduction.

1. 2. 3. 4. 5. 6. 7. 8.

Auditing in Logistic terms is done on the following basis or criteria: Quality Technology Productivity Packaging system Automation Warehouse capacity Strategic logistical planning External factors

LOGISTICS PERFORMANCE CONTROLS.

A. B.

To direct the logistical activities for competitiveness in an organization, a powerful control mechanism needs to be evolved and implemented. Usually organizations go for the following two types of Control Systems: Budgetary Control System Structural Control System

BUDGETARY CONTROL SYSTEM

Every firm fixes up a budget for each of the logistical activities. These budgets are irrespective of the original reporting structures. Earlier these specified limits on application of funds on each cost center. Any difference in costs are acutely supervised. Here emphasis is more on cost saving instead of customer service.

STRUCTURAL CONTROL SYSTEM. Controls are exercised through proper organizational structure. An organization having cost as its differentiation strategy will have various levels of reporting structure to cut cost at higher levels of investment proposals. But customer focused organization will have a flat reporting structure. It focuses on improving and tracking the health of the supply chain to remain competitive.

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