First, the definition of output should be
transaction based. For logistics, the basic transaction is a completed delivery to a customer. Because the entire process is required to provide a completed delivery, this definition of output includes all sub activities within the process, not just one function's contribution, as shown in Figure 1.
Second, the system needs to focus on
the downstream player in the supply chain, the customer. Because each transaction represents a discrete opportunity for meeting or failing some or all of a customer's requested standards, we can classify the output as being either perfect or not by comparing each completed delivery to the characteristics requested by the customer. This distinction between the promised
demand and the provided output permits a
measure of effectiveness based not on internal standards, but rather on customer requirements. Several cutting edge companies have begun to incorporate this concept of output under such names as Perfect Orders, Flawless Fulfillments, Perfect Installations and others.