Furthermore, most of the studied logistics performance measures are generally static and provide a cross-sectional analysis of performance rather than a dynamic picture of performance development.
5.4 Analysis of Logistics performance measurements on company level
The “Company level” analysis focussed on Logistics Service Providers and especially on “Third Party Logistics Service Providers” (3PL) or company´s logistics department who manages own account logistics and transports or hire / reward haulage.
In order to analyse the performance indicators for Logistics Service Providers, a literature review was conducted in several fields: literature on performance measurement in general, then focusing on Logistic Service Providers and on 3PL as special activity based service providers. With this literature review the question to be answered was: What performance measurement approaches and indicators for Logistics Service Providers are proposed in literature and how useful are they?
The detailed analyses can be found in Annex VIII.
To summarize, the following conclusions can be made:
The literature review shows that Logistics Performance Measurement on company level is still a difficult task. It seems that in general there is a lack of unique adequate performance measurement systems especially for Logistics Service Providing companies which cover all relevant areas. It has been observed that available frameworks have different basic problems:
- There is no specialisation of performance measurement for 3PL;
- Consideration is mainly focused on financial or costs aspects;
- One problem with performance measurement is that the main focus is given to individual business performance, instead of performance of the whole supply chain. To measure performance in the supply chain, with different owners, horizontal measurements instead of vertical are useful. Those measurements should cover aspects of productivity, cost, service and customer and employee satisfaction;
- The specification of used indicators is very unclear and still not optimized. In a study of customer perception of 3PLs, over 90 % of the businesses said that they are considering further development of their KPIs to evaluate their 3PL business (Wilding & Juriado, 2004). This indicates dissatisfaction with the KPI that have currently been used.
To evaluate logistics performance a broad perspective has to be taken into account for all the parts of a business. In general commonly named KPAs are effectiveness, efficiency and productivity. Productivity merges effectiveness, efficiency and quality into one by comparing the input and output. The next important criterion is employee development, which means the attractiveness of the logistics profession. These are two subjective criteria that are difficult to measure. Profitability is often being used as the most important area to measure performance. Both hard and soft measurements have to be used to measure these criteria for performance.
It can be concluded that there is the need for standard performance metrics or indicators related not only to logistics costs but to a wide range of areas at the company level.
5.5 Key Performance Areas (KPA) and Key Performance Indicators (KPI)
As discussed, a variety of studies, frameworks and models have been developed to assess the performance of logistics. These tools may cover the needs for different levels of analysis, e.g. national, and company levels, may be used by particular types