PERFORMANCE

MEASUREMENTS AND
CONTROLS
 NAME ROLL. TOPIC
NO
ROOPESH 5 Introduction.
YADAV
ASHWIN PATEL 15 Need for
performance
measurement
and System
Objectives.
MANMEET GILL 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
In logistics performance measurement is
done two different levels:
A. Internal measure
B. 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:
 EXTERNAL INTERNAL
MEASURES:
MEASURES:
1. Customer
satisfaction 1) Cost
2. After sale service 2) Quality
3. Customer demand
3) Productivity
4) Asset
management
 FINANCIAL MEASURES:
1. Operating Cost
2. Return on investment
NON-FINANCIAL MEASURES:
1. Productivity
2. Asset Management
3. Order fulfillment
4. Quality
CUSTOMER PERCEPTION MEASURES:
1. Customer feedback
2. Value added services
INNOVATIONS:
1. 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.
 Auditing in Logistic terms is done on the
following basis or criteria:
1. Quality
2. Technology
3. Productivity
4. Packaging system
5. Automation
6. Warehouse capacity
7. Strategic logistical planning
8. External factors
 LOGISTICS PERFORMANCE
CONTROLS.
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:
A. Budgetary Control System
B. 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.
Thank you