A comprehensive performance measurement system is essential for aligning supply chain processes and transportation decision making with a corporation’s strategic goals. Yet many companies do not have a measurement system that can deliver these benefits. A performance measurement system is much more than simply monitoring performance to be effective. It is the driving force behind timely decision making and action.
Some companies do not measure key transportation performance areas for themselves or their carriers. Two examples of these areas include the measurement of on-time service and claim ratios. This suggests that some transportation managers are incapable of addressing these deficiencies in customer service with their carriers.
How effectively does are your company’s processes, technology, and people work together to achieve defined goals? If you cannot answer this question then you may lack an effective system to measure and quantify performance in reaching your goals.
Performance measurement systems are designed to quantify an ongoing action. They play essential roles for management by providing:
- A basis to evaluate individuals and business process performance
- Feedback necessary to assist management in improving performance
- Alignment of company process goals and customer service objectives
For measurements to be effective, they should be:
- Few in number focusing on information needed for daily decisions
- High impact on main areas of importance
- Easily measurable using simple calculations from readily available data
- Widely understood and expressed in ways that tie in to the corporate goals
- Based on service and financial criterias
By understanding how well employees, processes, and technology are performing management can improve key elements of the operation, while focusing on the customers’ requirements. The absence of a performance measurement system, on the other hand, may derail well thought out plans and prevent a company from realizing its’ objectives.
Although performance measurement systems differ from company to company, some common themes exist. Measures must relate to business strategy, vary between locations, change over time, be simple and easy to use, provide fast feedback of information, and foster continuous improvement rather than merely monitor performance.
When you review your management methods, take time to assess your current performance measurement system with a fresh outlook. Make it worthwhile for the time that you invest in it. It should be paying you dividends in the areas of customer satisfaction and cost containment. If you do not have a system in place, there is no better time than now to start. It will make your life a lot easier and pave the path to greater success.
Joe Loughran is President of Parcel Rate Solutions and an expert in the parcel industry. Parcel Rate Solutions is a transportation consulting company offering services in Carrier Rate Analysis and Carrier Agreement Analysis. Joe can be reached by phone at (724) 934-0626 or email: firstname.lastname@example.org.