Logistics performance metrics

Abstract

Logistics metrics are quantitative measurements that track certain processes within the logistics framework. The best design for a logistic system or component(s) of a logistics system truly depends upon the metric(s) used for measuring the performance. A system that measures up very high in one metric may not measure very well in some other criteria. The objective, however, is to design a system that meets or exceeds the expectations in most of the selected metrics. Logistics metrics vary based upon the boundary of the system (the various functional areas included such as production, distribution, inbound transportation, storage, vendor selection etc.), the functional requirements of the system and the different areas and the ability to define and measure them quantitatively. Hence the first step in designing the metrics is to define the system that needs to be measured and its components. The second step is to determine the functional requirements or expectations of the system. The third step is to identify metrics that can quantitatively measure the functional requirements. It is also important to understand the relationship between metrics. One or more metrics may drive the performance of another metric. For instance, in the case of railroads, customer service in terms of the percentage of on-time delivery of shipments depends upon the on-time arrival and departure of trains and terminal dwell time for cars (time spent at a terminal).