Logistics, also known as supply chain management, is the study and operation of supplying services or products to places of need. In real-world situations in which time and money are of great importance, it’s often essential for a company or organization to measure the performance of their logistics. However, because of the complex processes involved in logistics, there’s no single way in which to measure how a company is performing in terms of their logistical operations. Instead, there are a number of measurements, each describing the performance from a different angle.
Measure supply reliability. This measurement tells a company how reliable the shipping method is in terms of preserving or maintaining products in their original state. Low measures of supply reliability can indicate improper shipping or packing methods. Calculate this measurement by subtracting the number of defective parts per average delivery from the average number of parts delivered per delivery and then dividing by the average number of parts delivered per delivery. The result will be a percentage indicating the number of parts delivered soundly per each shipment.
Compute the variation in transit time. This metric indicates the reliability of the shipment time. Used in conjunction with basic shipping-time statistics, this metric can tell a company how dependable their shipment method is. Calculate this value by subtracting the minimum transit time for a given period from the maximum transit time for a given period and then dividing by the average transit time for the given period. Lower values for this value indicate better performance.
Calculate the service reliability. Service reliability indicates the number of successful (in terms of providing the service promised) shipments. Divide the number of shipments delivered successfully at most four hours later than promised by the total number of shipments. The result will be a percentage. Percentages closer to 100% indicate better service.
Compute transportation utilization. This measurement shows how well a company is using its transportation resources. Divide the amount of time transportation devices (ships, trucks, and so on) are loaded during transit by the amount of time devices are in-transit regardless of whether they are loaded. The result will be a percentage. Percentages closer to 100% indicate better utilization of transportation devices.