To ensure the Logistics function supports organisational objectives and continuously improves its service delivery, it is important to measure performance. The performance of the people, processes and systems that make up a Logistics function can be measured by using Key Performance Indicators (KPI’s). KPI’s measure the success of particular activities within a function which in turn evaluates the success being made towards the strategic goals of an organisation. KPI’s for Logistics function can be set within the following areas:
- Delivery
- Quality
- Cost
Table 5 shows some typical KPI’s for a Logistics function
| Area | KPI |
|---|---|
| Delivery | On time delivery to customers |
| On time delivery from suppliers | |
| On time delivery to internal customers | |
| Quality | Order information accuracy |
| Packaging accuracy | |
| Consignment accuracy | |
| Cost | Inventory costs |
| Transportation costs | |
| Labour costs |
The video below provides an additional explanation of KPI’s and how they relate to the rest of an organisation: