The International Logistics Conference is coming up in a few months. Elephant L&

Question

The International Logistics Conference is coming up in a few months. Elephant L&SC Consultants has always participated and presented a paper which increase our stature in the eyes of the industry and potential clients. You are being assigned the task to write a paper and then be prepared to present it. First, let’s focus on the paper and the topic to be presented: Balanced Scorecard versus Logistics Key Performance Indicators.

Quite often, we are asked by some of our clients to develop a BSC so they can utilize a regular dashboard for measuring performance. As is often the case, there are other key performance indicators (KPI’s) that should be utilized beyond the traditional BSC. And we often have to go into a complicated discussion with clients to move them towards adapting the BSC to include other logistics KPI’s to provide a well-balanced Balanced Scorecard. We think that a well-written paper that covers this topic can be very useful. And that is your assignment. We hope to use this to develop a white paper that we can provide to clients and prospects.

Your Deliverable: a report that provides a review of the traditional Balanced Scorecard and also identifies logistics/SC Key Performance Indicators. Discuss why and how to include these other KPI’s to adapt the scorecard to specific logistic companies to make it more effective. Be sure to cover transportation, warehousing, and inventory as well as the five types of performance. Also to be included is discussion of how to design and implement these measures.

Explanation / Answer

A balanced scorecard refers to a system which includes performance metric. It is used in the strategic management of a business for identifying and improving the various functions of a business, both internal and external.

It further helps in measuring and providing feedback for the business. The balanced scorecard system focuses on connecting the elements such as the mission statement, the vision, the core values, etc. Further, it focuses on connecting the measures of performance, known as the KPIs, the objectives of the business, etc.

The balanced scorecard system are used largely in varius fields like, business, industry, government, and the non profit organizations.

As per the balanced scorecard, a business organization views itself from the following four different perspectives. They are, the development of the objectives, KPIs or the measures, the targets, and the initiatives.

Financial: This views the financial performance and the use of financial resources of the organization. This perspective is very important for the shareholders and other stakeholders.

Customer: This perspective keeps into view the customer. It includes other stakeholders also. Customers are responsible for determining various important aspects like the quality of the goods and services, the price, etc. These aspects may change any time.

Internal Process: This involves the activities and the processes used by an organization to provide value added products and services.

Organizational capacity: this takes into account the performance through the factors like the human capital, infrastructure used, advancement in technology, etc. This indicates whether an organization is able of continuously improving and growing in the environment. The dynamic environment is subject to change at any time.

Key performance indicators (KPIs) are the metrics used by businesses for tracking and analyzing the aspects that are deemed important to an organization. It helps in measuring the performance of the supply chain and thereby, monitor it. It helps in identifying the areas of improvement. KPIs aim at providing a specific, measurable, attainable, realistic, and timesensitive goal setting.

A KPI logistic is used by the logistics managers for tracking, visualizing and optimizing the logistic processes for achieving the goals of the organization. To name a few among the measurements are, transportation, warehouse and inventory.

The important logistics KPIs are the following:- Spotting of the shipping time potential issues, monitoring the accuracy of the order, tracking of the average time of delivery, analyzing all the costs incurred till the delivery, knowing the number of the orders shipped, maintaining the accuracy of inventory and regularly monitoring the same, optimizing the warehouse expenses and the cost of storage, tracking the inventory turnover, identifying overstock.

All these KPIs can be implemented in the balanced scorecard system, for aligning the objectives of the organization. They have to be aligned with the areas of performance and reviewed and improved regularly. When both, balanced scorecard and KPIs are linked to each other, the top management is able to monitor the growth of the organisation and rectify any problem if any.

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