The current situation and construction plan of logistics enterprise performance management

2005-11-8 14:09:34 Author Changxiang.com

World-class companies have broken away from Methods that are limited to the logistics department and measure logistics performance by analyzing simple functional indicators. They always formulate and deploy logistics strategies from the perspective of the company as a whole and the supply chain, and measure it through the company's performance in channel alliances. Measure and control logistics performance and supervise the allocation of logistics resources.

1. Performance management and domestic situation analysis

1. Definition of performance management: Performance management, as the name suggests, is to solve the problem of making intangible assets effectively create value. It targets knowledge. , skills and people management. Performance management is not only a typical human resource management issue for enterprises, but also a very important and integral part of enterprise strategic management.

Performance management emphasizes the monitoring of the process, ensuring the realization of strategic goals through the observation and evaluation of various indicators in the action process. It is not management based on goals, but management based on facts. Therefore, with the emergence of performance management, corporate strategy is no longer the task of a few people at the corporate decision-making level, but has become a matter for everyone from the CEO to every employee.

2. Performance management conceptual framework: The currently widely used performance management framework is mainly the Key Performance Indicator (KPI) method. The Balance Scorecard (BSC) is not widely used in my country, especially in my country's logistics and logistics-related enterprises.

The essence of KPI is to point out that the setting of enterprise performance indicators must be linked to the enterprise's strategy. The meaning of the word "key" refers to the most important issues that an enterprise must solve strategically at a certain stage. question. For example, for companies in a state of extraordinary growth, rapid business growth has led to rapid expansion of the company's organizational structure, rapid expansion of the workforce, shortage of management and skills, and imperfect processes and regulations, which have become the main problems that restrict the company from effectively coping with high growth. Solving these problems has become the key to strategic significance for the enterprise at this stage, and the performance management system must accordingly design management indicators to solve these problems.

According to Herzberg's "incentive-health" theory, we can divide the existing KPI index into two categories: coordination, control and motivation. The coordination and control part refers to the management measures adopted by senior management to directly interact with departments (including the rigor of the process, time allocation, management focus, etc.), generally including "human resources plan/process", "financial control and plan/process" ", "Operational control and planning/process" can be directly measured by the evaluation results; while "rewards", "opportunities" and "values ??and beliefs" belong to the motivation part, which refers to the clear actions taken by senior management to motivate the overall management team. Incentive measures are generally difficult to evaluate.

3. The current performance management objectives of Chinese logistics companies are weak, there is little feedback, and there is basically no reward and punishment management: Chinese logistics companies have a strong correct concept of the company’s mission and organizational structure, but they are more interested in Use the two levers of operational control and financial control to control and coordinate performance, and rely more on value appeals to motivate employees.

Therefore, companies often rely heavily on the promotion of corporate values ??(such as "becoming an industry leader", "loyal to the company", etc.). The formal manifestations are hanging photos of leaders and slogans, and singing company songs. and other methods to create an atmosphere to motivate employees, but rarely use the strategy-based performance management system commonly used by American companies.

Chinese logistics companies are significantly poorer in management capabilities and rigor, especially in the following aspects: setting goals; providing clear performance management feedback; and implementing real evaluation of good/bad performance. Rewards and punishments; over-reliance on operational control and value incentives; lack of financially proficient, astute and mature managers; rarely use incentive mechanisms/development opportunities to attract/retain employees with outstanding performance, and may suffer failure in the "talent war".

2. Improve management methods and operations

According to the institutional setup of my country’s logistics enterprises, the positioning of logistics organizations, and the best practices of foreign logistics companies, logistics performance management is the best It is based on the logistics capability as the core and based on the sensitive analysis of supply chain costs and final customer satisfaction. The company's performance appraisal in the logistics department. The specific KPI measurement system can be composed of two parts: supply chain logistics capability assessment and company logistics performance assessment.

1. Setting of supply chain KPIs

1) Supply chain unification: strive to unify and coordinate supply chain operations and satisfy end customers, requiring logistics roles to be single-minded and benefit sharing, Emphasis on the connectivity of logistics channels;

2) Information technology: Information technology is the application of hardware, software and networks to facilitate the improvement of logistics information, emphasizing variability and integration.

3) Information sharing: Information sharing is the desire to exchange logistics strategy and tactical data between functional departments and supply chain partners, emphasizing the form and proportion of logistics and financial information sharing.

4) Contact: Contact is about the ability to exchange and apply information.

5) Standardization: Standardization is about the continuous search for the ability to apply logistics practices consistently across organizations, and requires compliance with industry standards.

6) Simplification: Reduce the complexity of logistics processes and relationships.

7) Discipline: Achieve high level, standardization and simplification, and pursue the same operating policies and procedures.

2. Company logistics performance assessment

1) Logistics cost assessment: After the logistics department becomes an independent profit center, logistics cost assessment is more directly linked to the product division or sales department. To assess the logistics costs incurred by product divisions or sales departments, the most direct measure of a company's logistics performance is the logistics cost rate.

Logistics cost rate. Logistics cost rate = total annual cost of goods/annual sales. The logistics cost here is the real cost incurred to complete specific logistics activities. The logistics costs counted in enterprises are transportation costs and distribution center operating costs. Since there are no standard statistics and cost divisions, many hidden logistics costs are classified into production costs and sales costs. Scientific logistics costs should be based on logistics activities, and all costs related to completing logistics functions should be included in the activity-based cost classification.

Typical logistics costs can be divided into transportation costs and inventory costs in broad categories.

Logistics cost statistics:

A Transportation costs and insurance costs: transportation costs, freight from factory to customer, short-distance transfer fee from factory to distribution center, long-distance transfer fee from factory to distribution center, distribution Center-to-customer distribution costs, various railway transportation fees, and cargo insurance costs

B Inventory costs: out-of-stock costs (the general calculation standard is that out-of-stock costs are 25% of the cost of developing a customer), inventory funds Occupation (finished products, raw materials), logistics equipment depreciation, product obsolescence losses, storage insurance, warehouse labor costs, storage rent, inventory taxes, handling fees, packaging fees

2) Inventory turnover rate:

Inventory turnover rate = annual sales volume/average inventory level

The higher the inventory turnover rate value, the better the product sales situation, and the less funds occupied by inventory. Taking food companies as an example, according to the surveyed sales data and inventory data of domestic food companies in 2002, the company's current inventory turnover rate is around 50%, achieving a relatively high turnover level. In the future organization, the main assessment target of inventory turnover rate should be the product division.

3) Customer service level

Customer service level is mainly an assessment indicator for the product division or sales department.

Order fulfillment rate: Order fulfillment rate = the number of times the existing inventory can satisfy the order/the total number of customer orders, that is, the ratio of the existing inventory that can fulfill the order for the goods requested by the customer. The inventory in each distribution center should reach a 95% satisfaction rate. In the case of replenishing distribution center inventory by transferring goods, it is difficult to achieve this ratio. The survey results of Meizhi Company reflect that the average availability of inventory in East China only reaches 80%, and this is already running in various regions. Better, the average availability in the western region is even less than 50%.

Consistency between orders and deliveries: The consistency between orders and deliveries is considered to be the most important factor in both production and service enterprises. The main operational indicator is error-free delivery rate.

Correct delivery rate = the number of shipments made according to customer orders in the month/the total number of shipments in the month.

In actual operations, we should ensure that we can deliver goods correctly according to customer orders. In the survey, we also learned that this is what customers are most concerned about, so failure to deliver goods in accordance with customer orders causes the greatest damage to the company's service image. Therefore, before shipment, it is necessary to repeatedly review whether the goods shipped meet the customer's requirements based on the customer's order. From this perspective, it is very necessary for companies to set up the position of order administrator in the distribution center. There will be dedicated personnel to track and ensure the transmission and accuracy of orders from the source. Reducing the probability of order errors will greatly improve the company's service level.

Timely delivery rate:

Timely delivery rate = number of cars delivered on time in the month/number of cars delivered in the month.

Many products are currently available for short-haul, next-day delivery. The solution is to set up regional distribution centers to conduct direct shipments to primary and secondary wholesalers in key cities and regions who are capable of receiving completed vehicles, and to set up secondary distribution centers in other provinces within the region to support counties, An in-depth distribution strategy carried out in townships and towns to deliver smaller batches.

Damage rate of goods:

Damage rate of goods = value of damaged goods in the month/total value of goods sent in the month

This indicator is used to measure the process of delivering goods to customers. The general maximum limit for the damage rate of goods is 5%. Many damage cases occur during the loading and unloading process of goods. During peak shipping periods, insufficient loading and unloading power results in slow delivery and high damage rates. The recommended solution is to rent forklifts at the distribution center during the peak sales periods to reduce the damage rate and improve loading and unloading. speed.

Number of complaints: The carrier helps the company deliver the goods to the customer, so the carrier represents the company's service image during the process of handing over goods to the customer, and provides as many services as possible in the process. It will improve customers' loyalty to the company, but the most common complaint reported by distribution centers is that the carrier's service is not in place during the handover process with customers. In response to customer complaints, our suggestion is that the company should refine the service agreement with the carrier, and clearly provide basic services such as assistance with unloading, notifying customers before arrival, and collection of returns, as well as possible collection of goods in the future