December 2022 – LogiKal

December 27, 2022 By admin

BREAKING DOWN THE IMPORTANCE OF LOGISTICS KPI’S

Logistics Key Performance Indicators or KPIs are a technique for businesses for comparing their own enactment against industry benchmarks. It is an objective and practical measurement of progress, either:

For achieving a predetermined goal, or
In contrast to a requisite standard of performance

By tracing KPIs, businesses have important data that aids them to improve their operations. This data will mark any fluctuations and allows negative variations to be recognised and addressed efficiently.

Setting Up Logistics KPIs

Setting up logistics KPIs requires to first define the company’s logistics goals ensuring that these goals are “SMART”: specific, measurable, achievable, relevant and timely.

These goals will further help in understanding what is required from the KPIs and support in adjusting business processes for improvement. Break the KPIs for each stage within the supply chain that mark the company’s potential for improvement in the industry. Some of the important KPI’s that need to be considered are:

Average packing time: is the average time that is taken for a product to be picked up and get packed. Calculating this KPI regularly will help in comparing the employees’ productivity over time.

Pick and pack cost: It helps to measure the picking cycle time, the productivity, and the accuracy, as the cost transparency will help to understand the financial impact of changes in the related metrics’ values.

Shipping time: is the amount of time taken by the companies for shipping an order on or before the date requested. This metric is important for achieving customer satisfaction.

Shipping Costs: This metric helps in tracking the shipping costs per unit and identifies even the slightest changes in the set budget.

Transit time: This refers to the total time taken, right from pick up to the freight delivery at the recipients’ location. It helps in comparing the estimated transit time and inspect the carrier’s performance, to create an optimum transit time, while evaluating any possible delays that might prevent on-time deliveries.

On-Time and In-Full (OTIF): This is a customer-centric KPI that measures on-time delivery in its complete condition. It represents the number of orders to be delivered as per the schedule and the quantity specified. It calculates the amount of times the customer got what they purchased and if it was delivered within the promised time.

Order accuracy: it determines the total volume of the inventory on-hand that are shipped and delivered without any inaccuracies and identifying errors in the form of unsuccessful deliveries, incorrect orders, damaged, or returned goods.

Key points to remember while setting up the KPIs

Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ut elit tellus, luctus nec ullamcorper mattis, pulvinar dapibus leo.Here are some important points that are required to be kept in mind while setting up KPIs for business operations:

· Prioritization of the procedures and operations that are important.

· Making the KPIs relevant.

· Choosing simple, achievable KPIs instead of complex targets.

· Monitoring the performance elements of the chosen metrics.

· Focusing on the activities that help the staff to give a better performance.

· Understanding the industry KPIs before making new standards

Conclusion

Tracking KPIs provide with a strategic vision for the overall goal and performances throughout the course of time, identifying trends, and finding key enhancement points that will benefit the business.

Aiming for the right goal will further help in using the available resources and time more efficiently for reach bigger heights.

LOGISTICS A BUSINESS ENABLER FROM A COST CENTER – THE JOURNEY

Logistics refers to the complete process of handling how the resources are attained, warehoused, and transported to their ultimate destination. It is a traditional business that has emerged in the spotlight during the Covid-19 pandemic and matured over time highlighting its importance in various businesses.

Earlier, logistics industry used to be under a tremendous pressure to restate its significance and add value to its client base It ended up becoming a commodity instead of an essential service that was reduced to achieving targets on a spreadsheet, which with time, were becoming lower and. Its’ entire existence was being seen as a cost that needed to be further reduced.

But in the present time, companies view logistics as a business enabler instead of a cost centre. During the early 2000’s logistics teams used to be part of sales, but not anymore. There has been a shift. Today logistics is being observed as cost justified and carved itself out as a business enabler.

Companies now look to drive proficiencies as they are gradually navigating into the high-cost environment. It is no longer viewing logistics as a service at any cost. Rather, it is viewed as being discreet with the services that are required to be delivered. Logistics is no longer the cost that is to be managed, but has jumped towards the revenue generating side.

This shift came at the same time when transporters are moving supplies and goods to more and more destinations and at much greater speeds as in the past. To keep up with the high demands, logistics companies are venturing into new technologies like Cloud, Artificial Intelligence, Machine Learning, and Automation have changed the course of modern business operations. This results in cost savings and at the same time allows the complex and global supply chains to function efficiently.

It is a known fact that customer satisfaction is the key driver of business success, and the modern logistics is playing a very important role in ensuring the same. It helps the manufacturers and stores to sense the demand for all kinds of products across the geographies and ensure the on-time manufacture and delivery of these products.

In conclusion, it would not be wrong to say that “logistics is not a cost centre anymore and has transformed itself gradually into a business enabler”.

THE 7 RIGHTS (R’s) OF LOGISTICS

Logistics as a whole front is based on a number of well-formed concepts that define different functions of a company and help it to comprehend the gaps and opportunities in order to perform well in the industry. The 7 “Rights’’ (also known as the 7 R’s) are one of those concepts in logistics management that implies getting the Right product, to the Right customer, at the Right price, in the Right quantity, in the Right condition, at the Right time, at the Right place.

Each of these 7 rights are elaborated below:

1. Right Product: Freight companies ought to have thorough information about the product they are going to transport. Proper product knowledge is vital for administrating the time and resources.

2. Right Customer: It is very important to know about the target market in order to identify the potential customers and have a better chance of gaining leads.

3. Right Price: Taking care of the price while managing the freight process is another important aspect that needs to be considered. It should be well planned so as to provide best possible routes with proper data to ensure cost efficiency.

4. Right Quantity: It is essential to know the accurate quantity of products to be sent to the retailers. With the help of modern AI systems, this quantity can be determined easily, in turn helping to schedule the transport trucks in advance.

5. Right Condition: The products to be delivered have to be properly packaged according to its nature and reach its destination in the right condition without any damage.

6. Right Time: Time plays a very crucial role in the world of logistics. Prior planning and proper time management is required to ensure that there are no delays in delivering the product to the end customers.

Right Place: With a proper tracking system and optimum route selection, it should be certained that the products is reaching at the target destination.

Logistics management is all about planning, designing, executing, controlling and monitoring. Applying the 7R concept will further help in achieving all these steps as it enables end-to-end action, while defeating unnecessary deferrals which result due to lack of preparation.

LogiKal.ai is one such company that offers proficient services while giving more visibility into the logistics operations and adopting better solutions for best possible outcomes.