Introduction
The supply chain management effectiveness in an organizational setting is quantified by its outcome against key performance indicators (KPIs). Basically, these indicators are instituted by a business to demonstrate the existing gap between activity planning and execution within the supply chain in the form of merits such as cost, waste, value, and service. The main KPIs in logistics and supply chain operations are operating costs, inventory, and customer service. This essay applies the above concept to analyze the logistics and supply chain operations of the EnGlobal Logistics.
Importance of Developing Metrics and KPIs in Logistics and Supply Chain
KPIs in logistics and supply chain operations measure the actual gap that exists between the planning of different activities and the results from transforming the plans into action. For instance, a KPI would measure the effectiveness of different supply chain channels against a metric or another performance indicator. On the other hand, metrics are the performance goals or targets created to track the effectiveness of different KPIs against each other (KIP Institute, 2013). As a result, a company would be in a position to quantify its logistic and supply chain operations as either efficient or not, depending on monitors such as service, value, and cost.
EnGlobal Logistics Metrics
Since the EnGlobal Logistics operates in the dynamic freight sector, it has managed to develop metrics for tracking the effectiveness of logistics and supply chain departments. Specifically, given that the focus of this company is on freight services, the metrics used are supply variability and inventory (Myerson, 2015). In measuring customer service as a KPI, the company uses the metrics of on-time and supply variability aimed at managing the delivered cost against the company’s strategic goals (see Table 1). On the other hand, supply variability angled on the metrics is schedule attainment, capacity utilization, and item availability (see figure 1). The intention of this indicator is to measure the item’s availability and inventory quality.
Table 1. Merging supply variability and inventory KIPs.
Indications of the Metrics and Benefits to EnGlobal Logistics
Evidently, the high score in express and freight services within supply chain operations is an indication that EnGlobal Logistics has a well-performing supply variability and customer care. This also means that the supply chain operations of the company are positively aligned with the efficiency strategy. Performance ratings are used to measure the metrics on customer contentment and the logistics process in order to create strategies for reducing costs associated with supply chain operations. In fact, this strategy is significant in facilitating and identifying areas that require improvements (Mangan, Lalwani, & Lalwani, 2016).
For instance, as captured in Table 1, customer satisfaction was weighed on the basis of experience feedback. The positive rating is an indication that the company is on the right track in managing its supply and customer care variables for effective service delivery.
Developing KIP for Ethical Performance
Developing KIPs for ethical performance at EnGlobal is carried out through the integration of sustainability reports and assessment of stakeholder interests to create an ethical attitude indicator (Daft & Marcic, 2016). KPIs that track ethical performance minimizes unethical behaviors such as a lack of accountability and financial misappropriation. As a result, EnGlobal will have to grapple with costs associated with such activities.
References
Daft, R., & Marcic, D. (2016). Understanding management (10th ed.). New York, NY: Cengage Learning.
KIP Institute. (2013). The KPI compendium: 20,000+ key performance indicators used in practice. New York, NY: Createspace Independent Pub.
Mangan, J., Lalwani, C., & Lalwani, C. (2016). Global logistics and supply chain management. New York, NY: John Wiley & Sons.
Myerson, P. (2015). Supply chain and logistics management made easy: Methods and applications for planning, operations, integration, control and improvement, and network design. New York, NY: FT Press.