Performance Measurement (Performance Auditing)
Increased competition and many times, slow economic growth has compelled many enterprises to develop an efficient and effective logistical system within their organization. The task of the logistics manager, or logistics controller, is to continuously keep measuring the performance of the firm. In order to carry out this measurement process, the logistics manager or controller focuses his attention on the development of the various resources of the firm and the attainment of goals and targets.
Dimension of Performance Measurement
The logistics manager will be able to compare and measure logistical performance only if they are provided with quality information. In case there are old and outdated reporting formats in a company, they have to be replaced by more advanced computer-based control systems.
Objectives of Performance Measurement
Monitoring measures and keeps a track on the service level and the logistical cost components so that the same can be periodically reported to the management. Sometimes, the results of monitoring may be sent to the customers as well to have their feedback about-the performance of the company’s service level.
Controlling keeps a track on the on-going performance i.e. a track is kept on whether the process is within the specified standards or whether it has deviated from the prescribed standards. E.g.: during transportation, a company expects or predicts a certain amount of damage to its goods due to various reasons. By having a regular data regarding the extent of damage, the company can exercise control on the damage caused to the goods due to transportation.
Directing Measures are designed to motivate personnel. Basically, they are incentives schemes, which will help to increase productivity. The principle is “Better the performance more is the pay”. Here the company must guard against errors and damages caused by employees in their over-enthusiasm to earn more.
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