The evaluation, measurement and analysis of performance within the supply chain is a fundamental activity for any company that seeks to streamline its operations, boost business productivity, increase sales and improve customer satisfaction.
Take the example of Samsung , which in 2018 made a performance evaluation and analysis of 91% of its total suppliers, applying the criteria of the Responsible Business Alliance (RBA). This measurement was carried out as part of the supply chain performance evaluation in order to ensure that its processes were more economical, sustainable and environmentally friendly.
A performance analysis process like this should be part of the management and administration of SMEs and any company with logistics operations, in the search to improve the quality and competitiveness of its services within the market it faces.
Importance of the performance analysis process
The evaluation and analysis of the performance of a company works as a basis for the development of strategies that optimize and strengthen the work of each of the areas involved. For example, with the performance analysis in transportation processes it is possible to identify opportunities for improvement in the logistics stage of last mile delivery, in order to achieve a reduction in transportation costs, faster deliveries, etc.
In addition to this, a performance analysis plan allows detecting problems that could be generating logistical difficulties, cost overruns and even significant losses for the company. For this reason, performance evaluation is an indispensable process for companies that implement the Deming cycle or PDCA cycle .
How to do an evaluation and analysis of performance in companies?
When you are going to do a performance analysis in the company, the challenge is to implement the correct techniques and systems that meet the needs of the supply chain evaluation . In this sense, to measure a certain process, a performance analysis plan such as the following can be taken into account :
Identify the area or process to evaluate in the performance analysis
The first step to guarantee the veracity and accuracy of the information to be obtained is to define the area or process to be evaluated in the performance analysis . It may well be areas such as last mile deliveries, raw material management, inventory, warehousing, transportation, customer service, sales, etc.
Design the appropriate KPIs for the performance analysis of that area
The logistics indicators for the evaluation and analysis of the performance of a specific area must be designed considering certain methodological aspects that guarantee the precision of what is being measured. In this sense, to know how to make an adequate KPI , the ideal is to follow the SMART model, which indicates that each key indicator must meet the following characteristics:
S – Specific ( Specific )
M – Measurable ( measurable )
A – Achievable ( Agreed upon )
R – Realistic ( Realistic )
T – Delimited in time ( Time related )
Implement performance analysis systems to measure indicators
Although planning and designing the performance analysis process requires human intervention, data management can be digitized in order to obtain the information in an automated way. Therefore, it is necessary to choose the performance analysis system that best suits the process to be evaluated and that has the correct functionalities to measure the established logistics KPIs .
In the logistics area, some of the main performance analysis systems are SRM ( Supplier Relationship Management ), SCM ( Supply Chain Management ), CRM ( Customer Relationship Management ), TMS ( Transport Management System ), among others.
Analyze the information obtained from the performance evaluation
Along with obtaining the KPIs, the information obtained must be compared with historical data, internal optimal data and external average data, in order to have a complete perspective of the evaluated process. Based on this data collection, all the information is analyzed to make strategic decisions.
Performance measurement and analysis example
As an example of a company’s performance analysis, we can consider an e-commerce business that makes home deliveries. Suppose that the company’s policy is focused on customer satisfaction, so it seeks to optimize last-mile delivery processes in order to offer a very good shopping experience, with punctual and efficient deliveries.
In this context, the performance analysis plan can focus on the measurement and evaluation of different indicators related to the effectiveness of deliveries and customer satisfaction. Some of these KPIs can be:
CSAT ( Customer Satisfaction Score )
NPS ( Net Promoter Score )