In an economic viewpoint, it can be noted that measurements should be done through 4 KPIs, namely: [1] Costs (C), [2] On Time In Full delivery (OTIF), [3] Service Quality (Q), and [4]
Exception Management (ExM).
Costs (C)
The total costs of a specific SC cannot be seen at a first sight. In fact, in most cases the costs have been aggregated on department level. As one department works on several SCs, it is not possible to summate the different departments’ costs in order to calculate the total costs of a specific SC. However, the Logistics Operational Spend (LOS) as well as the Logistics Management Spend (LMS) are allocated to every SC. To calculate the SC’s overall costs, we may hence summarise the considered SC’s LOS and LMS of the considered month. Thus, let UC
be:
UC : Costs, Numerical, Real, 0.01, Euro, N = [0 , 1]
Let LOSi be the operational costs allocated on customer’s SC during the considered month t.
The total cost of a specific SC can thus be calculated as follows:
f(C) = ΣLOSi,t+ ΣLMSi,t
On Time in Full Delivery (OTIF)
In the technical language, ‘On Time in Full Delivery’ (OTIF) means that the freight was delivered within the agreed timeframe and without any damages. The data considering the OTIF indicator can therefore be calculated via the percentage of freight, which has been delivered on time and in full divided by the total freight supposed to be delivered. Hence, let UOTIF be:
UOTIF: On Time In Full delivery, Numerical, Real, 0.0001, Rate, N = [0 , 1]
Let Dg be the freight which was delivered in full and on time within the considered month t.
Let D be the freight supposed to be delivered within the considered month t.
Let i be the ith variable of the sample, whereas i = [1, n].
The percentage of on time and in full deliveries can be calculated via:
Service Quality (Q)
Most companies have implemeted a ‘QSHE – Department’, where the different quality, safety, health and environmental indicators are defined and evaluated. Nonetheless, those KPIs cannot be used to assess the level of quality of a SC, as they are usually related to the company’s internal actions and processes. It is important to bear in mind that some processes and actions taken are the same for many different SC’s and that a myriad of sub-indicators define a SC’s quality. For this reason, it is pertinent that experts rate the KPI concerning a SC’s quality. This is done via the linguistic values ‘very poor’, ‘poor’, ‘medium’, ‘good’, and ‘excellent’. Thus, let UQ be:
UQ : service Quality , Linguistic, Ordered,
L
Q = {very poor ; poor ; medium ; good ; excellent}Where
L
Q = Linguistic set of Q.As stated above, every qualitative value is converted into a quantitative one. 1 is set being
‘very poor’ while 5 is set being ‘excellent’. The average of all questioned experts will hence be calculated and used for further computations.
Exception Management (ExM)
We define Exception Management (ExM) being the interaction of the [1] concerned employees’ responsiveness (R), [2] the SC’s flexibility (F) and the [3] labours’ competences for solving issues (IS). Those competences are of higher importance for reacting on any deviation from standard processes. We calculate the ExM indicator by taking the average of its three inherent sub- indicators. As stated before, all qualitative data are converted into quantitative ones, so that the
𝑓(𝑂𝑇𝐼𝐹) = ∑ 𝐷𝑔𝑖𝑡
∑ 𝐷𝑖𝑡
UExM : Exception Management, numerical, real, 0.01, Average, N = [0 , 1]
The ExM of a considered month t can then be calculated via: f(ExM) = f(Rt, Ft, ISt).
=
𝑅(𝑥)𝑡 + 𝐹(𝑥)𝑡 + 𝐼𝑆(𝑥)𝑡3
Responsiveness (R)
An employee’s Responsiveness (R) within a SC is measured via its’ KPI. In many contracts, the maximal duration between the moment when a request has been submitted and the moment it has been responded needs to be less than a certain amount of working hours. In fact, several components like peoples’ know-how, their understanding of the project, the back-up persons’ understanding of the considered SC in case of holidays or sickness, etc.
play an important role in this context, which could explain eventual deviations. In this work, we calculate the R indicator by dividing the requests which have been treated in time, by the total requests submitted. Therefore, let UR be:
UR: Responsiveness, Numerical, Real, 0.01, Rate, N = [0 , 1]
Let DREQ be the requests which have been treated in time, during the considered month t.
Let REQ be the requests submitted during the considered month t.
Let i be the ith variable of the sample, whereas i = [1, n].
The percentage of on time responsiveness can be calculated via:
f (R)
=
∑ 𝐷𝑅𝐸𝑄𝑖,𝑡∑ 𝑅𝐸𝑄𝑖,𝑡 Flexibility (F)
Depending on the considered domain, a SC needs to be more or less flexible according to customers’ needs. Customers often have different requirements in respect of strategy as well as in regard to the considered products. Those customers’ demand is difficult to anticipate and thus the supply needs to be designed in a flexible way. This is not to say that a manager should deviate from the process in a regular manner, but means that the process itself should be improved constantly. Nevertheless, a SC’s degree of Flexibility (F) is often subjective as it depends on both, the product required as well as the customers’ strategy. For this reason, it needs to be evaluated in linguistic terms. Therefore, let UF be:
UF : Flexibility , linguistic, ordered,
L
F = { very poor ; poor ; medium ; good ; excellent } WhereL
F = Linguistic set of F. Issues Solving (IS)
SC’s may be very similar but they are rarely identical. In addition, customers’
requirements differ from one SC to another and may even differ within a same SC.
Consequently the emerging problems a LSP has to face may vary enormously. The IS indicator depends heavily on the considered employees’ successfully completed trainings, experience
UIS : Issues Solving, linguistic, ordered,