The formation of metrics for evaluation of logistic system administration efficiency in a focus company’s supply chain
MAGAZINE №1 (72) February 2016
AUTHOR SOKOLOVA O.G.
CATEGORY Controlling
ABSTRACT
A manufacturing company frequently plays a role of forming unit in a supply chain. The quality of manufacturer’s logistic system administration is an important impact factor for both company’s and supply chain’s performance and competitiveness. This article deals with the topical problem which consists in evaluation of logistic system administration efficiency in a focus company’s supply chain. The methodology for solving this problem, which was developed by the author, is presented. It includes 3 groups of indexes: strategic, which are presented in terms of Balanced Scorecard (BSC); operational, which estimate logistic system administration quality and integrated, which are calculated following changes in crucial for this system (subsystem) indexes’ rate of growth.
The quantitative evaluation of such logistic system’s characteristics, as organization, rhythmicality, synchrony and stability, which are used in the process of logistic system operational management as well as integrated indexes, which are offered by the author, are of academic interest. These indexes allow estimating the impact of the logistic system administration quality on a focus company’s and supply chain’s efficiency.
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Sensitivity of the return on assets at the company to the change of logistics KPI
MAGAZINE №4 (63) August 2014
AUTHOR SERGEEV V.I., KATALOVA V.S.
CATEGORY Controlling
ABSTRACT
The paper considers the problem of estimating sensitivity of the company’s business performance (in particular return on assets (ROA) to the logistics key performance indicators (logistics KPIs). Different impact of each logistics lever (service, costs, performance of the logistics department staff, return of assets, etc.) reflects on the logistics controlling and reporting system of the company due to the KPIs and modifies the return on assets at the company in a variety ways. In turn, the tool of any functional effectiveness evaluation, including logistics, is, for example, the model of strategic profit, which becomes the basis for a Balanced Scorecard (BSC) foundation.
It is (BSC) necessary to install properly the “weight” of each KPI in the BSC in order to motivate efficiently the logistics department staff. Currently in most companies it is done by experts without any objectiveness. The use of sensitivity methods can significantly increase the effectiveness of the incentive system due to the objective calculation of logistics KPIs impact on company’s ROA.
The paper proposes an approach of determining functions and coefficients of the ROA sensitivity to the changes of the logistics KPIs. The approach is based on the dynamic model of assessing the impact of KPI on the financial results of the company: appropriate information in the form of retrospective series of ROA / KPI should be used. The algorithm of specified assessment is suggested, and specific example of calculations of sensitivity functions, foundation of BSC and change of incentive system of logistics department employees of the company taking into account educed sensitivity of performance indicators is provided.
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