STUDY UNIT 8 Controlling Logistics Performance

Question 1

explain why the planning and control of logistics activities is a cyclical
process and not a once off event;

Answer 1

Planning and controlling logistics performance is a cyclical process. This is because plans, policies, processes and operations need to be continuously monitored and reviewed to ensure organisations operate efficiently and effectively

Question 2

identify the ISO standards that are important in logistics management;

Question 3

differentiate between the different performance measures, and provide
examples of performance measures that can be used to track processes in
various functional areas of logistics;

Answer 3

Measure Description General Non-Financial Measures
Asset Utilization
The amount of time assets are being used productively.
Total cycle time
The time from placing an order to the time the customer receives the order.
Percentage defective
The number of defective items shipped.
Percentage of demand met
Operational capability of an organization. Procurement
Price reduction quota
How good purchasing staff are at negotiating with suppliers on price.
Average cost per order
Average cost per order.
Supplier Selection
Delivery reliability
Variability of delivery times.
Complete shipments
Percentage of orders delivered in full.
Percentage good parts
Reliability of the supplier in terms of quality of parts supplied. Inventory control
Inventory turnover
The number of times inventory is turned during the course of a year.
Demand not met
Availability of products.
Inventory carrying cost
Cost associated with carrying inventory. Warehousing
Order picking time
The time it takes to pick all items for a customer order.
Warehouse throughput
The number of loads a storage system can handle.
Utilisation of warehouse equipment and warehousing operating cost per unit.
Utilisation of warehouse equipment and warehousing operating cost per unit. Transport
Total transit time
The time to transfer a shipment from origin to destination.
Transit time variability
Reliability of the transport function.
Percentage of perfect shipments
Percentage of shipments that arrived at the final destination on time, complete and damage free, with complete documentation. Customer service
Service reliability
How often shipments are delivered within or close to the promised delivery time.
Fill rate
Percentage of units available when the customer requests them. (There are a number of ways to calculate fill rate.)
Customer complaints
Total number of complaints during a period of time

Question 4

describe the steps involved in a bench marking exercise;

Answer 4

Step 1: Ensure management support and set objectives.
Step 2: Find a bench marking partner.
Step 3: Assemble a bench marking team.
Step 4: Measure and understand one’s own performance. Step 5: Measure and understand the partner’s performance. Step 6: Compare performance.
Step 7: Develop best practices.
Step 8: Continue the bench marking process

Question 5

identify the supply chain operations reference model ( processes
involved in any supply chain;

Answer 5

The SCOR model
is an all-embracing model that comprehensively describes operations in terms of:
* Plan – Processes that align resources with requirements.
* Source – Processes that connect you with suppliers.
* Make – Processes that change the form of functions of materials.
* Deliver – Processes that connect you with customers (not just delivering).
* Return – Processes that are associated with returns.

Question 6

discuss the important role that business intelligence can play in supply chain
management.

Answer 6

Business intelligence is simply the use of computer software to collect, integrate, analyse and present business information so that important decisions can be made. BI solutions make use of data warehouses to collect and process information so that the end user is able to extract it in a usable format

Question 7

at what levels does control happen

Answer 7

• Strategic – aims to achieve organisational objectives.
• Tactical – aims to improve short-term operational performance.
• Operational – aims to perform according to standards.

Question 8

what are the steps in total quality management

Answer 8

Step 1: Define the problem
Step 2: Identify possible causes and select root causes
Step 3: Generate solutions
Step 4: Planning and implement improvements
Step 5: Measure for improvement
Step 6: Process standardisation

Question 9

characteristics of bench marking

Answer 9

• Benchmarking is a process.
• Benchmarking focusses on continuous measurement and improvement.
• Products, services and business practices are compared.
• Benchmarking must take place against comparable processes.
• Comparisons made must be made against leading organisations.