How can you set challenging yet achievable KPI targets for logistics management?

In my experience, we need to recognize that logistics is heavily influenced by external factors, such as weather, global economic conditions, geopolitical events, and supply chain disruptions. We need to start acknowledging and understanding these factors and their potential impact on our operations. Since external factors are dynamic, regularly review and update your KPI targets. What may be achievable one quarter may not be in another due to changing circumstances. Since external factors are dynamic, regularly review and update KPI targets are key. What may be achievable one quarter may not be in another due to changing circumstances.

KPIs are so helpful that people overdo them and then make them almost worthless. KPIs are not a more is always better situation. You need the least amount of KPIs to positively impact your team, department, and company. The KPIs that matter to you are going to be reflective of your company values, mission, and culture. Effective KPIs must be aligned on those planes. For example, if you are an ultra low cost retailer then cost per shipment may be an effective KPI and on time delivery may not. And whether you are ultra low cost or have a premium offering, a lost/damaged KPI might be important. This must be unique to the core of how your company operates and serves.

Before talking about KPI’s from my perspective we need to think about overall company objectives in the short and long terms considering the particularities of the industry (price, quality, service level and others) After defining the objectives you break down per each area of the supply chain and make a cascading KPI for each contributor, from top management to lower levels Having all the levels aligned into the same objective is essential to achieve any aggressive target in your company. RZ

In my opinion, it is essential to define Logistics KPIs that truly matter. There are plenty of KPIs out there, but what counts are the ones that align with our customers' needs and our organization's goals. While there may not be "bad" KPIs per se, there are undoubtedly irrelevant ones for our specific situation. So, our priority should continuously be tracking and improving the KPIs that have the most significant impact on what we aim to achieve.

When defining KPIs for logistics management, it must be align with the company's mission and vision statements. The reason for this is to make sure that KPIs are achievable and reasonable. Employer have to adjust KPI's according to the capability of employees, storage capacity, transport frequency and capacity, and others. Employees in the other hand have to give their best to achieve KPIs set by employer provided that the KPIs are achievable and reasonable. KPIs need to be define yearly so that company will always improving and keep moving forward.

Before committing to a KPI, benchmarking your current performance is a great place to start. You will find out two important things - how much improvement there is in regards to the measure and how difficult it is collect the pertinent data? KPIs are meant to be a tool to help you improve, not a punitive measure. If you set your goals for KPIs too high, you may actually harm your team by killing morale or adding too much to their plate too soon. Also, if a KPI is hard to measure based on the current tech stack you are working with you will not get a good ROI. You may devote more time to reporting on the KPI than using the data to improve. Or you may just have a false start - because when you are really busy, you just won't pull the #s.

Start by evaluating existing KPIs to understand current performance levels. Analyze historical data and industry standards to identify strengths and areas with potential for improvement. This process allows for realistic goal-setting by considering past achievements and understanding where advancements are feasible. Compare against competitors or industry benchmarks to gauge relative performance. Identifying gaps and successes helps in defining ambitious yet realistic targets. By basing new KPIs on an informed understanding of present capabilities, logistics management can establish aspirational goals that push boundaries while remaining achievable.

Evaluating your current performance and aiming to surpass your previous achievements is key. While it's beneficial to gauge your progress against top performers and industry standards, the true essence lies in the ongoing enhancement of your performance over time.

- Needs to analyse the performance over a period and set a benchmark is crucial for all businesses. -When we have clear ideas about the strengths and weakness, we can set a action plans for improvement. -We can benchmark our performance through a customer satisfaction survey.

Many orgs just report out a plethora of data. The amount of emails I've seen that includes screenshots of a large, multi-tabbed Tableua report makes me sad. This is an indicator that people don't know what metric actually matters and are just throwing the whole kitchen sink back to stakeholders to divine for themselves what's working or what isn't. More importantly, where is performance coming from within the organization? Is there bias or filtering occurring that makes that data too specific or too vague to be useful? And what data is being used or looked at, etc. This is where it's also important that you either have clean data or at least very clear analysis occurring so as to not mislead or misrepresent what's actually happening.

Setting your KPI targets is an art not a science. In addition to considering what you want, you have to understand the cost. Nothing just happens. There is a mental, emotional, and physical toll to be paid by your team. There may be actual investments you need to make in technology or materials to achieve your goal. Do not raise the bar without giving your team the tools to achieve the goal. This will result in failure and your culture will take a hit. Once you know where you are, where you want to go, AND have assessed the time and cost it will take - then and only then can you set your intermediate goals for the KPI. We want to be able to celebrate improvement along the way, not just feel like we are failing out the gate.

Infelizmente a maioria das empresas ainda não tem de forma consolidada os seus indicadores de performance, especialmente na logística. É essencial que este mapeamento seja realizado de acordo com a realidade de cada empresa, não existe uma receita pronta e utilizável para todos. Claro que a base é sempre bastante parecida, mas temos que pensar sempre nas particularidades, para que haja personalização do KPI. O KPI serve para medir onde você está, mas acredito muito na força dele como direcionador para os gestores, pois o KPI certo pode orientar o negócio para um rumo totalmente diferente de onde está indo. A área de tratamento destes dados deve ser muito bem construída, com pessoas de perfil analítico e conhecimento técnico irrefutável.

Collect and analyze relevant data on past logistics performance, such as delivery times, inventory turnover, and transportation costs. This will help you understand the baseline and set realistic targets for improvement.

The key message here is: Rome was not built in one day. Identify the key metrics and set achievable targets for the next 6 months and then review and possible increase the targets again. If the targets derived from benchmarking are too far off, you may need to implement a massive change instead of doing continuous improvement.

Setting KPI targets in air cargo management is a balancing act. Targets must be challenging to drive progress but attainable to maintain morale. Consider your current trajectory and resources—human, financial, and technical. Weigh potential risks and market uncertainties. Align with stakeholder expectations to ensure targets are relevant and drive collective effort. This strategic alignment is crucial for advancing logistics performance.

Key to picking your KPIs is making sure they are reportable. Assuming you've done this pre-work, setting the schedule for review is the next step. You want to make sure its often enough that you can catch errors early (before the numbers have tanked) but not so often you are reacting to variations that are not significant. And of course that you haven't turned reporting on the KPI into a full time job on top of someone's actual full time job. Also, a key piece of the pre-work is to establish questions or follow on reporting you would do if the KPI is out of tolerance. Part of the reporting SOP should include what we do when its going poorly. We don't want to have a fire drill, we want to take consistent and productive action.

Much like the above, it's good to know who is owning what when it comes to KPI monitoring & maintenance. I've seen too many organizations have an agnostic reporting body disassociated from the actual team being measured and even when the desire to make change is there, the change management required is almost impossible to overcome because of the 'us v them' scenario set up by the reporting structures.

In air cargo, vigilance in monitoring KPIs is key. Establish a robust reporting system to track progress and communicate results. Regularly review actual performance against targets, understand deviations, and take action. Adjust KPIs as needed to reflect new goals or changes in the operating environment. This continuous cycle sharpens logistics efficiency, boosts customer satisfaction, and drives profitability.

It is vitally important that the process of gathering and processing data for a given KPI or set of KPIs is no so onerous as to negatively impact operations. If it takes a full day to pull and process the data for KPIs, and your goal is to increase productivity per unit time, I have bad news for you...

In my experience, when KPI‘s are relevant, linked to business objectives and are defined to accommodate external forces, they become a central driving force on an organization. When too many KPI‘s are communicated, the important take always can be lost. Having a clearly defined reporting structure that everyone understands at a glance is crucial for driving improvements. Ensuring the information and KPI‘s are available to all, and that everyone can ask questions allows KPI‘s to be effectively evaluated and adjusted over time. By showing links to the business goals, and the actions that are driven out of it, the value of the KPI, and achievability of the set targets can be validated, and adapted over time to maintain their relevance.

Having seen the watermelon effect (green from outside and red from inside) across many organizations of varying size, I believe KPIs are to be always taken with a pinch of salt. We should monitor KPIs as a way to show progress (with a consistent baseline) and not a target to be achieved at all costs. Else it becomes toxic and leads to unethical behaviors. Metrics should be used to think, track and improve and not to set targets to monitor performance.

Effective KPI targets should align with strategic goals and include stakeholder insights to ensure comprehensive coverage of performance areas. Incorporating technology advancements can refine KPI precision, while sustainability metrics address the environmental impact. Flexibility is crucial to adapt to market fluctuations, and employee training is vital for target attainment. A balanced scorecard approach ensures multi-faceted performance evaluation, and scalability allows KPIs to evolve with business growth. Risk management should be integrated to address potential disruptions, and regular reviews keep KPIs relevant and challenging, fostering an environment geared towards continuous improvement and resilience in logistics operations.

KPI‘s are only as strong as the data that they are built upon. I believe it should be mentioned that KPI measurements take resources from the organization, and this time can be underestimated. If data is being manually collected, then data quality is always an issue, and even when using data sets from computer systems, quality should always be checked. For me, data quality is the pre-requisite to the creation and definition of KPI‘s. Driving improvements off of bad quality data or poorly defined and implemented KPI’s can lead to employee disassociation, adverse impact on performance, decreases in customer satisfaction or other negative impacts.

Put into consideration the strength of your staff and give them the necessary training and good working conditions for them to achieve and meet up with the set up KPI. The strength of organization should also be considered to avoid setting up unacceptable KPI . Those setting up the KPI should have a full knowledge of the job.

In air cargo, beyond KPIs, technology's impact is profound. Real-time tracking and data analytics have become game-changers, enabling predictive measures to preempt disruptions. Collaboration across functions is also vital; logistics success hinges on seamless integration with customer service and supply chain management. Lastly, the human element is crucial. Continuous training ensures our team doesn't just meet targets but innovates, driving the industry forward. These insights are the lifeblood of air cargo excellence.