Financial performance is a symptom of the productivity performance of logistics. The underlying reason for good or poor financial performance is almost always found in the good or poor productivity performance. We must understand productivity metrics to understand total logistics performance analysis.
The productivity of any resource, r, is computed as the ratio of the output of the resource to the consumption of the resource.
Pr = Or/Cr
For example, labor productivity is typically computed as the ratio of labor’s output (normally measured in units or lines per year) to the consumption of labor (normally measured in working hours per year).
Pl = Ol/Cl = units/hour
The productivity of a piece of material handling vehicle, v, is typically measured as the number of loaded trips per available working hour.
Pv = Ov/Cv = trips/hour
The productivity of an inventory planner can be measured in a variety of ways including the number of SKUs per FTE, the number of $s managed per FTE, and/or the number of suppliers managed per FTE.
The productivity of the inventory planners needs to be balanced with their performance in turns and fill rate to make sure that productivity increases don’t come at the expense of turn and fill rate performance.