International Logistics Conference: BSC and other Logistics KPIs

International Logistics Conference: BSC and other Logistics KPIs
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International Logistics Conference: BSC and other Logistics KPIs
Introduction
The goal for any company in the competitive market today is to turn the strategic vision into reality. Most businesses are often looking for ways to make their vision become a reality and the balanced scorecard (BSC) has become an effective tool for fulfilling this dream for both upcoming and established business. According to Toklu (2017), BSC was first published by Kaplan and Norton in 1993 in an effort to measure the success of companies while at the same time creating room for businesses to evaluate their position in the market. BSC holds two potential advantages for businesses.
The first of this is how it enables organizations to build the linked system of measuring performances and allow the firm to measure their performance by monitoring their score. The second advantage is in the manner that this system can be turned into a management system to give the organization the power to determine its position in the market, especially by utilizing the scores from the recorded measures. This report presents a review of the traditional BSC and its logistics/key performance indicators. The report goes a step further to discuss and explain why and how other performance indicators can be included to the traditional BSC to improve its effectiveness. This is due to the fact that traditional BSC is flexible and can adapt to any company. The report narrows down to logistics companies.
The traditional BSC was designed in a manner that it provided a balance between financial and non-financial measures in an organization (Lanu, 2013). It also measures a balance between lead and lag indicators in the firm. The four main measures that BSC was designed to measure are the financial, customer satisfaction, internal processes, and employee learning and growth. The original BSC was built to cater for twelve companies and the four perspectives can be added or removed to suit any company that wants to use BSC to realize its vision in the competitive market.
Figure SEQ Figure \* ARABIC 1. Traditional BSC
Source: Balance Scorecard, (2018)
From the diagram of the BSC, it is evident that the center of the BSC model is the vision and strategy of the business. The vision and strategy focus the four perspectives named customer/stakeholders, organizational capacity, internal business, and financial stewardship. Customers belong to the external environment but have a strong influence on the realization of the vision and strategy of the business. Financial stewardship affects every aspect of the organization because it is the determinant of the operation of the firm. Finances control assets and labor which are the key determinants for the success of the firm.
Adaptation of the Traditional BSC to Logistics Companies
One of the advantages of the traditional BSC is in how it can be modified to suit into any environment by adding Key Performance Indicators (KPIs) and use them to facilitate realization of the business vision and strategy. According to Lanu (2014), traditional balanced scorecards focused on financial stewardships and were limited to the stories of t...