Analysis of the performance measurement process of a 3PL provider: the case of a multinational company

Cândido, Caroline Nascimento da Silva; Cândido, Luis Felipe; Lima, Sergio Henrique de Oliveira

doi:10.1590/1806-9649-2021v28e5604

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ORIGINAL ARTICLE • Gest. Prod. 28 (4) • 2021 • https://doi.org/10.1590/1806-9649-2021v28e5604 copy

Analysis of the performance measurement process of a 3PL provider: the case of a multinational company

Análise do processo de medição de desempenho de um operador logístico: o caso de uma empresa multinacional

Authorship SCIMAGO INSTITUTIONS RANKINGS

Abstract:

Performance measurement is considered a critical strategic process for companies operating in the logistics sector, as they need to perform high service levels under conditions of uncertainty. In this context, the present study aimed to evaluate the process of performance measurement in a multinational 3PL provider with a subsidiary in Fortaleza, Ceará. 31 indicators used by the company were identified and described, and its process of performance measurement was mapped. It was found that the company does not have a clear and well-structured process for performance measurement, which can lead to misinterpretations and management failures. In addition, the decision-making process proved to be mostly centered on the individual experience of employees, who might make decisions not aligned with the organizational objectives. The study discusses some manners to improve the process of performance measurement in the case investigated and proposes opportunities for further research in the field.

Keywords:
Performance measurement; Operations management; Performance indicators; Third-party logistics

Indicator / Author	A	B	C	D	F	G	H	I	J	Freq.	%
Deliveries made on time	x	x		x		x	x		x	6	70%
Perfect order		x		x	x	x			x	5	50%
Order fulfillment index	X	x		x			x	x		5	50%
Inventory turnover	x			x			x	x		4	40%
Fault index	x		x	x		x				4	40%
Use of truck load capacity			x	x	x			x		4	40%
Use of storage capacity			x	x				x		3	30%
Lack of inventory	x	x					x			3	30%
Total logistical cost					x	x	x			3	30%
Transportation cost	x				x	x				3	30%
Order cycle time				x	x		x			3	30%
Documentation accuracy		x					x			2	20%
Steering accuracy				x			x			2	20%
Information accuracy							x	x		2	20%
Availability of information							x		x	2	20%
Inventory balancing according to the ABC curve				x			x			2	20%
Inventory coverage				x			x			2	20%
Obsolete inventory							x	x		2	20%
Cost of non-conformities in Transportation				x			x			2	20%
Inventory and storage cost	x					x				2	20%
Return cost as a percentage of the cost of goods sold (COGS)		x		x						2	20%
Deliveries returned in whole or in part	x								x	2	20%
Complete orders							x		x	2	20%
Percentage of immediate deliveries		x						x		2	20%
Backorders		x					x			2	20%
Dock-to-stock time			x	x						2	20%
Complaint response time						x	x			2	20%

Note: (A) Conceição & Quintão (2004)Conceição, S. V., & Quintão, R. T. (2004). Avaliação do desenpenho logístico da cadeia brasileira de suprimentos de refrigerantes. Gestão & Produção, 11(3), 441-453. http://dx.doi.org/10.1590/S0104-530X2004000300015.
http://dx.doi.org/10.1590/S0104-530X2004... , (B) Ballou (2006)Ballou, R. H. (2006). Gerenciamento da cadeia de suprimentos/logísita empresarial (5th ed.). Porto Alegre: Bookman., (C) Fernandez et al. (2008)Fernandez, A. M. P., Vanti, A. A., Andrade, R. A. E., & Gómez, J. M. (2008). Proposta de um modelo de medição de desempenho logístico apoiado pela lógica difusa: o caso de uma indústria de motores. Revista Íberica de Sistemas e Tecnologias de Informação, 2(12), 53-64., (D) Neves (2009)Neves, M. A. O. (2009). Tudo sobre indicadores de desempenho em logística. Revista Mundo Logística, 12, 197-206., (E) Araújo et al. (2015)Araújo, P. C. D., Maduro, M. R., Zogahib, A. L., Lima, O. P., & Silva, L. C. D. J. (2015). Indicadores de desempenho em operações, logística e cadeia de suprimentos numa multinacional do polo industrial de Manaus. Gestão e Sociedade, 7(18), 326-342. http://dx.doi.org/10.21171/ges.v7i18.1932.
http://dx.doi.org/10.21171/ges.v7i18.193... , (F) Belmonte & Botter (2015)Belmonte, E. C. M., & Botter, D. A. (2015). Uma proposta de indicadores logísticos voltados para a indústria. Revista Techoje., (G) Longaray et al. (2015)Longaray, A. A., Munhoz, P. R., & Tavares, K. S. (2015). Análise do nível de utilização de Indicadores de Desempenho Logístico: um estudo de caso no cluster portuário-marítimo de Rio Grande. Exacta, 13(1), 67-79. http://dx.doi.org/10.5585/exactaep.v13n1.5379.
http://dx.doi.org/10.5585/exactaep.v13n1... , (H) Bowersox et al. (2016)Bowersox, D. J., Closs, D. J., Cooper, M. B., & Bowersox, J. C. (2016). Gestão logística da cadeia de suprimentos (4. ed.). Porto Alegre: AMGH., (I) Chopra & Meindl (2016)Chopra, S., & Meindl, P. (2016). Gestão da cadeia de suprimentos: estratégia, planejamento e operações (6. ed.). São Paulo: Pearson Education do Brasil., and (J) Vieira et al. (2016)Vieira, J. G., Carvalho, C. D., & Yoshizaki, H. Y. (2016). Atributos da distribuição de carga e indicadores de desempenho logístico: pesquisa com empresas que atuam na região metropolitana de São Paulo. Transportes, 24(4), 10. http://dx.doi.org/10.14295/transportes.v24i4.912.
http://dx.doi.org/10.14295/transportes.v... . Source: the authors.

Part	Number of Questions	Description
I – Characterization of the interviewee and the company	03	Information about the company with regard to market positioning, management philosophy, size, and characteristics that influence its performance measurement system.
II – Characterization of the performance measurement process in the company	12	Its goal is to survey, in general, what is done and carry out a self-criticism about the system, through questions about the processes.

Interviewee	Title	Process	Seniority
Interviewee	Title	Process	Company	Title
A	Operations Foreman	Distribution Check-Out	8 years	1.5 year
B	Operations Foreman	Operational Control	9 years	2 years
C	Operations Foreman	Solution	10 years	2 months
D	Operations Foreman	General – Air Mode	14 years	5 years
E	Operations Supervisor	B2C	11 years	4 years
F	Operations Supervisor	Exports	23 years	20 years

Code	Document	Sector	Source
D001	Presentation of the general management meeting	General	Alpha Company database
D002	Indicator management	Operational Control	Operations Foreman
D003	Perfect delivery indicator report	General	Alpha Company database
D004	Presentation of the board meeting	Exports	Operations Foreman
D005	Presentation of the board meeting	Air	Operations Foreman
D006	Standard Operating Procedure (SOP)	Air	Alpha Company database
D007	Dashboards – Occurrence Indicator Management	Solution	Operations Foreman

No.	Indicator	Unit	Goal	Process / Service
1	Effectiveness	%	97.00%	B2C
2	Perfect Delivery NSL (road)	%	90.00%	Distribution check-out – Road
3	Perfect Delivery NSL (air)	%	94.00%	Distribution check-out – Air
4	Scan compliance VAN	%	96.00%	Distribution check-out – Air
5	Scan compliance SIP / HIP	%	96% / 65%	Check-in – Air
6	Scan compliance SOP / HOP	%	96% / 65%	Export – Air
7	POD Scan X Goal	%	90.00%	Operational Control – Air / B2C
8	Requests	Hours	4	Operational Control – Road / Air
9	Claims	Hours	16	Operational Control – Road / Air
10	CTCs open (7 days)	%	10%	Operational Control – Road / Air
11	CTRCs usually open (of merchandise)	R$	No goal	Operational Control – Road / Air
12	Special Revenues – Released (cumulative)	%	85.00%	Operational Control – Road / Air
13	Productivity / Efficiency	%	94.00%	Distribution check-out – Road / Air
14	Air Export Freight	%	30.00%	Export – Air
15	Road Export Freight	%	20.00%	Export – Road
16	Cost per volume (air)	R$	R$5.00	Export – Air
17	Cost per volume (road)	R$	R$1.92	Export – Road
18	Average cost per kg	R$	R$1.70	Export – Air
19	Average cost per km	R$	R$3.76	Export – Road
20	General delivery inefficiency	%	6.00%	Distribution check-out – Air / Road
21	Delivery inefficiency – Company Responsibility	%	5.00%	Distribution check-out – Air / Road
22	Scheduling Lost – General	%	2.00%	Operational Control – Road
23	Scheduling Lost – Company Responsibility	%	ZERO	Operational Control – Road
24	% Electronic Bill of Lading scanned	%	88.96%	Operational Control – Air / Road / B2C
25	Scan time – CAP (up to 2 days after delivery)	%	90.00%	Operational Control – Air / Road / B2C
26	Scan time – ITN (up to 7 days after delivery)	%	80%	Operational Control – Air / Road / B2C
27	Time to resolve pending issues	days	3	Operational Control – Road
28	Occurrences (failure and fault)	%	0.19%	Solution – Air / Road / B2C
29	Indemnified / Invoicing	R$	0.25	Solution –Aerial / Road / B2C
30	Indemnified / quantity of handling volumes	%	0.01%	Solution – Aerial / Road / B2C
31	Balance sheet (inventory)	%	98%	Solution – Aerial / Road / B2C

Operations Foreman (A)	Operations Foreman (B)	Operations Foreman (C)
Yes, they are very important […]. Each sector has this perfect delivery indicator because it measures the quality of our service […].	Yes, all indicators are important because they measure the quality of the service level and guide the operation towards achieving the goals.	Actually, these indicators work like a thermometer. Through them, we assess whether or not we are doing well during the month and which way we should go.
Operations Foreman (D)	Operations Supervisor (E)	Operations Supervisor (F)
It is important to measure our performance every day [...], in the decision-making process, in our operations planning, to find out if the resources are being used properly [...].	So indicators become important because of that ... They show us day by day, in detail, where we have a problem and where we can improve.	They are important because they allow the company hired to provide the service to monitor its performance and identify where it can continuously improve.

Operations Foreman (A)	Operations Foreman (B)	Operations Foreman (C)
The work we perform here is all based on indicators, in order to achieve these goals... all the decisions that are made [...] aim at achieving these results.	Through them, we follow the goals and performance and identify where we should employ more resources and effort and what are the critical issues that deserve more attention in operations.	[...] Each indicator works like a thermometer, so when any of my indicators are underperforming, I can create action plans to achieve the results.
Operations Foreman (D)	Operations Supervisor (E)	Operations Supervisor (F)
The indicators assist in guiding our daily operations. They guide our decision making, assisting the team in the use of resources.	Through the daily monitoring, we identify where we are failing, either in delivery or in the warehouse operation.	Well, they essentially measure customer satisfaction and my performance in providing the service. That is, they allow me to provide good customer service and monitor my team’s day-by-day performance.

No.	Indicator	Unit	Goal	Result	Status
1	Effectiveness	%	97.00%	98.67%	Positive
2	Perfect Delivery, Logistic Service Level (road)	%	90.00%	94.80%	Positive
3	Perfect Delivery, Logistic Service Level (air)	%	94.00%	94.94%	Positive
4	Scan compliance VAN	%	96.00%	97.90%	Positive
5	Scan compliance SIP / HIP	%	96% / 65%	97.7% / 98.4%	Positive
6	Scan compliance SOP / HOP	%	96% / 65%	98.61% / 91.90%	Positive
7	POD Scan X Goal	%	90.00%	79.81%	Negative
8	Requests	Hours	4	7	Negative
9	Claims	Hours	16	23	Negative
10	Open CTRCs (+7 days)	%	10%	8%	Positive
11	General open CTRCs (Total Merchandise)	R$	No goal	3,326,791.19	-
13	Productivity / Efficiency	%	94.00%	98.1%	Positive
14	Air Export Freight	%	30.00%	24.33%	Negative
17	Cost per volume (road)	R$	R$1.92	4.03	Negative
19	Average cost per km	R$	R$3.76	2.06	Positive
24	% Electronic Bill of Lading scanned	%	88.96%	89%	Positive
25	Scan time - CAP (up to 2 days after delivery)	%	90.00%	92%	Negative

Item	Analysis Summary
Characteristics
(i) Having performance indicators	Identified. The company has 31 indicators.
(ii) Having an established support infrastructure	Identified. The company has its own system, which automatically extracts indicators.
Roles
(i) Measuring performance	Identified. Indicators are the basis for managing operations.
(ii) Managing the strategy	Partially identified. There is evidence of indicators being used at the operation level. It was not possible to verify whether, and how, it contributes to the achievement of the company’s strategic vision.
(iii) Communicating results	Partially identified. No external communication (to customers) was found.
(iv) Influencing behavior	Partially identified. No guidelines were found for a system of rewards / compensation that creates a challenging environment and increases productivity.
(v) Provide learning and improvement	Partially identified. No planning was found to manage the knowledge generated or to institutionalize it for the company.
Processes
(i) Defining and selecting indicators	Partially identified. There is no manual of indicators with key information for use.
(ii) Collecting and processing data	Partially identified. Although the indicators are extracted automatically, there is no manual of indicators with key information for use.
(iii) Managing information	Identified. The results are disseminated to the different levels of performance in different forms of presentation, adapted to each target audience.
(iv) Evaluating and rewarding	Partially identified. The company only gives the target of the indicators, but not what should be done when good or bad performance is verified.
(v) Reviewing the system	Not identified. The company does not review the indicators (only its targets), nor does it review the measurement system itself.

Universidade Federal de São Carlos Departamento de Engenharia de Produção , Caixa Postal 676 , 13.565-905 São Carlos SP Brazil, Tel.: +55 16 3351 8471 - São Carlos - SP - Brazil
E-mail: gp@dep.ufscar.br

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