PERFORMANCE MEASUREMENT AND CONTROL IN LOGISTICS SERVICE PROVIDING

Elfriede Krauth, Hans Moonen*

Rotterdam School of Management, Dep artment of Deci s i on and I nformati on Sci ences Eras mu sUni v ers i tyRotterdam, Bu rg. Ou dlaan 5 0 , P. O. Box1 7 3 8 , 3 0 0 0DR, Rotterdam, T he Netherlands Emai l:ek rau th@ rs m. nl, hmoonen@ rs m. nl Au thorsrank ed i n alp hab eti cal order. *= Corres p ondi ng au thor ( Room F1 2 6 , T elep hone:+3 11 04 0 81 4 0 3 , Fax : +3 11 0 4 0 89 0 1 0 )

Viara P op ov a, Martij nS c hut

Dep artment of Comp u ter Sci ence, Facu ltyof Sci ences Vri j e Uni v ers i tei t Ams terdam, De Boelelaan 1 0 8 1 a, 1 0 8 1HV, Ams terdam, T he Netherlands Emai l:p op ov a@ few. v u . nl, s chu t@ cs . v u . nl

Key words: Ab strac t:

KeyP erformanc eI ndic ators ( KP I ) ,P lanningS y stems, Log istic sS erv ic eP rov iders, S y stem Dev elop ment Outp ut of a p lanning p roc ess is a set of assig ned indiv idual task s to resourc es at a c ertain p oint in time. I nitially a manual j ob , howev er, in the p ast dec ades information sy stems hav e larg ely ov ertak en this role, esp ec ially in industries suc h as ( road)log istic s.This p ap er foc uses on the p erformanc e p arameters and ob j ec tiv es that p laya role in the p lanningp roc ess. I n order to g ain insig ht in the fac tors whic hp laya role in desig ning new software sy stems for Log istic al S erv ic eP rov iders ( LS P s) .Therefore we study the area of KeyP erformanc eI ndic ators ( KP I ) . Ty p ic ally , KP I s are used in a p ostante c ontex t: to ev aluate a c omp any s p ast p erformanc e.W e reason that KP I s should b e utiliz ed in the p lanning p hase as well;thus ex ante. The p ap er desc rib es the ex tended literature surv ey that we p erformed, and introduc es a nov el framework that c ap tures the dy namic s of c omp etingKP I s, b yp ositioningthem in the p rac tic al c ontex t of an LS P . This framework c ould b ev aluab le inp ut in the desig n of a future g eneration of information sy stems, c ap ab le of inc orp oratingthe b usiness dy namic s of today s LS P s.

1 INTRODUCTION
P lanningis the p roc ess of assig ning indiv idual task s to resourc es at a c ertain p oint in time.Orig inally , p lanning was a manual task ,p erformed b y a human p lanner.Ov er the last dec ades information sy stems hav e inc reasing ly tak en ov er this role in industries suc h as roadlog istic s; in p rac tic e howev er the human p lanner has still a c onsiderab le role. I n order to mak e the transition from p lanning inp ut to p lanning outp ut, a p lanning sy stem manual or c omp uteriz ed must emp loy the p rop er ob j ec tiv es to deriv e to an op timal p lanning .To g ain insig ht in this area, we c onsider the Key P erformanc e I ndic ators ( KP I )literature. KP I s are ty p ic allyused in ap ostante c ontex t: to ev aluate the p ast p erformanc e of a c omp any . W e reason that KP I sc ould b e utiliz ed in the p lanningp hase as well; ex ante. The researc hq uestion we p ursue with this p ap er is:Whi ch are the p erformance i ndi catorsthat hav e

an i mp act on op erati onal p erformance of logi s ti cs s erv i ce p rov i ders ?W e b rieflydesc rib e the Log istic s S erv ic e P rov iders ( LS P ) industry and shortly introduc e the KP I field ( sec tion 2 ) . Then, we undertak e a literature rev iew in the areas of sup p ly c hain manag ement and LS P s ( sec tion 3 ) .Building up on, we c omp ose a framework for log istic al KP I s, c onsidering a multidimensional and multip le stak eholder p ersp ec tiv e( sec tion 4 ) . S ec tion 5c ov ers v alidation. F uture researc h direc tions and c onc lusions are disc ussed in sec tion 6 .

2 LOGISTICS SERVICE PROVIDERS AND KPI S

The inc reasing foc us on c ore c omp etenc ies op ened upmanyb usiness op p ortunities for Log istic sS erv ic e P rov iders ( LS P s)( Christop her, 1 9 9 8 ) .LS P s, often

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also referred to as Third Party Logistics Service Providers ( 3 PLs) , carry ou t the logistic activities for on e or more comp an ies within the su p p ly chain ; fu n ction in g as anin termediary ( Lai et al. ,2 0 0 4 ) . The fu n ction s of 3 PLs or LSPs can b e divided in : warehou sin g, tran sp ortation , cu stomer service, an d in ven tory an d logistics man agemen t ( Sin k et al. , 1 9 9 6 ) ,( Vaidyan athan ,2 0 0 5 ) . Logistics service p rovidin g is an in du stry u n der great p ressu re. M argin s are small, an d therefore LSPs con tin u ou sly seek for op p ortu n ities to mak e their b u sin ess more p rofitab le. That can b e, for ex amp le, b y scalin gu p or ex p an din g their activities ou tside their home cou n try ( Lemoin e et al. 2 0 0 3 ) . Plan n in g an d con trol is cru cial for the op eration s of anLSP: b oth for the daytoday op eration s as well as the more lon gterm strategic ob j ectives.A good in sight in p erforman ce in formation an d therewith steerin g mechan isms for p lan n in g is imp ortan t. Historically, comp an ies con cen trated on fin an cial in dicators.Nowadays it is widely recogn iz ed that n on fin an cial an d evenn on n u merical in dicators can give valu ab le in formation as well ( Brewer et al, 2 0 0 0 ,I ttn er et al., 2 0 0 3 ) . Su ch in dicators thou gh are more difficu lt to measu re an d comp are. Selectin g the right in dicators for measu rin g( an d steerin g! )however is rather comp licated.A fu ll set of in dicators cou ld resu lt in a hu ge amou n t of data which wou ld req u ire a lot of efforts an d high costs b oth in acq u irin g an d an alyz in g.An other difficu lty is that it is n ot u n common that the selected in dicators tu rnou t to b e con flictin g imp rovin g on e may worsenan other. Performan ce in dicators are to a large ex ten t domainsp ecific. Ou r research focu ses onthe area of thirdp arty logistics. Bu t evenhere n ou n iq u e su b set of in dicators canb e selected. The choice is comp an y sp ecific an d dep en ds on the goals, state an d orien tation of the comp an y. Therefore it is worthwhile to first con cen trate efforts on p rovidin g aid in the selection p rocess.The ex istin g literatu re onp erforman ce measu remen t in logistics p rovides a large n u mb er of p oten tially u sefu l in dicators.

I n this p ap er, we review the differen t theories an d emp irical fin din gs k n own in literatu re on KPI s in( road)logistics. W e sp ecifically in clu de elemen ts su ch as the mu ltidimen sion ality of comp an ies ( several hierarchical p lan n in g levels as well as relevan t b u sin ess fu n ction s p er comp an y) , gen eral b u sin ess p erforman ce versu s in dividu al order p erforman ce, an d the p rin cip les of su p p ly chain man agemen t( steerin g a chain of comp an ies versu s solely steerin g on e s own comp an y) .Note that the p ercep tionof p erforman ce is relative: cost efficien cy may b e on e of the imp ortan t measu res for an LSP, still this might n ot b e what the ship p ers an d con sign ees desire they wou ld in stead p refer high q u ality an d low p rice ( Lai et al. ,2 0 0 4 ) . I n the literatu re we iden tified two maj or p ersp ectives.F irst, there is a clear sp lit b etween p erforman ce in dicator related research that focu ses on in tern al op eration s of an in dividu al firm, versu s literatu re that tak es the su p p ly chainp ersp ective an d seek s to op timiz e in terorgan iz ation al p erforman ce. F or on e ex cep tion we refer the reader to Gib son et al. ( 2 0 0 2 ) , which comp ared how ship p ers an d carriers ran k service. The secon dp ersp ective relates to the u se of p erforman ce in dicators;in gen eral the in dicators are u sed either at the strategic level, for p erforman ce evalu ation , or at the highly op eration al level, for p lan n in g an d con trol.I n the n ex t section s we review the differen t sou rces of literatu re.

3. 1 Su p p l yc h a i np e r f o r ma n c e
LSPs are sp ecialists in su p p ly chain man agemen t, an d are gen erally well align ed with the typ e of su p p ly chainthey serve. F isher ( 1 9 9 7 )mak es a sp lit b etween efficien t an d resp on sive su p p ly chain s. Christop her et al. ( 2 0 0 2 )mak e a similar distin ction in to lean an d agile. W eb er ( 2 0 0 2 ) is u sin g a hierarchical model to measu re su p p ly chain agility. The Su p p lyChain Op eration s Referen cemodel ( SCOR)offers a model with stan dards to describ e su p p ly chain s( SCOR, 2 0 0 3 ) .M easu remen ts which can b e u sed to measu re efficien cy or lean n ess of LSPs in clu de fill rate of delivery p lan s, emp tytoloaded b ack hau l mile in dex , eq u ip men t u tiliz ation rates ( hou rs) , eq u ip men t u tiliz ation rates, vehicle main ten an ce costs. M etrics to measu re resp on siven ess or agility in clu de ex p ort ship men t p rocessin g time, delivery p erforman ce to cu stomer req u ested date, cu stoms clearan ce time. A stron g p artn ership emp hasiz es direct, lon gterm collab oration , en cou ragin g mu tu al p lan n in g an dp rob lem solvin g efforts. An other imp ortan tp oin t is the u se of in formation systems ( San der, et al. 2 0 0 2 ) ;as well as the typ e of systems. I n formationsystems su p p ort the in tegration

3 LITERATURE REVIEW
KPI s are u sed to evalu ate the p ast p erforman ce of a comp an y: mak in g it p ossib le to comp are p erforman ce with p reviou sp eriods of measu remen t, or in du stry stan dards or evenin dividu al comp etitors. Con seq u en tly, an y logistical system shou ld try to op timiz e an d steer its decision s to the metrics it later shall b e evalu ated u p on .A clear in sight in to the factors that drive logistical op eration s p rovides u s with adeq u ate p lan n in g ob j ectives.

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of inter-organizational processes (Hammer, 2001). F or an LS P information sy stems rev olv e arou ndfou r maj or play ers:th e LS P s cu stomer, th e cu stomer s clients, th e cu stomer s su ppliers and alliances, and th e LS P prov id er itself (Vaid y anath an, 2005 ). Ross (2002) sh ows th at I T inv estment can h av e a positiv e impact on mark et performance as a resu lt of b etter coord ination in th e v alu e ch ain. Howev er, pu tting su cha h ighlev el of collab oration into practice is not easy . Both information q u ality and relationsh ip commitment play an important role (M ob erg et al, 2002). As Kemppainen et al. (2003 ) su ggest;it is neith er feasib le nor profitab le to h av e strong collab oration with all su pply ch ain partners. LS P s sh ou ld select k ey cu stomers and focu s on th ese relationsh ips. Th is th en migh t resu lt in d ifferent ty pes of inter-organisational sy stems: h ierarch ies and / or mark ets (Grah am et al., 19 9 4 ), (Toni et al, 19 9 4 ), (Lewis et al, 2000).

3.2 Performance manag ementfrom an int ernal company pers pect iv e

Wh ereas su pply ch ain performance ev alu ation can tak e many id entities as h as b een sh own ab ov e, research ers agree on internal measu rement, cost calcu lation and performance ev alu ation meth od s. Company -centredperformance management focu ses on th e measu rement and ev alu ation of d ecision mak ing on companyperformance. I n th e 19 9 0s Van Donselaar et al. (19 9 8 ) performed a large-scale stu d y in th e transportation and d istrib u tion sector in th e Neth erland s. Th ey focu sed on logistics performance from th e prov id er s point of v iew wh ere th ey mak e a d iv ision b etween d istrib u tion and transportation. Th eir find ings inclu d e th e attractiv eness of long trips for long-d istance transportation (wh ich migh t b e influ enced in th e ord er-intak e process). F u rth ermore th ey sh ow th at a lower percentage of empty miles (of total miles d riv en) lead s to b etter resu lts. F inally , comb ining (international) sh ipments migh t b e b eneficial, th ou ghit consu mes more h and ling time. UP Sex ecu tiv eP eter Bromley(2001) lists th eb ig fiv e KP I s important for UP S Logistics: on-time receiv ing, on-time sh ipping and d eliv ery , ord er accu racy , inv entory accu racy , retu rns cy cle time. Alth ou gh low costs are important for UP S , th e perfect cu stomer ex perience (th rou gh a perfect serv ice) seems to d irect its b u siness processes;for oth er LS P s th is mayb ed ifferent. S imilar find ings were reported b y M enon et al (19 9 8 ) wh o list th e most important factors relev ant for cu stomers in th eir selection of an LS P . M ost important are: speedandreliab ility , loss andd amage rate andfreigh t rates (tariffs).

Deliv ery performance can b e measu red b y ontime d eliv ery . Th is d etermines wh eth er a perfect d eliv ery h as tak en place or not, it th u s measu res cu stomer serv ice. S tewart (19 9 5 ) id entifies th e following as th e measu res of d eliv ery performance: d eliv ery -to-req u est rate, d eliv ery -to-commit d ate, ord er fill lead -time andgood s in transit. Qu alityand th e way th e information is ex ch anged d etermine th e d eliv ery performance to a large ex tent; possib le performance ind icators are: nu mb er of fau ltless inv oices, flex ib ility of d eliv ery sy stems to meet particu lar cu stomer need s. M easu res of cu stomer serv ice and satisfaction are flex ib ility , cu stomer q u ery time, and post transaction measu res of cu stomer serv ice. S ee (F owk es et al. 2004 ) for a d iscu ssion on th e reasons for d elay and h ow reliab ilityandpred ictab ilityis v alu edin ind u stry . M entzer et al. (19 9 1) stu d y performance ev alu ation in logistics. Th ey id entify a list of performance measu res in fiv e su b -areas of logistics. Th ey d ifferentiate b etween: lab ou r measu res (load ing, d riv ing, general lab ou r), cost measu res, eq u ipment measu res, energy and transit-time measu res. Closely related to performance management, are mod ern accou nting meth od s, su chas Activ ityBased Costing (ABC) (P irttila et al., 19 9 5 ;Th emid o et al., 2001). ABC d iffers from trad itional cost accou nting b y tracing costs to prod u cts accord ing to th e activ ities performed on th em. ABC h as gained acceptance with in manu factu ring; h owev er, most companies h av e not y et ex tend ed ABC to logistics operations. I n th eory , th e application of ABC with in an LS P wou ld mak e it possib le to trace costs to specific ord ers, cu stomers, or su pplych annels.

3.3 Planninglev els

A company is u su ally d iv id ed into th e lev els strategic, tactical andoperational. Gu nasek aran et al. (2001) assigned metrics to th e appropriate management lev el. Van Donselaar et al. (19 9 8 ) d istingu ish b etween segments, wh ich are mark ed b y th ed ifferent serv ices th at are offered to cu stomers. Th e relev ant costs on segment lev el were v ariab le costs (fu el, ty res, maintenance, etc.), d irect costs (d epreciation, insu rance, leasing, etc.) and d riv er wages. Loh man et al. (2004 ) perceiv e performance measu rement sy stems as process control sy stems. I f th ere is d iscrepancy b etween th e actu al and d esired v alu e of a metric, k nowled ge ab ou t th eb eh av iou r of th e organization is u sed to mod ify th e process. At th e tactical or strategic lev el th e control loop is u sed to ev alu ate th e operational lev el andad j u st its goals.

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3.4 Measuring the unmeasurab le

It is compelling to note that most literature focuses on numerical factors such as:cost, time, faults, IT utiliz ation. Env ironmental factors, customer perceptions, employ ee happiness, et cetera are hard ly cov ered in logistical performance ind icator literature.An ex ception is the b alanced scorecard which prov id es a formaliz edmechanism to achiev ea b alance b etween nonfinancial and financial results across shortterm and longterm horiz ons and is b ased on the notion that companies hav e to aim at a true integration of mark eting, prod uction, purchasing, sales andlogistics ( Brewer et al. ,2 0 0 0 ) . The b alanced scorecard d istinguishes four main perspectiv es ( Kaplan et al., 1 9 9 2 ) : customer, internal, financial, innov ation and learning. The managers need to create their own v ersion of the b alanced scorecard and concentrate on the most critical measures. Knemey er, et al. ( 2 0 0 3 )stud ythe perspectiv e of a customer.If the customer perceiv es that the LS P focuses on the interaction b etween the companies and is concerned with winning and k eeping the customer, the relationship can b e strengthened . S tank et al. ( 2 0 0 3 ) ex amine how relational, operational and cost performance relate to customer satisfaction, loy altyandmark et share. The internal b usiness perspectiv e translates the customer perspectiv e into what the company must d o in ord er to meet its customer s ex pectations.But the targets for success k eep changing; and thus innov ation is need ed .F or LS P s innov ations can includ e ad d itional activ ities, regions, transport mod es and communication sy stems e. g.RF ID or W eb S erv ices ( Chapman et al., 2 0 0 3 , Lemoine et al., 2 0 0 3 ) . F inancial ind icators measure if the company s strategy , implementation and ex ecution contrib ute to b ottomline improv ement.

4 OUR FRAMEWORK
The literature ov erv iew presented in the prev ious section supports the v iew that a new framework for performance ind icators can b eb eneficial in the area of third party logistics. W e consid er d ifferent points of v iew ( b oth internal and ex ternal) on the company s performance. F igure 1 presents the general scheme of our framework . On the horiz ontal ax is we separate the d ifferent v iewpoints correspond ing to the parties inv olv ed .The internal point of v iew is represented b y the two parties within the company management and employ ees. The ex ternal point of v iew shows the perspectiv e of the customer andthe society .

The motiv ation for includ ing four d ifferent points of v iew comes from the fact that in many cases they will b e conflicting and , in ord er to achiev eab alance, the management shouldb e aware of the need s and d esires of all parties inv olv ed . Consid er for ex ample the prices for the logistics serv ices the company offers.Increasing the price will b ring more profit which is d esirab le for the company . The customer, howev er, prefers low prices.The society on the other hand is clearly not so concerned with prices alone b ut more with the economic climate as a whole, e. g.how to increase the competition, fight monopolies, etc.Employ ees are in general not so concerned with the prices b ut with their work cond itions.Another ex ample would b e lab our efficiency .M anagement is interested in max imum utiliz ation of lab our which, without apply ing restrictions, will lead to ov erex ploitation. This naturally comes in conflict with the point of v iew of the employ ees. The society might b e concerned with cases of ov erex ploitation on a large scale that lead s to d rastic increases in accid ents, strik es d isrupting traffic or health insurance issues. The v ertical ax is in F igure 1 d iv id es the performance ind icators in longterm and shortterm. This d istinction has b een prev iously used in other research ( e. g. Gunasek aran et al, 2 0 0 1 ) and is accepted as a meaningful d iv ision that the d ecision mak ers find applicab le.Short term ind icators can b e measured for ex ample within the period of a month.The final choice of short term ind icators d epend s on organiz ational strategy and measurements costs.F or instance, an organiz ation aiming at max imiz ing its total numb er of d riv en k ilometers wouldwant to report this on a d ailyb asis. P rogress in information and communication technology might lower costs for more granular measurements. Long term performance ind icators are measuredov er longer period s of time. The classification d iscussed so far is v ery general.It incorporates all relev ant points of v iew b ut d oes not prov id e structure within these v iewpoints.Thus we ex tend it in this d irection.An ex tra ex tension has b een ad d ed for the management point of v iew, the KP I scheme has b een further split in four categories;see the lower part of F igure 1 . The reason for onlyenriching the management point of v iew is that we ex pect it to accumulate a richer collection of ind icators where further refinement will b e necessary .W e d ifferentiate b etween the following four categories: Effectiveness Effectiv eness measures the capab ility of prod ucing an intend ed result.It thus concerns the outsid e of the organiz ation what results d oes the organiz ation achiev e? Efficiency Efficiency is the measurement for prod ucing results tak ing into account usedresources.

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It thus refers to the inside of the organiz ation how does the organiz ation achieve its results? W e may also say that efficiency measures the ratio between input and output. Satisfaction S atisfaction represents the human factor in our model. All organiz ational achievements may be optimal regarding effectiveness and efficiency, the people in the organiz ation should still be able to do their work to some degree of satisfaction. In this way, it makes the performance optimiz ation problem of the organiz ation more constrained. IT and innovation An organiz ation must also be concerned with its future performance. As such, innovation and IT utiliz ation are indispensable factors for measuring long term performance. An organiz ation that is working optimal now may not be the best tomorrow if it does not take its own circumstances into reconsideration constantly. W e applied this framework to our extensive collection of performance indicators;for results see Table 1 .

industry. W e plan to conduct field studies with two LS P s ( i.e. with management and planners) . After finishing our evaluation, we intend to use the framework and its indicators in the development of a new agent-based software system for road-logistics planning.

5.1 Ex pert interview

The interviewee prepared for the interview by reading a draft version of this article, i.e. the literature review, and the definition part of the framework. The semi-structured interview lasted for one-and-a-half hours. The interviewer started with a short introduction. He explained in ten minutes what the purpose was of this interview, what has been done so far, and what future plans were. F urthermore he made clear why especially this interviewee was selected. Over the next seventy-five minutes, the interviewee gave his vision on performance measurement and performance indicators. His thoughts were guided by twenty years of logistical industry experience. At the end of the interview, the interviewer used five minutes to summariz e the points discussed in the interview, which were confirmed by the interviewee. The results of the interview are presented below, in Table 2 ; it contains a summary of the most relevant aspects discussed during the interview;before publication it was checked with the interviewee.

5 FRAMEWORK EVALUATION
W e present here preliminary validation results although validation is at the time of writing not yet completed. W e conducted an expert interview to cross-validate our model with feedback from

F igure 1 : High-level framework to cluster KP Is relevant for LS P s

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Table 1: List of clustered performance indicators for LSPs

Internal perspective - Management point of view Effectiveness Total number of orders Rev enue Number of customers Profit marg ins Number of new customers Capacityutiliz ation Number of reg ular customers Km per day Labour productiv ity Number of profitable customers Price Continuous improv ement, rate Turnov er per k m Product rang e Number of deliv eries Plan fulfilment Benefit per deliv ery Total loadingcapacity( for truck s) Trips per period On-time delivery performance Perfect order fulfilment Efficiency Total dis trib u tion cos t Lab ou ru tiliz ation Overh ead percentag e Overtime h ou rs % Ab s ent employees S alariesand b enefits Controllab le ex pens es Non-controllab le ex pens es Cu s tomer s ervice cos ts Order manag ement cos ts I nventories Nu mb er of tru ck sin u s e Total delivery cos ts S a t is fa ct io n Attrition of drivers M orale,motivation of pers onnel I Ta ndinno v a t io n I nformation s ys tem cos ts Up-to-date performance information availab ility Utiliz ation of I T eq u ipment I T trainingcos ts Averag e fu el u s e per k m Averag e delivery re-planningtime M ark etingcos ts F ailu re cos ts P revention cos ts Apprais al/ I ns pection cos ts % of failed orders % of realiz ed k m ou t of planned k m P erformance meas u rementscos ts Hu man res ou rce cos ts Variab le as s et cos ts F ix ed as s et cos ts I nformation s ys tem cos ts On-time delivery performance Nu mb er of cu s tomer complains Overall cu s tomer s atis faction Nu mb er of new produ ctsin th e rang e % of information ex ch ang e th rou g hI T % of employeeswithI T training Availab ility of I T eq u ipment

Longterm plansavailab ility / development M ark et s h are width Nu mb er of mark etsth at h ave b een penetrated S u cces s fu l contacts% of s u cces s fu l dealsou t of th e initial offers Effectivenes sof dis trib u tion plannings ch edu le % of orderss ch edu led to cu s tomer req u es t % of s u pplier contracts neg otiated meeting targ et terms and conditionsfor q u ality, delivery, flex ib ility and cos t Competitive advantag e

Overh ead/ manag ement/ adminis trative cos ts Qu ality of delivery docu mentation per tru ck / driver Effectivenes sof delivery invoice meth ods % orders/ linesreceived withcorrect s h ippingdocu ments % produ ct trans ferred with ou t trans action errors I tem/ P rodu ct/ Grade ch ang eover time Order manag ement cos ts S u pply ch ain finance cos ts Total s u pply ch ain cos ts Total time in repair ( for tru ck s ) Ratio of realiz ed ordersvs . req u es ted orders Averag e delivery planningtime

% of orderss ch edu led to cu s tomer req u es t Overall employeess atis faction Overall s ociety s atis faction % of information manag ement as s etsu s ed / produ ction as s ets % of invoice receiptsand paymentsg enerated via EDI Averag e time for new produ ctsdevelopment Averag e cos tsfor new produ ct development

Internal perspective Employees point of view Km per trip W eig h t to ( u n) load per lab ou rh ou r W ork ingconditions Ex ternal perspective Cu stomers point of view Trans parency for a cu s tomer Trans portation price I ns u rance price P os s ib le typesof commu nication P rimary s ervicesprice Availab le types of g oods ins u rance Order Goodss afety s iz e flex ib ility P rodu ct variety Timelines sof g oodsdelivery Res pons e time Ex ternal perspective S ocietys point of view: S olid particlesemis s ion Level of CO2emis s ion Tax esto th e national treas u ry S ociety s atis faction W as ting P articipation in ch aritab le actions res ou rces Repu tation of a company Recyclinglevel Employeess atis faction Road maintenance cos ts Dis as ter ris k Nu mb er of availab le workplaces

S alariesand b enefits

S ervicesvariety Order config u ration flex ib ility P os s ib ility to ch ang e order details Additional s ervicesprice ( priority trans portation) Contact points( nu mb er of people to contact)

Competition level amongs imilar companies Care for animals / ch ildren arou nd Us e of innovation tech nolog ies Development of innovation tech nolog ies Cooperation withoth er companies

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Table 2: Expert Interview In trad itio nal Operatio nsRes earc h( OR) ,o peratio nsare o f ten rated and o ptimiz ed u po nas mall s et o fparameterso nly s o metimeso nly o ne s ing le parameter.Th isres u ltsh o wever in no no ptimal s y s tem beh avio u r.Co ns id er th e example o f empty k ilo meter minimiz atio n. Th iso ptimiz atio no f ten res u ltsin tru c k ss tand ing s till, waiting f o r a next o rd er ( pref erably with a s tarting po int eq u al to th e plac eo fwaiting ) . Tru c k sd o no t antic ipate o n th e next o rd er ( in a mo re f ru itf u l reg io n) . Of ten waitingtime d o esc o s t mo ney aswell th ed river need sto be paid andth e tru c kc o u ld h ave been u tiliz ed f o ro th er pu rpo s es .Reviewing s ing le o ptimiz atio n parametersc an h ard ly be s een s eparate f ro mo th er ind ic ato rs ,asth ef o llo wing ind ic ates : Let u sc o ns id er an LS P th at h asa tru c kd rivingaro u ndwitho nly o ne s mall pac k ag e s o , it u s eso nly 5 %o fits c arriag ec apac ityu tiliz inga veryinef f ic ient ro u te, withlo tso fd eto u rs . It ish o wever no td rivingaro u ndemptys of ro m an empty milespers pec tive th istru c ko peratesveryef f ec tive. Alth o u g hwe d orealiz e th at th e tru c kc o u ldh ave c arriedmo re c arg o , andth e ro u te it to o kc o u ldh ave been mo re ef f ic ient. Ho wever, we d ono tk no wy et wh eth er th ec u s to mer isac tu ally pay ing f o r th istrip bec au s e ifs o , no LS P wo u ld mind to h ave a tru c kd riving aro u nd via an inef f ic ient ro u te, with o nly little c arg oaslo ngasth ec u s to mer ispay inga g o o dpric e. No t all ind ic ato rsd oh ave a d irec t trans latio n in c o s ts , o rf inanc ial meas u rements , bu td otrans late in, f o r example, extra apprec iatio nf ro m th ec u s to mer.An interes ting example isCeh ave a Neth erland sbas ed o rg aniz atio n ac tive in th e ag ribu s ines s .W h en d elivering f eed pro d u c ts to f armers ,f armers pref er and valu e it to be th e f irs t f arm o n th e d elivery ro u nd trip,s inc e with eac h extra vis it ( between Ceh ave splant,and th ef arm)th e ris ko n animal d is eas esand inf ec tio ns ris es . Th e parad o xh o wever isth at, alth o u g hf armerspref er th es ervic eo fbeing th ef irs tc u s to mer, th ey are no t willing to payf o r th iss ervic e. Ag ility is mo reand mo re req u ired f o r LS P s bu s ines so peratio ns .It is very impo rtant to h ave a f lexible bu s ines s inf ras tru c tu re,c apable o fq u ic k ly reac ting and ad apting to c h ang es in o peratio ns : new o rd ers ,rero u ting o fa tru c k ,o r h and ling c h ang esin th e enviro nment ( s u c h asa traf f ic j am) .Th eref o re quick react capabilities are o ftru e impo rtanc e; meas u ringth es eh o wever isa c o mplex matter. P lanning s y s tems targ eted at s u c h ind u s tries c o u ld well be bu ild by u s ing ag ent tec h no lo g y ,and d y namic s y s tems ( c o ntro l)s tru c tu res ;u tiliz ing meas u rement and reac tio n mec h anis msto d erive to s mart d ec is io ns . [ W e]believe th at s mart lo c al d ec is io n mak ing , mak ingth e rig h td ec is io nsat th e rig h t mo ment andrig h t plac e are lik ely tores u lt in well beh aving plannings y s tems . F eed bac kplay san impo rtant ro le in s u c hs y s tems . P erf o rmanc e meas u rement s h o u ldno to nlylo o kat th e parameter ass u c h , bu t als oat th e wayth o s e parametersc h ang e( andbeh ave)o ver time th u sbe aware o fth ef irs to rs ec o nd d erivative o fth ef u nc tio n aswell. Th ef ramewo rkaspres entedin th ispaper isveryinteres ting . It isf inallyan attempt toh ave a c o mplete s c h eme, lo o k ing bey o ndj u s tf inanc ial ind ic ato rs , andes pec iallyd ed ic atedf o r th e lo g is tic al ind u s try . It meas u resmo re th an s o lelyc o s ts , lik e it als oc aptu resperc eptio ns( o fmanag ement, c u s to mers , emplo y eesat d if f erent levels , et c etera) . A very u s ef u ld ivis io n is th es plit between th es trateg ic , tac tic al, ando peratio nal timed o mains . It mig h tf u rth ermo re h elp in o verc o mingpro blemsin s u pply c h ains th at want to as s es sc h ain wid e perf o rmanc e.Ho wever,s o me ad j u s tments and g eneraliz atio ns mig h t be need ed . Critic al no teso n th e wo rk inc lu d e: a s u bd ivis io n/ ref inement aswasmad e f o r th e c las s if ic atio no fth e manag ement po into f view ( s ee Table 2)s h o u ldbe mad ef o r all th ec ateg o riesasmentio nedin th ef ramewo rk , th u sinc lu d ingemplo y ees , c u s to mer ands o c ietyaswell. Th erewithth ef ramewo rkbec o mesth reed imens io nal. Be aware th at o ptimal, d o esno t mean th es ame toall c o mpanies . Optimal f o ro ne c o mpany , c an be f ar f ro mo ptimal f o r ano th er c o mpany . Interes tingas pec to fth e pres entedwo rkisth at it c o u lds erve asa to o l th at mak esperf o rmanc e ind ic ato rs , andth erewith s y s temc o ntro lad is c u s s able is s u e in an o rg aniz atio n wh ic hwo u ldbe a real valu able to o l toevalu ate c u rrent s y s tems , and to d es ig nf u tu re s y s tems .Th e tru e ad vantag eo fth isappro ac h isth at it c o u ld be relatively eas y trans lated into an ag entbas ed s o f tware s y s tem. W ith s o f tware ag entsmo nito ring and c o ntro lling s ing le perf o rmanc e ind ic ato rs , and s teering u po n th es e.

6 CONCLUSIONS
Th ec o ntribu tio no fth ispaper istwo f o ld . F irs tly , we pres ent a literatu re s u rvey o n th e c o nc ept o f perf o rmanc e ind ic ato rs in lo g is tic s .S ec o nd ly ,we pres ent a f ramewo rk c aptu ring th e d y namic so f perf o rmanc e ind ic ato rs f o r LS P s inc lu d ing an extens ive lis to fLS Pperf o rmanc e ind ic ato rs . Th e literatu re s u rvey id entif ies a nu mber o f s tu d ieso n perf o rmanc e meas u rement/ evalu atio nf o r

lo g is tic s .Ho wever,th es e s tu d ies are mainly o n a partic u lar area o r c as e and are f o c u s ed o n external and q u antitative ind ic ato rs . Ou r review h as c o ns id ered th e areas o fs u pply c h ains , internal c o mpany perf o rmanc e, planning and q u alitative ind ic ato rs . Th e f ramewo rk th at we pres ent is a f irs t s tep to ward so u r lo ng term aim to u s e perf o rmanc e ind ic ato rsexante rath er th an po s tante.Th e mo d el c o ns id ersind ic ato rsalo ngtwomain d imens io ns . On

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the one hand we look at the p er s p ec ti v e:i nter nal ( manag ement,emp loy ees ) and ex ter nal ( c u s tomer , s oc i ety ) ;on the otherhand we c las s i f yi ndi c ator sas s hor tter m or long ter m.W e i denti f y the c os t of meas u r ement ofan i ndi c atorases s enti al i nc hoos i ng whether an i ndi c ator i s eli g i b le f or p r eante moni tor i ng and analy s i s . W e hav e v ali dated ou r f r amewor k wi th a domai n ex p er t,and hav ep lanned mu lti p le c as es tu di es and i nter v i ews f orv ali dati on asf u tu r e wor k. Other di r ec ti ons f or f u tu r e wor k i nc lu de ob tai ni ng mor ei ns i g ht i n the r elati ons hi p sb etween the i ndi c ator s as well as the r elati ons hi p sb etween i ndi c ator s on di f f er ent ag g r eg ati on lev els . The knowledg e g ai ned wi ll b e ap p li ed i n the DEAL p r oj ec t whi c h ai msat the dev elop ment ofan ag entb as ed s of twar e s y s tem f or r oaddi s tr i b u ti on p lanni ng . I ns u c has y s tem we r ep r es ent the i nv olv ed log i s ti c al p ar ti esasag entsop er ati ng wi thi n a mu lti ag ent s y s tem.I n or derto g i v e the ag entsthe p r op er dec i s i on ob j ec ti v es ,i ns i g ht i n log i s ti c al KP I si s needed. F i nally , we ar e c u r r ently dev elop i ng a f or mal lang u ag e f or ex p r es s i ng the r elati ons hi p s b etween the i ndi c ator s and r eas oni ng ab ou t thes e, dr awi ng i ns p i r ati on f r om the f i eld ofr eq u i r ements eng i neer i ng .

ACKNOWLEDGEMENTS
Thi swor ki sp ar t ofDEAL ( Di s tr i b u ted Eng i ne f or Adv anc ed Log i s ti c s ) s u p p or ted as p r oj ec t EETK0 1 1 4 1u nderthe Du tc h EET p r og r amme.F or thi sp ar ti c u lar p ap er we ar e v er yg r atef u l f or the c ontr i b u ti ons of J os v an Hi lleg er s b er g ,P eet v an Toor en,J an Tr eu r ,S teefv an de Velde,and P i nar Yolu m.

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