1. Ineffective strategies- To create an LPM strategy, a logistics leaser must lay out the logistics performance process. Once the areas of improvement are identified, goals and processes to achieve those goals must be set. The company may monitor financial, nonfinancial or both.
2. Performance metrics aren’t clearly defined- data collected is of little importance without the right performance metrics. There are numerous metrics logistics professionals can turn to measure performance, and these measurements will largely depend on the goals and size of your company. Examples include:
- Total orders in a period
- Total orders fulfilled
- Number of shipments within x hours of delivery time
- Cost of goods sold
- Fixed costs (payroll, building, equipment)
- Overhead costs (insurance, taxes, heating, lighting)
- Customer service complaints
3. Lagging logistics technology- One of the biggest hurdles of performance management is having (or developing) the existing IT infrastructure required to support logistics software. Add in the fact that the software doesn‘t always integrate well enough with applications already in place, and it‘s no wonder so many companies are hesitant to adopt a performance management strategy. Some suffer from a terminal lack of customization abilities; others are incredibly flexible, but offer limited reporting capabilities.