Development of a Performance Measurement System for the Evaluation of Logistics Service Providers

Logistics is a key part for companies in the manufacturing industry because manufactured products must be efficiently transported to customers. The development of logistics should not be forgotten because logistics contributes the value creation for customers. Product transport must be carried out on the terms of a customer so the customer can optimise its processes in the best possible way, in which case the value chain created by the supplier and customer can compete against value chains created by other companies. The measurement and reporting of logistics operations contribute to logistics transparency, making it possible to develop logistics according to a company’s strategy. The research aims to develop a unified performance measurement system for the case company, which can be used to develop the case company’s logistics according to its strategic goals. The logistics performance measurement system needs to be able to guide the operational activities of logistics towards the case company’s strategy. This research can be divided into two parts, which are the literature and interview research. Pragmatism, which emphasises the practicality of knowledge, is used as a research philosophy in the research, to which abductive reasoning in the creation of theory is naturally connected. The research strategy is a case study, which aims to investigate the phenomenon in depth in a certain environment. Qualitative research material was collected through semi-structured interviews and workshops. As a result of the literature research and qualitative data analysis, the most important success factors of the case company were identified for the development of the performance measurement system. The research begins with the literature research, which was used to thoroughly understand the operating environment of the case company. In addition, the literature research provided a performance measurement system implementation model, which was applied to the case company. With the help of literature research, interview structures were developed, which were used to recognise the needs of both internal and external stakeholders of the case company. Draft performance measurement dashboards were created, which were tested in workshops and presentations with the case company. The material obtained from the workshops and presentations was used to guide the development of the dashboards toward the strategic goals of the case company’s logistics. The case company had an ongoing project, which purpose was to increase transparency in logistics processes. The project offered a new opportunity for research because the information provided by the project was not available before. Not all the measurement success factors identified in the research could be implemented so research is still needed in the future. The challenges of implementation were related to the manual work in the logistics processes, which would be required in collecting and using measurement data. The research proves that it is important to use the available tools and frameworks when implementing a performance measurement system. An implementation framework can break down the implementation goals into smaller sub-goals so that nothing is left undone with the main goal. A company’s measurement goals must always be dealt with on a case-by-case basis. The objective of a performance measurement system is to support the company’s strategic goals, in which case implementation models and frameworks must be applied in the operating environment of the company. In addition, the research emphasises the importance of sharing information and knowledge so that logistics processes can be systematically developed. The research developed a system for measuring the performance of the logistics service providers used by the case company. A total of four dashboards were created and these were uploaded to the case company’s server where using the dashboards is agile