The measurement of an organization’s performance presupposes a thorough evaluation of the key components of the corporate mechanism, including both the internal (e.g., the workplace environment, the corporate ethics, etc.) and the external (i.e., the logistics processes, the international relations, etc.). The Global Logistics Performance Index (LPI), which measures six key factors of an organization’s operations (LPI ranking and scores, 2012),
As a rule, the process of international trade involves customs clearance. Despite the recent improvements in the overall design of the procedure and the promotion of a more adequate set of requirements for the customs clearance, the specified procedure remains one of the most tedious and stressful stages of the international supply management chain. Therefore, by identifying how cleverly a company has approached the issue in question, one is capable of locating the organization’s potential and ranking it on a global scale.
As a tool that improves the clearance process, which is typically defined as “speed, simplicity and predictability of formalities” (Performance indicator, 2015, par. 3), infrastructure also affects the outcomes of the international supply chain management processes, as the specified element outlines the stages for the supply management process on an international level. In other words, the creation of a proper infrastructure presupposes a better understanding of the key transport related elements within the context of the global environment.
Though the logistics component is often underrated, it, in fact, plays a huge role in the overall process of the international supply chain management. Particularly, the choice of the mode of transportation, the company that will be used as a partner in the transportation process, the speed of the product and the raw materials transfer, etc., have a tremendous effect on the satisfaction of the end customers and, therefore, the rank of the company in the LPI table of scores based on the “ease of arranging competitively priced shipments” (Performance indicator, 2015, par. 3). Thus, it is essential that goods and draw materials should be transported fast and at the same time should not be damaged in the process.
Tracking and tracing, in its turn, creates the environment, in which the company managers are capable of monitoring the key outbound logistics processes. As a result, the slightest obstacles can be removed instantly in the process of delivering goods or raw materials to a specific destination.
As it has been stressed above, timeliness plays a great part in the context of the international supply chain management. It helps make sure that the organization follows the schedule and attains the objectives set in an orderly fashion. Being able to meet tight deadlines is essential for communication between a company and a customer on an international level.
Allowing for a general assessment of any company in the international context, the LPI tool makes a performance analysis possible. In other words, the specified elements help locate the chances that an organization may have in the global context within the international supply chain. While one may claim that the current set of elements listed in the tool needs a further expansion, with the addition of the components such as the financial strategy chosen for managing the outbound logistics, etc., the index under analysis seems a rather legitimate tool that can and should be used as the basic performance indicator for the companies that have entered the global market.
LPI ranking and scores. (2012).
Performance indicator. (2015).