Development Of The Kpi System Of Logistic Activity Of Agricultural Enterprise

Abstract

The article proposed for consideration the system of key performance indicators (KPI) developed by the authors of the logistic activity of the agricultural enterprise. The choice of the object of approbation of these indicators – the Peasant farm I.I. Pireev – due to the fact that the logistics component in its activities is very large, and the formation of a system of indicators of improving the efficiency of logistics activities will allow the company to gain additional competitive advantages. The formed system of key performance indicators includes indicators for assessing the purchasing and sales, transport, and also the warehouse activity. The KPI logistics activities of an enterprise developed and presented in this article meet the following requirements: simplicity of calculations, availability of input data, relevance and utility. The following key performance indicators were proposed for the purchasing and sales department: order satisfaction, the use of investments in the information system, the number of orders processed per unit time. The key indicators of the efficiency of the transport department include: the use of investment in transport, the completeness of the ride and the average delivery time of the order to the consumer. For the logistics center and warehouse, the following KPIs are formed: return on investment in warehouse infrastructure and in the logistics center, time to prepare and complete the order. The article also presents the method of calculating the developed KPIs, which take into account the particularities of the company under investigation and the specifics of the market in which it operates.

Keywords: Agricultural enterpriselogistics activitiessystem of key performance indicators

Introduction

In August 2014 the Government of the Russian Federation decided to impose a ban on the import into the Russian Federation of an extensive list of products from countries that supported the imposition of sanctions against Russia. Due to the introduction of a food embargo, the share of imported goods in food commodity resources of retail trade decreased from 36% at the beginning of 2014 to 22% by the middle of 2016 (Berendeeva & Ratnikova, 2018).

Import substitution in modern conditions is one of the most relevant areas of agricultural development in Russia. Its goal is to create such a conjuncture of the domestic market of agricultural products, which will strengthen its position to Russian producers.

The results of the study (Berendeeva & Ratnikova, 2018) indicate a decrease in the price-quality ratio for food. In such a situation, Russian agricultural producers need to pay attention not only to increasing production capacity, but also to improving the quality and diversity of products.

The achievement of a competitive advantage in the market is facilitated by the decision of an enterprise to search for and implement such new technologies and management tools that will allow the company's strategic goals to be communicated to personnel. In the work of Drok and Nikonova (2016) proposes the development and implementation of a balanced scorecard (BSC), which provides control over the achievement of the goals of the organization, its departments and individual employees through key performance indicators (Key Performance Indicator, KPI).

In this regard, it seems relevant to the study, in which the KPI system was developed to improve the logistics of an agricultural enterprise operating in the Novgorod region. The object of the study was the Peasant Farm I.I. Pireev, the logistic component of which is very large, and the formation of a system of indicators for improving the efficiency of logistics activities will allow the company to gain additional competitive advantages.Please replace this text with context of your paper.

Problem Statement

Key performance indicators are the basis of a balanced system of organization performance indicators. Analysis of the KPI system allows you to: make a conclusion about the success of the enterprise; make timely decisions to improve the efficiency of the enterprise as a whole and its structural divisions; open promising areas of enterprise development.

The issues of determining, developing and applying a KPI system are considered by many economists. The introduction of the KPI system by Russian enterprises began several years ago, but there is still no uniform methodology for assessing key performance indicators.

Some authors consider KPI as an evaluation system that helps an organization determine the achievement of strategic and tactical (operational) goals. For others, KPIs are a criterion used to determine performance indicators that are relevant to achieving the goals and objectives of an organization and can be measured quantitatively. These definitions consider KPI, first of all, as a system of indicators that are essential for achieving the established goals and objectives of the organization (Zakirova, 2011).

Creating a really good KPI system requires not only the knowledge of the subject area and experience in it, but also the active, creative use of intuition. Increasingly, KPIs are called an integral and unique indicator, regardless of its object (company, division, team, person). Some experts insist on the need for an “invention” of an integrated corporate KPI that would reflect the work of the company as a whole, taking into account its specificity (Shabalina & Podverbnyh, 2015).

The efficiency of the enterprise, its structural divisions and individual specialists of the company depends on the depth and accuracy of KPI development and the method of their calculation. Extremely challenging is the implementation of a KPI system that will improve existing business processes of the organization. There is no universal set of KPIs; their development requires a creative individual approach, since these indicators must take into account the company's characteristics, its competitive advantages, the specifics of the market in which it operates, the uniqueness of the technologies used, and the knowledge of the company's employees.

Research Questions

The study involves finding answers to the following questions:

• What indicators can form a system of key performance indicators of the logistics activity of the studied enterprise?

• What is the method of calculating the key performance indicators of the logistics activity of the studied enterprise?Please replace this text with context of your paper.

Purpose of the Study

The aim of the study is the formation of a system of key performance indicators (KPI) of the logistics activity of an agricultural enterprise on the example of a farm I.I. Pireev.

Research Methods

In work the system approach is realized with a support on methodology of theoretical generalization and the analysis.

Findings

Recently, more and more Russian companies are puzzled by the assessment of the contribution of logistics services to the final results of the company. Proper assessment of the effectiveness of logistics is often hampered by the absence of a well-thought-out system of reliable indicators and methods for calculating them.

A kind of “framework” that allows us to formulate a firm’s logistics strategy in the form of a set of operational goals that determine its market behavior and financial well-being is the Balanced Scorecard (BSC) method. It provides an opportunity to assess the degree of achievement of goals, the efficiency of business processes and the work of the company, its divisions and each employee using key performance indicators (KPI). Their linking with the employee motivation system increases the interest of the latter in achieving the company’s set goals and makes this interest constant (Sergeev, 2007).

BSC is projected onto the whole organization by developing individual goals within the framework of already developed corporate strategies and stimulates employees to understand their place in the company's strategy (Efimov, 2016). According to Nefedova (Nefedova, Redko, & Yanushevskaya, 2017), the BSC-based personnel management system is a mechanism for consistently implementing the company's strategic goals and key success factors through strategic maps and further monitoring their achievement through KPI, which show the potential for a dramatic increase in productivity (Orlova-Sheiner, 2009).

However, according to the research of Saplina and Kurlykova (2012), two or three key indicators are not enough to identify the causes of changes in the organization and for a comprehensive assessment of the performance of its logistics services. This leads to the need to develop a system of balanced indicators of logistics activities.

The introduction of a balanced scorecard can lead to a number of problems (Jumigo, 2009).

1) Problems associated with the choice of strategic goals: only short-term indicators or targets and indicators affecting only the financial sphere of the enterprise’s activities are taken into consideration.

2) Problems associated with the choice of indicators: conflicting indicators are selected, their number is not optimal, their measurement is more expensive than the result obtained, or they have no relationship with the company's goals.

3) Problems related to the human factor: there is no regular measurement of indicators, the information collected is unreliable, and the opinion of a specific performer is not taken into account when introducing the indicator.

In the formation of the KPI system of logistic activity of the Peasant farm, I. I. Pireev, the system of planning and reporting indicators proposed by Sergeev (2007) and includes five gauges:

• the quality of logistics services for consumers;

• the use of investment in logistics infrastructure;

• general and operational logistic costs;

• the duration of logistic cycles;

• productivity / resource productivity of logistics infrastructure and personnel.

In this study, on the basis of existing methodological approaches, a system of key performance indicators (KPI) of logistics activities is formed, which reflect the specific development of the studied agricultural organization and meet the following requirements:

• simplicity of calculations (calculation of indicators should not take a lot of time from managers);

• availability of source data (variables);

• relevance and usefulness (the data should reflect the efficiency of logistic activities, and the conclusions and decisions made on their basis should be beneficial to the enterprise).

Conclusion

The proposed system of key indicators of the efficiency of the logistics of an agricultural enterprise, developed in relation to the farm I.I. Pireev, however, can also be used for other enterprises that have a similar activity. It can provide the management of the enterprise with the necessary information that allows it to make management decisions in a timely manner, identify factors affecting the achievement of the company's goals and make adjustments to business processes. Using the KPI system makes it possible to: reduce the cost of logistics activities by monitoring and timely detection of problem areas; increase sales by improving the quality of logistics services and motivating the staff of the purchasing and sales department.

References

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