KEY PERFORMANCE INDICATORS (KPI) OF TRANSPORT SERVICES ASSESSMENT Božena ZWOLINSKA AGH University of Science and Technology, Krakow, Poland, EU, bzwol@agh.edu.pl Abstract Economic development of the world and fast capital flow as well as information flow has forced new methods of logistic management in the field of transport. Possessing own fleet of vehicles became financially inefficient. Full maintenance costs of transport system which include: costs of vehicles, costs of work and amortisation were the deciding factor to delegate the transport structures beyond the organisational range of the enterprise. A significant number of enterprises has fully resigned from their own fleet of vehicles and decided to realise their services of transporting goods on the basis of the outsourcing rules. Organisations with international range and the companies of the so-called big enterprises sector have isolated the transport department from their own structures and assigned the department with certain tasks and aims to realise with simultaneous bringing profit. Most often situations which occurred were creations of so-called subsidiaries which legally are separate economic entities where their parent company is the entity which controls business activities. The main aim of tasks completion in case of a subsidiary is the positive financial result and not provision of the fixed level of delivery services of the superior unit. In the long run, the company becomes one of the elements of TSL sector. Gradual integration of the goods transport in favour of many service providers positions the company in the regional transport system. The article presents the criteria of transport services assessment in dealing with deliveries. The next part of the article presents the direct and indirect parameters which influence the assessment of the services quality divided into two groups. First group includes the subjective parameters which refer to the assessment of the respondents who are customers the recipients of the services. Second group is the strict representative assessment resulting from for example the amount of occurring late deliveries in a given time unit (week, month, etc.). Keywords: Key Performance Indicators, shipping 1. INTRODUCTIONS In times of market economy with relatively unstable demand for a number of products and services it is hard to keep zero stock-in-trade with maximum high level of customer service. Functioning of enterprises always aims at brining profit which comes from selling products and/or services. The advantage over competition is the market value of the enterprise and in time perspective influences the amount of assets in the enterprise. Globalisation transformed the sales markets of enterprises to macro scale, which is to international and global markets. Broadening the area of market activity influences the development of the company and the increase of its income. Broadening the groups of purchasers from the number one had on a local market with the potential customers from remote markets forces the enterprises to change structure of actions in a number of fields. The biggest changes can be observed in re-organisation of transport systems. The point of the changes is not only the scale or distance the products are distributed but also the character of the use of the whole transport infrastructurere. In recent years, a number of solutions and practices were prepared for limiting costs in processes and actions which do not build added value to products and/or services. Decrease of the overall costs of functioning of a company is one of the sources of competitive advantage. Outsourcing, which is using the external organisational units specialising in particular tasks, is one of the ways to limit the expenses in functioning of a company. Examples of expensive professional services which are often carried out by external companies are:
transport services, renovation and construction services, training services, information technology services and other services. Transport which is moving goods between points of logistics infrastructure (point of storage and processing point, point of manufacturing and point of destination etc.) does not constitute added value to products but is indispensable in order to meet the needs of the recipients [1]. The main benefits of outsourcing from the point of view of management and conduction of transport services by professional external units are: decrease of needs to purchase car units, decrease of costs of labour, delevant certainty about transport costs, decrease of risk. At present on TSL (Transport Shipping Logistics) market there are many types of transport services with varied character on offer. Their classification is dependent on type of used form of transport, range of transported product, type and weight of the parcel, etc. A wide range of offered transport services results on the one hand from type of transported products and means of transport adjusted to it and on the other hand on economic calculation and administrative and legal aspects. Shipping services are often connected with transport services. A shipping service is, according to definition, organisation of transport [2]. Shipping service is inseparably connected with transport and may be conducted on TSL market by companies which specialise only in such types of services. As singular market product it is subject to the same assessment criteria as other products and services. Main parameters of assessment of market goods is, taking into account existing need, their quality and availability. Quality is relative parameter of products and services assessment. In general, the assessment of service quality due to their non-material character is a more difficult task than the assessment of accordance of manufactured real product with earlier assumed criteria. 2. CHARACTERISTICS OF SHIPPING SERVICES 2.1 Meaning and classification of shipping services in logistics In international supply chains transport is widely available but often causes a lot of problems. Despite globalisation in economy and unifications and standardisation resulting from that fact in terms of solutions in technical, technological, administrative, legal and organisational issues, there are many countries where local markets use their own rules and regulations. Small and medium transport enterprises on international markets are forced to use advisory services concerning transport issues. Big companies, international corporations often use the help of infrastructure of smaller companies. High level of complication in economical relationships which appeared between customer (or co-operant) and the entrepreneur (partner or sender) resulted in a need for services of advisory-organisational-management type concerning transport issues The notion of shipping originally comes from Italian and means to deal with, to enable [3]. On TSL market (T for Transport, S for Shipping, L for Logistics) it serves the role of service provider and is based on organisation of goods transport. In reality, within the conduction of shipping services there are also activities such as: counselling in the field of transport-shipping-logistics processes, choice of optimal means of transport, drawing up contracts, i.e. : concerning transport, insurance agreements etc., coordination of loading and unloading goods,
monitoring the shipment together with sending the necessary information for the sender (and/or recipient), if the need arises the activities connected with customs clearance, arranging for the necessary transport permissions, explaining the formal and legal issues in case of inconsistency of the shipment and possible existence of damages which occurred during transport. Shipping services are inseparably connected with transport and that is why the first (basic) classification of them is division according to transport branch in which organisation of transport of goods occurred. Therefore there are the following forms of shipping: freight forwarding overseas, shipping by plane, shipping by train, shipping by car vehicle. In case of combined transport (connecting two different branches of transport, i.e. rail and road) the person organising transport (so-called forwarder) conducts the necessary activities of administrative and legal type concerning the range of both types of shipping. Another criterion of shipping services division is division according to the size of transported load. The term size signifies the space which fills the cubature of the vehicle. In this classification there are: piece-goods shipping and full-vehicle shipping. Criterion of division of shipping services according to their territory range is as follows: national shipping, international shipping. Enumerated criteria of shipping services division on TSL market are the most frequently appearing ones. In case of classification of enterprises which provide such services on TSL market we can mention: clean and mixed shipping [4], own and public shipping. Criteria of division of shipping enterprises according to specified parameters of providing services classify them in reference to realisation of aims. Shipping companies, which do not possess any transport means in their assets, are in the group of so-called clean shipping. They act on TSL market adjusting their offers (of sending the parcel and the necessity of transport) i.e. by transport exchange (Trans, TimoCom and other). Mixed shipping is conducted by companies which own their set of vehicles. Owning transport means does not mean that goods transported by such companies are only transported with the use of owned vehicles. It is often happens that such companies use transport means from other enterprises and make their vehicles accessible to other enterprises. Big corporations with international range or ones which require professional equipment invest in their own transport infrastructure creating organisationally fully dependent transport unit. Such department/unit in a company can be, due to financial reasons, a separate enterprise or so-called daughter company of a bigger organisation. A significant part of conducted services in this unit is performed on the basis of commission from its main co-operator and the type of provided services is defined with the name of own shipping. In this case on the primary market the shipping service is not provided as a separate product so it is not valued separately. It is performed within the activities of the same enterprise and the costs of its conduction are calculated in the price of the product In the group which offers shipping services of public character there are both enterprises which do not own transport means and such which own their own vehicles. A characteristic feature of such class of shipping companies is the amount of organised transports on behalf of other enterprises which are not formally or
legally connected with the service provider. Such type of provided services on the market is a separate product with defined parameters. 2.2 Parameters which determine the quality of shipping services Products distributed on the market in order to meet the needs of recipients are compositions of material elements (real products) and intangible elements (services). Shipping service on primary market is a product with specific parameters which are inseparably connected with transport. Among the most important features determining the character of shipping services there are: intangible form shipping service is an activity so it cannot be verified with the use of senses of smell, touch or hearing, inseparability of the service with the provider (so-called forwarding agent or a group of such agents), impermanence which is existence of service only in the form of its performance with no possibility of its storage, high level of complementarity shipping service is most commonly connected with transport but it often completes other market products from the area of logistics, both material and intangible, high degree of diversification and difficulty in standardisation close connection of service provider and service recipient including: the expectations concerning professionalism, time of performance, place of sending and receiving, type of parcel as well as means of transport adjusted to determined parameters; all these influence the broad variety of shipping services. Due to such varied parameters determining the form and character of provided shipping services it is hard to present an explicit measure which shows to what degree and on what quality level a given service was provided. Definition of service quality according to norm ISO 8402 is understood as satisfaction and contentment of the customer referred to as subjective impressions, observations and sensations of the recipient (or recipients).[6] In such approach, the function with two variables can be marked: expectations and real sensations. Marking the parameters which determine the correct or incorrect performance of service gives detailed information for the reports of the quality assessment. The most commonly mentioned parameters of the quality level assessment in shipping services are: timeliness of both loading and unloading of goods, price level in reference to competition and existing supply and demand on TSL market, expertise and professionalism of shipping consulting, parameters and technical condition of the vehicles, lack of damages to transported load and lack of defects in delivered goods, correctness of documentation, fast and efficient reaction of forwarding agents in a situation of danger to the correctness of service provision, overall level of the provided shipping services. It should be underlined that parameters presented above concerning the quality of shipping services are not a permanent (invariable) closed group. Depending on the need the parameters may be supplemented by additional criteria or limited to determined minimum. The most common parameter which occurs almost always in quality of shipping service assessment (or services provided in a given period: one month, one year quarter, etc.) is timeliness according to KPI indicator (Key Performance Indicators). Timeliness refers both to loading the goods as well as deliveries [5]. Companies which order shipping services will expect almost hundred percent KPI indicators from their partners. Depending on the type of transported goods the boundaries of timeliness indicator are set on the
level from 95% to 99%. In case of exceeding the lower value the enterprises providing shipping services (or shipping and transport services) pay a determined fine. Eight parameters which are specified above can be divided into two groups. First group of assessment indicators refers directly to actions and processes conducted by the person who provides shipping service. In the group there are: speed and efficiency of reactions in situation when the customer expects that, expertise and professionalism of consulting as well as overall level of services in which the information flow is important between the customer and service provider, i.e. concerning the stage on which service conduction of shipping goods is. Second group of parameters which influence the assessment of shipping services is directly connected with the person who organises transport. In this group there are: correctness of filled documents for which the loading and unloading experts are directly responsible (in case of road transport the correctness of the filled documents is the responsibility of the driver), lack of damages and defects, responsibility as above, parameters and technical condition of vehicles in a situation, when shipping company organises transport and the delivery service is provided by subcontractor, then the transport enterprise (performer of transport service) bears direct responsibility for technical parameters of vehicle used for such delivery, situation on the market influences the price level directly, depending on economical development of the world and of region, fuel and energy prices, demand level for transport services, demand level in reference to number of competing companies, region where the service is conducted, market segment, etc. Tests of quality level of conducted services are performed by filling a questionnaire with prepared set of questions in which the customer (recipient of the shipping services) is the respondent who assesses the service provider. A number of reliable parameters determining the level of provided shipping services in overall final report aim at accordance of activities in order to satisfy the customer for whom the services are provided. The factors which influence the degree of assessment in final report are subject to fixed sum of occurrences in a given determined time in reference to: the amount of loadings and unloading on time (or the number of delays in a given time unit), number of means of transport which were in accordance with orders (or number of occurring inconsistencies in time unit), number of occurring damages and defects, number of documents which were inconsistent with assumptions. A subjective opinion of the assessing person has big influence during the assessment of shipping services quality on the remaining criteria (i.e. level of services, professionalism). A good, average or very good consulting not only depends on the knowledge and experience the given shipping service provider has but also on their ability in terms of conveying right information concerning transport services to the listener with varied amount of knowledge. Remaining parameters, about which respondents expresses their own opinions, will present a high level of subjective assessments. In case there is is a will to achieve the highest level of provided services in which the most important aspect is degree of satisfaction and contentment of customer it is necessary not only to take into account the rigid measurable parameters but also personalised features of the recipient the customer. 3. CONCLUSIONS The basis of efficiently functioning enterprise is an ordered and logically functioning transport and storage system [6]. In international supply chains transport is commonly used and in time perspective there is a systematic integration of transport with the use of different transport means. Such integration is observed on many levels of activities: technical and technological through adaptation of various means of transport in
various branches, organisational conduction of service is performed by one operator and legally one agreement refers to transport in the whole distribution channel. Together with occurring unification and standardisation of the ways and conditions of goods transport, the range of services offered by shipping companies gets wider. Overall assessment of the quality level of provided services will take into account many parameters for a number of fields concerning activities of shipping providers. Comparison of a number of companies providing shipping services in rankings will need to include not only the range of provided services but also the size of the company, the length of their existence on the market and geographical level of provided services. The article also presents the influence of human factor on the overall level of assessment. Assessing the level of provided services should be done with as little parameters as possible in which an important aspect is the opinion of the respondent. In order to achieve a high level of competitiveness towards other companies which provide shipping services one should provide a fluent trouble-free conduction of product shipment with minimum expenditure of the sender (customer). Development of new global forms of supply chains is directed towards use of intermodal transport. Professionalism of conducting shipping services through transporting goods is not limited to knowing the carriers (which are transport companies) on local markets but must also include legal and administrative knowledge of a given area of activity. LITERATURE [1] CZERSKA, J. Improving the stream of the value, Warsaw, Difin 2009 ISBN: 978-83-7251-942-9 [2] FERTACH, M. Dictionary of the logistic terminology, Biblioteka Logistyka, Poznań 2006 [3] KAMIŃSKA - SZMAJ, I. Słownik wyrazów obcych, Wydawnictwo Europa, Wrocław 2001 [4] FLEJTERSKI, S., PANASIUK, A., PERENC, J., ROSA, G. Współczesna ekonomika usług, Wydawnictwo PWN, Warszawa 2000 [5] MICHLOWICZ, E. Zarys logistyki przedsiębiorstwa, Wydawnictwa AGH, Cracow 2012 ISBN: 978-83-7464-406-8 [6] WWW.ISO.ORG