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It is very important to measure customer perception as a regular part of performance measurement because by doing so, customer success will have been enhanced to the benefit of the firm (Bowersox, Cooper & Closs, 2009, p. 389). Bowersox, Cooper and Closs further assert that measurement of perceptions and opinion of customer in a firm is quite fundamental in a balanced scorecard. Customer perception measurements are instrumental in logistic operations because it will facilitate the accomplishment of objects associated with logistical operations. Therefore, effective measurements of customer perspectives among other functional perspectives are instrumental in accomplishing the three main objectives of controlling, directing and monitoring logistical operations of a firm (Bowersox, Cooper & Closs, 2009, p. 382).
Comprehensive measures of supply chain performance for instance total supply chain cost are quite difficult to develop. This is because the metrics have to focus on the effectiveness demands metrics and overall supply chain performance, which has to provide an integrated perspective (Bowersox, Cooper & Closs, 2009, p. 390). The perspective has to be comparable and consistent across supply chain institutions and functions of the firm. Lack of integrated measures implies that the management in different firms and different function are likely to have different perspectives about actual logistical performance, thereby making it difficult to develop comprehensive measures of supply chain performance (p.190). Besides, total supply chain cost is actually the combined costs in all firms in the supply chain, which is quite difficult to determine. For instance, one organization may experience increased cost while other firms experience reduction in the same supply chain hence the organization, which have experienced reduction, should share the benefits with those whose cost was increased (p.392). The willingness to share risks and benefits is limited and can lead to distortion of information that can be useful in determining total supply chain cost thereby making it difficult to develop comprehensive measures of supply chain performance.
By comparing and contrasting the contribution approach with the net profit approach in cost-revenue analysis, contribution approach advocates that all costs, based on cost behavior be identified as variable or fixed while net profit approach advocates that costs be allocated to operating segment (Bowersox, Cooper & Closs, 2009, p. 395 to 397). The basis of equitable and fair allocation of cost is considered arbitrary, which can mislead financial assessment in net profit approach (p.396). On the other hand, the fixed cost in contribution approach are not actual fixed and they do change in some circumstances (p.395).
If a firm, which currently uses a private truck fleet, switches to a for-hire transportation company, the aspect of strategic profit model that would be affected is operating expenses, profit margin, asset turnover and possibly sales (Bowersox, Cooper & Closs, 2009, p. 398 to 400). Expenses on private truck fleet is higher than that of for-hire transportation in that the in the latter you will spend on hiring when in need unlike in the case of private truck fleet where the expense is fixed. This is likely to increase profit margin for the firm.
Sarbanes-Oxley Act requirements for logistics performance measurement by demanding that companies or firms disclose their internal controls and external financial reports, which would reveal important logistics events and transaction on corporate profitability and balance sheet has negative impacts (Bowersox, Cooper & Closs, 2009, p. 404). Such requirements injure the efforts of firms to gain competitive advantage since their approaches are made public knowledge (p.403). The act also reveals some facts on merchandise that firms would not wish they customers to know, thereby affected to some extent development and profitability of some firms.
Reference
Bowersox, Cooper & Closs, D., Cooper, B. & Closs, D. (2009). Supply chain logistics management. New York: McGraw-Hill.
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