Measuring the Delivery Precision at Holmen Paper

Abstract: This thesis aims to evaluate measurement techniques for delivery precision at Holmen Paper (HP). Delivery precision is an important KPI for a business, because it gives an indication of how well the company’s  supply chain is performing. At HP, the Operation and Logistics division, wants to use the result  to  assess  that  if  they  are  doing  a  good  job  planning  HP’s  production  and  transportation.   The purpose of the thesis: “The  purpose  of  the  thesis  is  to  determine  how  the  KPI  delivery  precision ought to be measured for  various  order  types  in  Holmen  Paper’s  supply  chain.” A great deal of literature was initially reviewed on the subject of delivery precision, and different sources suggested alternative ways in which it may be determined. To understand the logistics and information flow, two flow-charts where constructed. This was done in order to obtain a holistic overview  of  HP’s  order-delivery process, and furthermore, to see where the required data could be retrieved from the system. After evaluating the supply chain, it was concluded   that   the   SCOR   models’   pre-defined Key Performance Indicator Perfect Order Fulfillment (POF) and Perfect Order Index (POI), were the best way to measure the delivery precision. Both theories are well known in the logistics sector and both are built upon lower level metrics. The metrics measure if an order is delivered satisfactorily to a customer, according the parameters of time, quantity, quality and documentation. The thesis, however, rejected the parameter of documentation in dialogue with HP (and because the parameter has little to do with the operators work at Operation and Logistics). Data  was  collected  from  HP’s  database  in  an  attempt  to  measure  the  delivery  precision  according  to   both the theories. However, it was concluded that the calculated value was unreliable. This was mainly due to fact that the data required did not exist, and the data that did exist was not reliable. The data was seen as unreliable because there was no information of when the data was collected along the supply chain. Therefore, the thesis presents a model that will help HP implement the KPI delivery precision in the future. At the completion of the study, it was concluded that HP, initially, needs to implement a system to save data regarding the reason and source of order modifications. Additionally, it is suggested that HP should try to measure the delivery precision as close to the customer as possible. Currently, the data required to do this does not exist. To obtain this data, HP needs to implement some sort of receipt when the customer receives the goods.