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Design of the performance measurement system

Discus About The Performance Measures Transportation Systems?

Competition is increasing, demands of customers are changing that forces business to change or improve their strategies (David, and Joseph, 2014). For sustaining into the competitive environment business implement different techniques and tools for improving their performances and strategies. Performance measurement system is one of the important tool for every organization as it helps in measuring the performance of an employee, a team or an organization that results in taking corrective actions to improve the performance. It reflects whether the performance of department has improved or ruined. In last decades, researchers used to study about performance of business, measurement definitions and its measurement systems. Later, researchers developed different models and frameworks for performance measurement (David, and Joseph, 2014).

In this report performance measurement system is designed for Delivery department of Woolworths supermarket. Woolworths supermarket has its retail business throughout New Zealand and Australia (Woolworths group. 2017). It is the second largest retail organization in Australia in terms of revenues after Wesfarmers Limited. In the year 1924 the organization has started its business operations by launching its first store in Sydney. In the year 2012, the organization has become one of the largest retail stores in Australia and New Zealand (Woolworths group. 2017). This is the subsidiary of a well-known brand, i.e. Woolworths limited. It operated different brands, such as; Dick Smith Electronics, Safeway Supermarkets, Big W, BMS, Tandy etc. Currently, Woolworths has 1000 retail stores across Australia, from which 968 are supermarkets and 19 are convenience stores (Woolworths group. 2017). Which carry similar logo of Woolworths. Mostly, the company sells groceries, like; fruits, vegetables, meat, packed food products etc. with this it also sells magazines, stationary goods and DVDs. With Coles, this organization makes a duopoly of supermarkets in Australia, accounting approximately 80% of the Australian industry. Company’s goal is to provide good services to their customers and deliver the product to their nearest place. They serve over 29 million customers every week with team of 205,000 employees (Woolworths group. 2017). With addition to this report also includes justification of design for company and for management accounting theory. Accounting for design process is also shown in this report.;

Setting objectives for different departments of the organization is very important as it provides a blue print to the employees. In this stage, short term and long term objectives will be decided for delivery department by its manager. While deciding objectives for the department company’s main focus should be on improving customer services, satisfaction of the customers, maintaining proper records and building good relations with the clients (Green, 2017). For achieving these objectives business should appoint employees with good communication and interpersonal skills. Delivery manager should identify new systems to make services customer centric and competitive. For maintaining customer satisfaction business should maintain good relations with their clients and suppliers. Organizations that maintain proper records can achieve their decided goals effectively. As maintaining proper track of clients and customers can help in improving service quality (Green, 2017). Delivery manager should be very much competent towards achieving the objective and it can be achieved by motivating employees for improving their services and fulfilling the targets.          

Define the objective

Key performance indicator is a computable value that determines how successfully a company is attaining business objectives (Logistics bureau. 2013). For fulfilling targets organizations use key performance indicators at different levels. It focuses on performance of the business and processes of different departments (Logistics bureau. 2013). Different key performance indicators are:

Capturing of order: It is one of the important indicators of delivery department. Performance can be measured by checking the number of orders received from the customers. If business will receive less orders as compared to previous month it means there is any problem. Number of orders placed by customers should be analyzed monthly or quarterly to know the performance of the business. If there is reduction in the number of placed orders then they should improve their performance and service quality for sustaining in the competitive market (Logistics bureau. 2013).

Management of inventory: Delivery manager should manage the inventory properly so that the stock does not gets damaged. In this proper records are maintained by manager of the stock that has been sold and stock of finished products for sale. If inventories are not managed properly then it creates financial problems and shortage of inventory (Ogbo, Victoria and Ukpere, 2014).

Purchasing and supply management: Purchase and supply management both are important for the business as it affects the cost of the product and overall profit of the business. Delivery department should provide information of the stock in a timely manner.  This information should be provided to the purchasing department in order to eliminate the shortage of the stock (Weele, 2004). Adequate use of resources is essential for overall performance. In relation to this the business should choose those suppliers who can provide good quality of products on time as poor quality products increase the cost incurred by the company for the purchasing of the product (Moser, 2007).

Warehousing: Warehousing is a process of storing the stock of the company in a building from where stocks can be delivered easily to the customers. Warehouses protect the stock from getting damaged and reduces the time taken in delivery of the product. Packaging of the product is also done in the warehouses (Keller, and Keller, 2014).

Transportation: Carrying of goods from one place to another is known as transportation. It connects the business from its suppliers and customers. Transportation provides its major contribution in the customer satisfaction. It supports two commercial utilities i.e. place and time (Turnbull, K. F. 2005).

Aligning performance key indicators

Performance measurement is a process of assembling, evaluating and recording information regarding the performance of an employee, a team or an organization. It can be done by comparing actual performance with assigned performance standards. It is also known as performance appraisal that involves systematic evaluation of employees (Word press. 2017). It is a structured system that evaluates work and behavior of the employees. Factors that are considered for measuring the performance of the employees are knowledge of the job, communication, leadership quality, etc. (Word press. 2017). Methods that are used for performance measurement are as follows:-

360 Degree feedback- It is a process in which employees provide feedback about their colleagues or team. 360 degree feedback technique is very helpful in self-development. Organizations use this technique for measuring customer satisfaction, team management and interactive skills (Healthfield, 2016). Negative side of this technique is that it involves multiple raters that might not represent correct or balanced feedback.

Self-evaluation- Self-evaluation is part of performance appraisal because it serves a genuine purpose as it helps in development of the career (Fleschner, 2017). Woolworths supermarket can ask their employees for setting their own objectives timely basis. Through this they can evaluate themselves and provide feedback to their managers about achieving their self-made objectives.

Balanced scorecard: It is a performance measurement technique used to measure the activities of a company. For long term benefits balanced scorecard technique focuses on marketing, operational, financial and development outputs. It is an instrument which provides navigation towards future success (Zizlavsky, 2014).

Rating scales: Rating scales involves criteria of the performance such as attendance, loyalty, creativity, attitude, outcomes etc. It provides ranges to employees from excellent to poor. Then all the scores are calculated that will reflect the performance of the employee’s (Performance appraisal. 2010). Advantages of rating scales are it is easy to use and adopt, inexpensive, suitable for all types of jobs.

Psychological appraisals: Psychological appraisal is concerned about the future performance of the employee’s rather than their past performance. Its main focus is on the personal characteristics that affects the performance of the employee’s. Besides this psychological appraisal is costly and time consuming (Cooper and Rothmann, 2013).

Check list: Under checklist method, different questions are prepared with options of yes or no. Superior who is responsible for this only prepare the checklist but final evaluating and rating is given by the HR of the company (Libraries. 2017). This method can help Woolworths supermarket in preparing the list of responsibilities for each of the employees in delivery department and then they can evaluate their performance.

Performance measurement

Any retail business needs to make improvements in its way of working in order to attain its organizational objectives (Roberthall. 2014). Woolworths can make some improvements in their delivery department according to the deviations reflected in the above stage of performance measurement. Improvements that business can make in its delivery department are as follows:-

Software of addressing is used by the business for noting the address of the customer so that they can recheck the address at the time of delivery (Bennett, 2014). As false address can result in delivery failure or delay in delivery and this can reflect negative image of the company in the customer’s mind. Improvement can be done in the delivery system by checking the list of the activities is done correctly. Tracking of vehicle can help business to provide information of the product to its customer and it helps in cutting the fuel cost. Business can opt outsourcing for delivery whenever it is appropriate. GPS system can help in providing updates of the products to the customers through emails and texts. Drivers that are appointed by business should be trained as they represent the business. They are the ones who interact face to face with the customers so they should greet customers with a smile on their face and feedback should be asked from the customers to know where they are lacking in order to do improvements (Bennett, 2014).       

After completing performance measurement and searching for scope of improvements next stage is of taking corrective actions. In this stage business will take different decisions for solving the problems of employee’s performance (University of Washington. 2017). Association between the supervisor and employee should be such that the corrective action is implemented rather than taking negative actions against the employee (University of Washington. 2017). Corrective actions that business can take are:-

Training program: Business can start training sessions for their employees to help them in resolving their problems. Training is meant to increase the productivity, revenue, profits, decreases waste and cost (Dalto, 2014). It increases satisfaction of employee’s and reduces employee turnover. There are different techniques available for training such as Whiteboard or blackboard, projector, power point presentation, storytelling, group discussion, quizzes, case studies, etc. (Training today. 2016).

Motivation: Motivation is another technique that helps in increasing productivity and improving the performance of the employees. Motivation can be done in two ways i.e. monetary motivation and non-monetary motivations. Monetary motivation can be done by salary increment, incentives and other monetary benefits. Non-monetary motivations involve promotion (increase in designation), recognition of the work, non-monetary rewards and appreciation (Sturman, and Ford, 2011).

Feedback: Feedback provides a better reflection of the work as it helps in identifying the root cause of the problem. Feedback is important for improving the present performance of the employee and future actions (Office of personnel management. 2017).    

Counselling: Counselling is provided to that person who is going through a problem. Counselling helps the employee to have a positive perception towards the work. It helps employee to see things differently. Professionals are appointed for counselling of employees. These professionals are well trained and can handle the situation properly (Ekpang, 2015).

Woolworths supermarket comprise with different departments. Measuring the performance of these departments is very important for the business. Delivery department is one of the department that need proper assistance and system for improving the performance. Performance measurement is a process of assembling, evaluating and recording information regarding the performance of an employee, a team or an organization. The above mentioned system is designed for Woolworths supermarket as it can help the company for measuring the performance of their employees. System include different stages such as defining the objective, aligning performance key indicators, performance measurement, scope of improvement and corrective actions.

First stage included in the design is defining the objective because it is very important for business to decide the objectives for business as well as for employees. Objectives provide a wider image of company’s goal. Superior should provide proper communication about the set objectives for eliminating doubts. Second stage of the design includes aligning performance key indicators as it sets some standards on which department and employee’s performance will be measured. Different key indicators are explained above as that will help Woolworths supermarket to set the performance standards. Third stage of the designed system is performance measurement. Performance measurement is included in the system because this stage will help business to measure the performance of the department and employees. It can be done by comparing actual performance with set standards. Company can use different methods for measuring the performance that are explained above. 360 degree, self-evaluation, balanced scorecard, rating scales, psychological appraisals. These methods will help superiors to check the progress of department and where they are lacking. Measurement of performance stage will guide the superiors for taking correct action. Fourth stage is of scope of improvement. This stage was included in the design because it is important for concerned superiors for making improvements reflected in the third stage. Fifth stage of the system explains corrective actions. It is important for business to take actions for solving the problems faced by the department and employees. Actions that business can prefer are training, motivation and counselling.           

Business use an accounting system for taking decisions that system is known as management accounting. For the development of policies and procedures for the business management accounting provides essential information (Epstein and Lee, 2008). For improving the business services management accounting provide guidance to its management. Different budgets are prepared by the management for controlling the operations of the business. Management accounting use different tools to recognize and examine the problems in the business (Epstein and Lee, 2008). Scope of management accounting are Financial accounting, Cost accounting,  Statistical methods and operations research, some of them are explained below:-

Financial accounting: Financial accounting provides past information of the business and through this information different strategies and policies are formed. It also helps in forecasting future activities like sales, purchase etc. for the business (Berry, A. 1999).

Cost accounting: Cost accounting helps in providing information related to cost of product and services. Tools that are used to interpret this information and form policies are standard costing, marginal costing, unit costing, batch costing, process costing, etc.

Design of performance measurement system will help Woolworths for make decisions to improve the performance of the business by considering the budget of the business. Keeping in mind the role of management accounting and performance measurement system to improve the social and financial performance designing of the system is done accordingly. Aspects that are considered is cost of performance measurement system and its benefits to the business, impact of the system on business and reactions of the investors. System will help the superiors of the Woolworths in making different policies and strategies for improving the social and financial performance of the department.

Group of 4 students have designed this performance measurement system for Woolworths supermarket. All of us were very excited for designing this system as it was a new experience for all of us. We all learned a lot while doing this assignment about our skills, knowledge and perception. Through this assignment we came to know about Woolworths supermarket and its working. At the initially stage we were bit confused about designing the performance measurement system as before this none of us had designed this type of system. All the team members invested their time throughout the process of preparing the system and its report. Report and system is prepared due to the efforts of all the team members. While preparing this report and system of performance measurement we faced some problems too, like miscommunication between the team members, difference in the thought process, different point of view and behavior.

Before designing the system all the members of our group decided to find out topic related material and study it to have a clear image of the topic. Then we decided to start the designing, but all the members had different opinions so it was creating a problem for all of us. Like when we were deciding about the stages to be included in the system all of us were explaining different stages which was not possible. To solve this problem we all decided to sit together, then we heard all the members idea’s merged them together and came out with five stages of performance measurement system they are defining the objective, identifying key performance indicators, performance measurement, scope of improvement and corrective actions. We have discussed some key indicators in this report like capturing of order, management of inventory, Purchasing and supplier management, warehousing and transportation. With this different methods of performance measurement are also discussed in the report such as 360 degree feedback, self-evaluation, balanced scorecard, Rating scales, psychological appraisals and check list. In this report we have justified our design by using management accounting theory. All the members of our team have contributed their best for designing the performance measurement system and report.

Conclusion

In the conclusion it can be said that performance measurement system is very important for all the business as it guides the manager about deviations in the department or company. Performance measurement is a process of assembling, evaluating and recording information regarding the performance of an employee, a team or an organization. In this report designing of measurement system is done for Woolworths supermarket. Woolworths supermarket has its retail business throughout New Zealand and Australia. It is the second largest retail organization in Australia in terms of revenues after Wesfarmers Limited. Design of the system includes five stages such as Defining the objective, Aligning key performance indicators, Performance measurement, Scope of improvement and corrective actions.

Defining of objective stage explains that objectives helps business to achieve their goals as it provides a blue print to the employees. In this stage, short term and long term objectives will be decided for delivery department of Woolworths supermarket by its manager. Aligning key performance indicators is the second stage included in the design because it provides a numerical value that helps business in analyzing how successfully a department is attaining business objectives. Key indicators that Woolworth can use are Capturing of order, Management of inventory, Purchasing and supplier management, Warehousing and transportation. Third stage that is included in the design is Performance measurement because it evaluates the performance of employees systematically. Methods of performance measurement that are explained above in the report are 360 degree feedback, self-evaluation, balanced scorecard, rating scales, psychological appraisals and check lists. Scope of improvement is the fourth stage of the performance measurement system. This stage will help managers to know the areas where improvement is required. Last stage that is included in the design is Corrective actions. This stage will help employees to improve their performance and learn new things. Justification of the design is provided above and it can be said that design will help Woolworths supermarket to improve their performance. Managerial accounting theory is also explained in the report to provide the justification of the performance measurement system. All the members of team have provided their views to design this system.

References

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Berry, A. 1999. Financial Accounting: An Introduction. Cengage Learning EMEA, pp. 3-41.

Cooper, C and Rothmann, I. 2013. Organizational and Work Psychology: Topics in Applied Psychology. Routledge, pp. 207-262.

Dalto, J. 2014. How to create an effective training program: 8 steps to success. Accessed on: 22 September, 2017. Accessed from: https://www.google.co.in/url?sa=t&rct=j&q=&edata-src=s&source=web&cd=7&cad=rja&uact=8&ved=0ahUKEwje6uz8hrjWAhUMKo8KHRxsC0UQFghHMAY&url=https%3A%2F%2Fwww.convergencetraining.com%2Fblog%2Fhow-to-create-an-effective-training-program-8-steps-to-success&usg=AFQjCNEPp-Zo24NsPcV2z74noSVhay9yHA

David, R. and Joseph. J. E. 2014. Study on performance measurement systems – Measures and Metrics. International journal of scientific and research publications, 4(9), pp. 1-10.

Ekpang, P. U. 2015. Counselling for effective work performance: A way for service improvement. Journal of humanities and social science, 20(3), pp. 39-43.

Epstein, M. J and Lee, J. Y. 2008. Advances in Management Accounting. Emerald Group Publishing, pp. 2-309.

Fleschner, M. 2017. How to Handle the Self-Evaluation Component of Your Performance Assessment. Accessed on: 21, September 2017. Accessed from: https://www.monster.com/career-advice/article/performance-assessment-self-evaluation

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Healthfield, S. M. 2016. 360 degree feedback: The good, the bad and the ugly. Accessed on: 21, September 2017. Accessed from: https://www.thebalance.com/360-degree-feedback-information-1917537

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Libraries. 2017. Appraisal methods. Accessed on: 22 September 2017. Accessed from: https://open.lib.umn.edu/humanresourcemanagement/chapter/11-2-appraisal-methods/

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Nigeria

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Sturman, M. C. and Ford, R. 2011. Motivating your staff to provide outstanding service. Accessed on: 22 September, 2017. Accessed on: https://scholarship.sha.cornell.edu/cgi/viewcontent.cgi?article=1242&context=articles

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Zizlavsky, O. 2014. The Balanced Scorecard: Innovative Performance Measurement and Management Control System. Journal of technology management & innovation, 9(3), pp. 210-222.

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