Different performance measures are used to examine the efficiency of an organisation's logistics. The most popular and widely used performance measure is the landed cost. The landed cost is the total cost of purchasing, transporting, warehousing and distributing raw materials, semi finished and finished goods.
Another performance measure equally important is the end customer fillrate. It is the percentage of customer demand which is satisfied immediately off-shelf. Logistics is generally a cost-center service activity, but it provides value via improved customer satisfaction. It can quickly lose that value if the customer becomes dissatisfied. The end customer can include another process or work center inside of the manufacturing facility, a warehouse where items are stocked or the final customer who is will use the product.
Another much more popular derivative and a complete usage of the logistic term which has appeared in recent years is the supply chain. The supply chain also looks at an efficient chaining of the supply / purchase and distribution sides of an organisation. While Logistics looks at single echelons with the immediate supply and distribution linked up, supply chain looks at multiple echelons/stages, right from procurement of the raw materials to the final distribution of finished goods upto the customer. It is based on the basic premise that the supply and distribution activities if integrated with the manufacturing / logistic activities, can result in better profitability for the organisation. The local minima of total cost of the manufacturing operation is getting replaced by the global minima of total cost of the whole chain, resulting in better profitability for the chain members and hence lower costs for the products.