Key Performance Indicators (KPIs) in EXIM – Must for continuous improvements

Exim Vidya

Most people handling EXIM trade, import export clearance and compliance have apprehensions around the measurement of KPIs and their advantages, since most activities are dependent on customs procedures and officials. Their concerns are genuine and require detailed explanation which will help EXIM professionals to take necessary steps to implement KPIs.

First some basics.

“If you cannot measure it, you cannot improve it.” – Peter Drucker

“In God we trust. All others must bring data.” – W. Edward Deming

KPIs can help organization to make strategy, check if a particular strategy is working and measure performance against goals. KPIs also help in simplifying complex matters, individual and corporate/department self-improvements, leading indicators of future trends, improve communication (internal external), customer satisfaction, continuous learning, mode risk assessment and actions, cost benefits.

In order to make international trade more competitive, effective and efficient, KPIs needs to be measured and monitored.

KPIs can contribute to three major areas:

  • Strategic & Compliance
  • Operational
  • Cost

A deep dive in each of these areas will result in identification of several KPIs, which is an important exercise to ensure good health of EXIM trade.

What KPIs to be measured? This is important step and must be carefully done.

This will vary based on:

  1. Organization type, area, size, structure, type of operations
  2. EXIM volume, department size, number of shipments, modes of transport, operations at number of customs locations.
  3. Type of activities- Normal clearance, clearance under FTA, Advance /EPCG Authorizations, bonding, ex-bonding, project imports, second hand imports, exports returns, repair and returns, job work, returnable packing etc.
  4. Number of Customs Brokers
  5. Number of Internal Business Units

However, most important is KPI must be SMART.

There are few important practical points which must be followed.

  • Start KPI design with Business needs, not with KPIs.
  • Have action plan to achieve a specific objective in mind.
  • Define KPIs – for monitoring performance or tracking progress.
  • Translate your KPIs to a team, involve team in KPI design.
  • Choose proper KPI Automation and Visualization tool.

Most importantly, do not copy KPIs of other companies i.e. if an organization handling critical medical spares have Customs clearance KPIs measured in hours, this may not be suitable for clearance of break bulk or bulk commodity like steel/paper etc.

This is an abridged version of the EXIM Vidya segment that was published in the March issue of Logistics Insider magazine. To read the complete version, please click here.