Friday 5 December 2008
Section A – BOTH questions are compulsory and MUST be attempted
1 The Sentinel Company (TSC) offers a range of door-to-door express delivery services. The company operates using a
network of depots and distribution centres throughout the country of Nickland. The following information is available:
(1) Each depot is solely responsible for all customers within a specified area. It collects goods from customers within
its own area for delivery both within the specific area covered by the depot and elsewhere in Nickland.
(2) Collections made by a depot for delivery outside its own area are forwarded to the depots from which the
deliveries will be made to the customers.
(3) Each depot must therefore integrate its deliveries to customers to include:
(i) goods that it has collected within its own area; and
(ii) goods that are transferred to it from depots within other areas for delivery to customers in its area.
(4) Each depot earns revenue based on the invoiced value of all consignments collected from customers in its area,
regardless of the location of the ultimate distribution depot.
(5) Depot costs comprise all of its own operating costs plus an allocated share of all company costs including
centralised administration services and distribution centre costs.
(6) Bonuses for the management team and all employees at each depot are payable quarterly. The bonus is based
on the achievement of a series of target values by each depot.
(7) Internal benchmarking is used at TSC in order to provide sets of absolute standards that all depots are expected
(8) (a) The Appendix shows the target values and the actual values achieved for each of a sample group of four
depots situated in Donatellotown (D), Leonardotown (L), Michaelangelotown (M), and Raphaeltown (R).
(b) The target values focus on three areas:
(i) depot revenue and profitability;
(ii) customer care and service delivery; and
(iii) credit control and administrative efficiency.
(c) The bonus is based on a points system, which is also used as a guide to the operational effectiveness at
(a) Prepare a report for the directors of TSC which:
(i) contains a summary table which shows the points gained (or forfeited) by each depot. The points table
should facilitate the ranking of each depot against the others for each of the 12 measures provided in
the Appendix. (9 marks)
(ii) evaluates the relative performance of the four depots as indicated by the analysis in the summary table
prepared in (i); (5 marks)
(iii) assesses TSC in terms of financial performance, competitiveness, service quality, resource utilisation,
flexibility and innovation and discusses the interrelationships between these terms, incorporating
examples from within TSC; and (10 marks)
(iv) critiques the performance measurement system at TSC. (5 marks)
Note: requirement (a) includes 4 professional marks.
A central feature of the performance measurement system at TSC is the widespread use of league tables that display
each depot’s performance relative to one another.