Glossary
Surrogate [item] Driver
Tags: Glossary
A substitute for the ideal driver, but closely correlated to the ideal driver, where [item] is Resource, Activity, or Cost Object. A surrogate driver is used to significantly reduce the cost of measurement while not significantly reducing accuracy. For example, the number of production runs is not descriptive of the material disbursing activity, but it may be used as an activity driver if material disbursements correlate well with the number of production runs.
What is Surrogate [item] Driver?
A surrogate driver is a valuable tool in logistics that serves as a substitute for the ideal driver, while still maintaining a close correlation to the ideal driver. It is used to measure and track various aspects of logistics, such as resources, activities, or cost objects, in a cost-effective manner without compromising accuracy.
In logistics, it is crucial to have accurate measurements and data to effectively manage and optimize operations. However, obtaining precise measurements can sometimes be costly and time-consuming. This is where surrogate drivers come into play. They provide a cost-effective alternative that allows logistics professionals to gather relevant data without incurring excessive expenses.
For instance, let's consider the example of material disbursing activity in a manufacturing facility. The ideal driver for measuring this activity would be the actual amount of material disbursed. However, directly measuring this can be expensive and impractical. Instead, a surrogate driver can be used, such as the number of production runs. While the number of production runs may not directly describe the material disbursing activity, it can serve as a reliable indicator if there is a strong correlation between the two. By using the number of production runs as a surrogate driver, logistics professionals can significantly reduce the cost of measurement while still maintaining a reasonable level of accuracy.
Surrogate drivers are particularly useful when there is a strong correlation between the surrogate driver and the ideal driver. This correlation ensures that the surrogate driver provides a reliable representation of the desired measurement. However, it is important to note that surrogate drivers should be carefully selected and validated to ensure their accuracy and relevance to the specific logistics context.
In conclusion, surrogate drivers are a valuable tool in logistics that allow for cost-effective measurement without compromising accuracy. By using surrogate drivers, logistics professionals can gather relevant data and track various aspects of logistics, such as resources, activities, or cost objects, in a more efficient and economical manner. It is essential to carefully select and validate surrogate drivers to ensure their correlation with the ideal driver and their suitability for the specific logistics context.