Performance Measures for Supply Chain Systems

8/8/2019 Performance Measures for Supply Chain Systems

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Performance Measures for

Supply Chain Systems

Dr. Nicoleta S. Tipi

The University of Huddersfield


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Performance Measures -

Overview

It is known that the role of performance measureswithin organisations is to evaluate, control and

improve their processes in order to ensure theachievement of their goals and objectives.

Performance measures are employed to determinethe effectiveness and efficiency of an existingsystem.


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Aims

To evaluate which procedures are currently used inpractice and academic research to develop andanalyse performance measures

To assess the general issues regarding PM

To understand the role of modelling and modellingprocedures in determining the most appropriate

performance measurement systems for anorganisation


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Performance Measures Research

Approaches

Research evaluates how supply chain

performance measures are

currently selected and analysed

within organisations.

Research in this area focuses on

classifying measures in different

type of categories, where the

modelling element is not always

considered.


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So far

A large number of performance measures havebeen used to characterise manufacturing

systems, production, distribution and inventory

systems.

The performance measure available can becategorised in the following groups:

time,

cost,

quality

and flexibility


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Types ofMeasures

Outcomes

CustomerService

Product qualityDelivery performanceOrder fulfilment performancePerfect order fulfilment

Time Order fulfilment lead timeProduction flexibility

Cost Total Supply Chain CostValued-added productivity

Assets Cash to cash cycle timeReturn on assets

Inventory days of supplySupply Chain Metric Framework

Supply Chain Improvement Objectives.Source:Adapted From: Pretko, 2001

PM Categories


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Issues, so far

The problem becomes more complicatedfor a supply chain system, and even

more for a global supply chain, becauseeach individual echelon in the systemmay use different performancemeasurement criteria.

Measures within a category can becompared and analysed, so that

performance measure selection within a

category may be easier.


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Questions?

What to measure?

Is each individual echelon from the supply chain base

on the same measurement system?

How are multiple individual measures integrated into ameasurement system?

How often to measure?

How and when are measures re-evaluated in order toanalyse and create the best possible supply chain

system?


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Revised Performance Systems

Traditional

Financial:

Historic

Not linked to

SCM (e.g.

service, quality,waste along

chain)

Revised Integrate with other

departments or

companies

Balanced systems

Cross-functional

Time and order

accuracy emphasised


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New Approaches

Cross-Functional Measures

Supply Chain Operations Reference

(SCOR) Model

Balanced Scorecard

Economic Value Analysis (EVA)

Factor analysis

Activity-Based Costing (ABC)

and so on


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Viability

Utilises SCOR and Balanced Scorecard within SAP

Integrates supply chain planning and execution

functions with key performance data

Communicated to all levels and partners

Alerts on deviations from targets


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Figure 1. Source: Adopted from Pretko, P. (2001) -Supporting the Innovative SCOR model with a balanced Scorecard


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Aggregated Measures and their

modelling implications

Aggregated measures are important within an integratedsupply chain to give a summary to stakeholders or policy

makers of the complex multi-dimensional issues

accumulated form different levels within an individual supply

chain within an organisation.

Aggregated measures aim to present the bigger picture, the

overall performance where this is easier to interpret by

different players within the supply chain as well as it is

easier to communicate to different parties within theextended chain.


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By aggregating measures, individual elements coulddisguise failings in parts of the operating function or

system.

From a modelling point of view before aggregation

extensive testing and verification procedures needs

to be carried out for individual elements, after which

they can be consolidated into a single moremeaningful measure.

Aggregated Measures and their

modelling implications


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Although complex modelling approaches have been adopted

lately for design and analysis of supply chain system, theperformance measures used within these analyses are stillvery limited.

Furthermore research in supply chain modelling demonstrating

the interrelationship between performance measures hasbeen very limited.

Understanding how changes in supply chain strategies or

decision variables affect a given performance measure or aset of performance measures, as well as their interdependency will offer companies better judgment on theselection of their performance measurement system.

The future


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The future

New modelling approaches such as simulation allowthe analysis of complex supply chain measures

and their combination and interdependency.

Ongoing research will look into the development ofthese within different types of supply chains within

different companies.


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Thank you for your attention

Performance Measures for Supply Chain Systems

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