Supply Chain Management

Chapter 16 : Measuring Supply Chain Performance

Supply Chain Performance Measurement (SCPM)

Framework for Developing Supply Chain Metrics

Identify Key Supply Chain Links
Evaluate the Links
Draw up Profit and Loss Statements Realign Supply Chain Processes
Align Non-financial Measures with P&L Statements Compare Across Firms and Replicate

Performance Metrics and Measures in a Supply Chain

Metrics for Performance Evaluation of Planned Order Procedures

Order Entry Method Order Lead-time Customer Order Path

Supply Chain Relationship Metrics

Production Level Measures and Metrics

Product Range
Capacity Utilization
Effectiveness of Scheduling Techniques

Measures for Evaluating Delivery Links
Measures for Delivery Performance Evaluation
Measures of Levels of Customer Service and Satisfaction

Requirements for Designing an Ideal SCPM System

Process-based Metrics
Metrics that are defined at Executive and Operational Levels
Metrics Aligned to Overall Business Objectives
Metrics that can Measure Cross-enterprise Processes

Approaches to SCPM

The Balanced Scorecard
The Supply Chain Council’s Model The Logistics Scoreboard
Activity-Based Costing (ABC) Economic Value Analysis (EVA).

Chapter Summary

To be competitive in the market, firms need to measure the performance of their supply chains continuously. This requires specific supply chain metrics that capture the present performance of the supply chain and predict its future performance. In this chapter, we discussed a framework for developing appropriate supply chain metrics.

Then the chapter gives a list of metrics to measure the performance of the various supply chain components and activities like planned order procedures, supply chain relationships, production, delivery links, customer service and satisfaction.

Some approaches for measuring supply chain performance like the balanced scorecard, the supply chain council’s SCOR model, the logistics scoreboard, activity-based costing (ABC), and economic value analysis (EVA) were also explained. Finally, we looked at various methods for setting targets to measure the improvement in supply chain performance. The methods discussed include historically-based targets, benchmarks and theoretical targets.

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