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Performance Measurement Along the Supply Chain (World-Class Performance…
Performance Measurement Along the Supply Chain
Introduction
Adding several tiers of suppliers & customers complicates performance measurement
Achieving adequate performance and then continually improving on those measurement are what firms air toward
Designing standards and monitoring them can provide much better information for decision-making purposes
Performance measures must be visible & communicated to all members of the SC
Viewing the SC as a Competitive Weapon
Traditional Performance Measure
Decisions to maximize current stock prices do not necessarily reflect that the firm is performing well
Financial performance measures
Traditional cost-based information does not reflect the underlying performance of an organization's productive system
Understanding SC Partner Requirement
Cost
Quality
Sustainability
Service
Adjusting SC Member Capabilities
Responsive to customer needs, quicker to anticipate changes in the markets & control costs much better
Continually reassess performance with respect to requirement
Determine consistency with needs of end customers
Traditional Performance Measures
Productivity & Utilization Measures
Performance Standards & Variances
Organization Costs, Revenue & Profitability Measure
World-Class Performance Measurement Systems
Design and document performance measures for each functional area that adequately track each required capabilty
Assure the compatibility and strategic focus of the performance measures to be measured
Develop an understanding of each functional area's set of requirements for achieving the strategic objectives
Implement the new performance monitoring system
Identify the firm's strategic objective
Identify internal and external trends likely to affect firm and functional area performance over time
Periodically re-evaluate the firm's performance measurement system as these trends and other environmental changes occur
SC Performance Measurement Systems
SC production flexibility
SC delivery performance
SC cash to cash cycle time
SC perfect order fulfilment performances
Total SCM Cost
Supply chain e-business performance
Supply chain environmental performance
Balanced Scorecard
Internal business process perspective
Customer perspective
Financial perspective
Learning & growth perspective
SCOR Model
Process
Make
Deliver
Source
Return
Plan
Enable
Function
Calculate performance gaps against a global database
Develop company-specific road maps for supply chain competitive success
Set reasonable performance goals based on the SCOR Model