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International Journal of Operations & Production Management

Measuring supply chain performance
Benita M. Beamon
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Benita M. Beamon, (1999),"Measuring supply chain performance", International Journal of Operations &
Production Management, Vol. 19 Iss 3 pp. 275 - 292
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(2001),"The Supply Chain Management Processes", The International Journal of Logistics Management,
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(1999),"Supply chain management: an empirical study of its impact on performance", International
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Measuring supply chain Measuring
supply chain
performance performance
Benita M. Beamon
University of Cincinnati, Cincinnati, 275
Ohio, USA
Keywords Flexibility, Performance measurement, Supply chain
Abstract The process of choosing appropriate supply chain performance measures is difficult
due to the complexity of these systems. The paper presents an overview and evaluation of the
performance measures used in supply chain models and also presents a framework for the
selection of performance measurement systems for manufacturing supply chains. Three types of
performance measures are identified as necessary components in any supply chain performance
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measurement system, and new flexibility measures for supply chains are developed.

1. Introduction
When analyzing system performance, qualitative evaluations such as ``good'',
``fair'', ``adequate'', and ``poor'' are vague and difficult to utilize in any
meaningful way. As a result, quantitative performance measures are often
preferred to such qualitative evaluations. A numerical performance measure
might be utilized because the data are readily available, or because it has been
used for a long time. However, the chosen numerical performance measure
may not adequately describe the system's performance, and may therefore be
as vague and difficult to utilize as the above qualitative evaluations. The
difficulty of developing appropriate performance measures extends beyond
these issues of context, to also include issues of scope, such as whether the
performance measure (or measurement system) should include a single
organization or many? Is the performance measurement to include one product
line or many?
Formally, a supply chain is an integrated process wherein raw materials are
manufactured into final products, then delivered to customers (via distribution,
retail, or both). A typical supply chain is depicted in Figure 1.
The supply chain depicted in Figure 1 contains four echelons (supply,
manufacturing, distribution, and consumers), where each level (or echelon) of
the chain may comprise numerous facilities. Thus, the complexity of the supply
chain arises from the number of echelons in the chain and the number of
facilities in each echelon. Given the inherent complexity of the typical supply
chain, selecting appropriate performance measures for supply chain analysis is
particularly critical, since the system of interest is generally large and complex.
The purpose of this research is to develop a framework for the selection of
supply chain performance measures.
International Journal of Operations &
Production Management,
The author would like to thank the editorial team and anonymous referees for their helpful Vol. 19 No. 3, 1999, pp. 275-292,
comments and suggested improvements. # MCB University Press, 0144-3577

IJOPM
19,3

276

Figure 1.
Supply chain
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2. Performance measurement: background and previous work
When a procedure, a model, an approach, a case study, or other research is
undertaken, generally some measure of the system's performance is presented
and perhaps analyzed. A large number of different types of performance
measures have been used to characterize systems, particularly production,
distribution, and inventory systems. Such a large number of available
performance measures makes performance measure selection difficult.
Generally, performance measurement research focuses on analyzing
performance measurement systems that are already in use, categorizing
performance measures and then studying the measures within a category, and
building rules of thumb or frameworks by which performance measurement
systems can be developed for various types of systems.
Beamon (1996) presents a number of characteristics that are found in
effective performance measurement systems, and can therefore be used in
evaluation of these measurement systems. These characteristics include:
inclusiveness (measurement of all pertinent aspects), universality (allow for
comparison under various operating conditions), measurability (data required
are measurable), and consistency (measures consistent with organization
goals). Besides analyzing the measures based on their effectiveness,
benchmarking is another important method that is used in performance
measure evaluation. Benchmarking can be useful in that it can serve as a
means of identifying improvement opportunities. Camp (1989) provides an
excellent, comprehensive discussion of benchmarking.
In order to study the large number of performance measures available,
researchers have categorized them. Neely et al. (1995) present a few of the
categories in the literature, including: quality, time, flexibility, and cost. This
categorization is a useful tool in systems analysis. For example, a model may
be developed to improve one characteristic of a system, for example, time. The
model may then compare manufacturing lead time or due-date performance by

(1995) note that different measurement frameworks have been developed and others have provided criteria for the measurement system design. This involves the methods by which an organization creates its measurement system. Thus. stockout probability. the problem is more difficult since the ``slate is blank'' and the goal is to create the ``best'' possible Downloaded by ASU Libraries At 01:52 31 March 2016 (PT) measurement system for the supply chain or chains of interest. 3. Different types of systems require specific measurement system characteristics. and fill rate. Important questions must be addressed here: What to measure? How are multiple individual measures integrated into a measurement system? How often to measure? How and when are measures re-evaluated? Although all of the ideas important to examining measurement systems already in place apply. Lamming 1996. analysis. However. but within this category. This section describes and evaluates the various types of performance measures that have been used in supply chain modeling. Thus. 1995a. measures within a category can be compared and performance analyzed. previous work has sought to develop various performance measure frameworks for different types of systems that share certain critical characteristics. 1996. a generally applicable systematic approach to performance measurement has not been developed. . time. subject to various operational constraints. and discusses the applicability of these measures. Although with this approach. so that performance measure selection within a category may be easier. Neely et al. Table I summarizes the supply chain models available in the literature and the corresponding performance measures used. The performance measures utilized in these models directly affects their real-world applicability. These models use the listed performance measures as objectives that are either minimized or maximized. In this way. the performance category is already determined. Customer responsiveness measures include lead time.1 Overview Supply chain models have predominantly utilized two different performance measures: (1) cost. 1995b. Waters-Fuller. One of the most difficult areas of performance measure selection is the 277 development of performance measurement systems. and (2) a combination of cost and customer responsiveness. a single type of measure has Measuring been chosen. New. Supply chain performance measures Supply chain management. changing the system's configuration. Costs may include inventory costs and operating costs. and therein lies the difficulty in creating such a general approach. 1995). many different specific measures of supply chain time may be used. 3. and improvement is becoming increasingly important. The literature includes approaches to supply chain management (see Bytheway. in addition to supply chain models.

In order for a measure to be . The author concluded that significant weaknesses were present in each of the performance measures evaluated. customer responsiveness. 1993). and consistency.3 Cost Cohen and Lee (1988) Cohen and Lee (1989) Cohen and Moon (1990) Lee and Feitzinger (1995) Pyke and Cohen (1993) 278 Pyke and Cohen (1994) Tzafestas and Kapsiotis (1994) Cost and activity time Arntzen et al. (1993) Downloaded by ASU Libraries At 01:52 31 March 2016 (PT) Towill (1991) Towill et al. the most consistent weakness for these performance measures was inclusiveness. This section evaluates and identifies the limitations of these supply chain performance measures.2 Evaluation of supply chain performance measures Cost. their use in supply chain models is challenging. 3. but have not yet been used in supply chain modeling research. measurability. information flow (Nicoll. Yet the measures used thus far possess some significant weaknesses.1 Single supply chain performance measures. since the qualitative nature of such measures makes them difficult to incorporate into quantitative models. 1994). activity time. IJOPM Measure Author(s) 19. Customer responsiveness Lee and Billington (1993) Performance measures Flexibility Voudouris (1996) in supply chain modeling Source: Adapted from Beamon (1998) Other performance measures have been identified as appropriate for supply chain analysis. 1995). and risk management (Johnson and Randolph. this measure adequately describes the system performance. Repeatedly. Beamon (1996) identified and evaluated various individual supply chain performance measures. Although these measures may be important characteristics of a supply chain. based on such criteria as inclusiveness. (1992) Wikner et al. universality. Examples of such measures are: customer satisfaction (Christopher. supplier performance (Davis. 1994). (1991) Table I. and flexibility have all been used as supply chain performance measures either singly or jointly. However. The use of a single performance measure is attractive because of its simplicity. (1988) Newhart et al. (1995) Cost and customer responsiveness Altiok and Ranjan (1995) Christy and Grout (1994) Cook and Rogowski (1996) Davis (1993) Ishii et al.2. 3. one must ensure that if a single performance measure is utilized.

it must measure all pertinent aspects of the supply chain.2. there are downfalls to relying on cost as the sole performance measure. it may simultaneously demonstrate poor customer response time performance performance. Strategic goals seldom imply only one performance Strategic goals Implied performance measurement system Company Q will provide high quality custom Cost product quality designed product at the lowest possible cost ABC. Although the supply chain may be operating under minimum cost. Inc.2. Existing supply chain models have typically restricted themselves to traditional cost measures. 3. or lack flexibility to meet random fluctuations in demand. inclusive. and have not yet utilized the advantages of strategic cost management of the supply chain. The authors Downloaded by ASU Libraries At 01:52 31 March 2016 (PT) identify two commonly omitted inventory costs: (1) obsolescence.2 Cost as a single supply chain performance measure. The two reasons cited for establishing and maintaining this relationship are: (1) the company may determine if its performance is meeting its strategic goals. This problem is magnified by current cost accounting methods. 3. and inflexibility. The problems include a lack of relevance of the cost categories. will produce high quality product Product quality flexibility Strategic goals and which will meet future customer demands performance measures . Maskell (1991) suggests that the type of performance measures required for a manufacturing organization are directly related to the manufacturing strategy chosen by the company. such as overhead calculations. Lee and Billington (1992) identify many pitfalls in supply chain management and one identified pitfall is the incorrect assessment of inventory costs. cost is the performance measure of choice for many supply chain 279 models. and (2) rework due to engineering changes. Inc.3 Strategic goals and supply chain performance measures. thus the performance measure will steer company direction. and omitted inventory costs. Consider the strategic goal examples in Table II and the corresponding implied performance measures. Maskell (1991) identifies many shortcomings of traditional management accounting. will manufacture product X and Cost product lateness consistently deliver the product to the customer on time and at a low cost Table II. such as reports that are too late to be valuable. XYZ. and (2) people in the organization will concentrate on what is measured. Although cost as a resource measure is important. As Table I illustrates. Consider an Measuring example in which a company decides to use cost as the measure of supply chain supply chain performance. cost distortions (especially overheads). Shank and Govidarajan (1992) and Barker (1996) address strategic cost management issues within the context of supply chains.

That is. The interrelationship among these three types of measures is illustrated in Figure 2. Although it may be difficult to choose the individual performance measures. although use of multiple supply chain performance measures may be commonplace in real-world settings. product quality can be measured in many different ways. Each of these three types of performance measures has different goals. then. and are not always clearly defined. and flexibility measures (F). has also been identified as an important part of the supply chain. and do not consider the effects of uncertainty. The supply chain performance measurement system must measure each of the three types (R. Many strategic goals of organizations recognize not only the importance of minimizing resources. as illustrated in Table III. The use of resources. is to develop a framework for measuring supply chain performance. Each of the three types of measures has important characteristics and the measure of each of these affects the others. but also the overall importance of the output of the system. Resources measures (generally cost) and output measures (generally customer responsiveness) have been widely used in supply chain models. Toward a new framework for performance measurement As previously mentioned. the desired output and flexibility (how well the system reacts to uncertainty) have been identified as vital components to supply chain success. Measuring the use of resources. as each type is vital to the overall performance success of the supply chain. Strategic goals involve key elements that include the measurement of resources. it is not commonplace in supply chain modeling. Additionally. 280 Consequently. 4. output measures (O). it is vital that the performance measures are related to the strategic goals of the organization.4 Performance measure evaluation summary. A performance measurement system for supply chain analysis must be developed that addresses these issues. O and F). The next step. output and flexibility.3 example. they are often inconsistent with the strategic goals of the organization. ignoring the effects of uncertainty on the supply chain results in a system that is unable to adapt to future changes. 3. .2. IJOPM measure. Therefore. ignores the interactions among important supply chain characteristics. Current supply chain performance measurement systems are inadequate Downloaded by ASU Libraries At 01:52 31 March 2016 (PT) because they rely heavily on the use of cost as a primary (if not sole) measure. and ignores critical aspects of organizational strategic goals. especially cost. Although flexibility has been limited in its application to supply chains. important supply chain characteristics and their associated interactions have been ignored. a supply chain performance measurement system that consists of a single performance measure is generally inadequate since it is not inclusive. Individual performance measures used in supply chain analysis have been shown to be non-inclusive. a supply chain measurement system must place emphasis on three separate types of performance measures: resource measures (R). For 19. many advantages exist to a flexible supply chain. they are not inclusive. they usually point to many.

while the deployment of too many resources artificially increases the system's requirements. Resource measurement is an important part of the measurement system. and cost. personnel requirements. One general goal of supply chain analysis is resource minimization. equipment utilization. Efficiency measures the utilization of the resources in the system that are used to meet the system's objectives. energy usage. The supply chain measurement system Therefore. environment chains must be able to respond to Goals of performance change measure types Downloaded by ASU Libraries At 01:52 31 March 2016 (PT) R O F Figure 2. Each type of performance measure is discussed in the following sub-sections. supply Table III. the effect of reducing resources on the flexibility of the supply chain is not often considered.1 Resources Resource measures include: inventory levels. This measurement system can then allow study of the interactions among the measures or can at least ensure a minimum level of performance in different areas. the supply chain performance measurement system must contain at least one individual measure from each of the three identified types. The individual measures chosen from each type must coincide with the organization's strategic goals. Too few resources can negatively affect the output and the flexibility of the system. 4. Performance Measuring measure type Goal Purpose supply chain performance Resources High level of efficiency Efficient resource management is critical to profitability Output High level of customer service Without acceptable output. Resources are generally measured in terms of the minimum requirements (quantity) or a composite efficiency measure. customers will turn to other supply 281 chains Flexibility Ability to respond to a changing In an uncertain environment. Although a minimum level of output is often specified. A supply chain may be reconfigured with reduced resources while present demands are .

although the relationship between the costs required to achieve different output levels is not generally considered. and the quantity of final product produced. quality. A minimum level of output is often specified. Many output performance measures are easily represented numerically. and address issues such as how many did I produce today? Not how many can I produce tomorrow? Thus. time required to produce a particular item or set of items. The return on investment is generally given by the ratio of net profit to total assets.3 demand. . output measures are based on short. customer satisfaction. what are the costs if the product is delivered late? Additionally. Work-in-process. In this way. resources are directly related to the system's output and flexibility performance. (5) Return on investment (ROI). product quality. Investment value of held inventory. but such short-term analyses do not account for the dynamic nature of 19. IJOPM met. 282 (2) Distribution costs. number of items produced. such as: . Inventory investment. (3) Manufacturing cost. Costs associated with held finished goods inventories. including labor. maintenance. and re-work costs. Costs associated with obsolete inventory. and the output of the supply chain . resources affect the output of a supply chain. Total cost of manufacturing. (4) Inventory. Finished goods. What is the added value or cost if the product is delivered early? Likewise. . Costs associated with held inventory: . However. . Total cost of distribution. Costs associated with work-in-process inventories. Measures the profitability of an organization. sometimes includes spoilage.2 Output Output measures include: customer responsiveness. number of on-time deliveries (orders). finite time horizons. . Inventory obsolescence. including transportation and handling costs. there are also many output performance measures that are much more difficult to express numerically. Downloaded by ASU Libraries At 01:52 31 March 2016 (PT) . . The following is an example list of supply chain resource performance measures: (1) Total cost. Total cost of resources used. such as: . 4.

In this case. Number of stockouts. Measures item. system (quality. To what extent a target fill rate has been achieved. Corbett (1992) identifies a furniture manufacturer that discovered that their customers actually valued delivery reliability more than fast delivery. order. Aggregate lateness divided by the number of orders. but must also correspond to the customers' goals and values. . (3) Fill rate. Instantaneous probability that a requested item is out of stock. The following is an example list of supply chain output performance measures: (1) Sales. Stockout probability. quantity. . . or product delivery performance: . etc. Delivery date minus due date. Average backorder level. . Product lateness.) is important in determining the flexibility of the Measuring system. Aggregate fill rate divided by the number of items. (4) On-time deliveries. Aggregate earliness divided by the number of orders. Measures item. since strategic goals generally address meeting customer requirements. Total revenue. . short lead times were secondary to having the product delivered on time. Average lateness of orders. on- time delivery was more important to the customer. Number of items backordered due to stockout. Downloaded by ASU Libraries At 01:52 31 March 2016 (PT) (2) Profit. (6) Customer response time. . Average earliness of orders. Although lead times may be extremely important to the manufacturer. Amount of time between an order and its corresponding delivery. Number of backorders. . Number of requested items that are out of stock. Proportion of orders filled immediately: . supply chain Output performance measures must not only correspond to the organization's performance strategic goals. Average item fill rate. Total revenue less expenses. Target fill rate achievement. Percent of orders delivered on or before the due date. Percent on-time deliveries. (5) Backorder/stockout. For example. order. both of these output performance measures should be utilized. For 283 the customer. Number of items backordered divided by the number of items. . or product availability performance: .

Ability to respond to and accommodate periods of poor supplier performance. Ability to respond to and accommodate new products. since the supply chain exists in an uncertain environment. (8) Shipping errors. 5. Number of incorrect shipments made. manufacturing unreliability. Number of customer complaints registered. Increased customer satisfaction. Reductions in the number of late orders. or new competitors. . which is seldom used in supply chain analysis. 284 4. flexibility is vital to the success of the supply chain. manufacturers. the chain can be designed to adapt adequately to the uncertain environment. Slack (1991) identifies two types of flexibility: range flexibility and response flexibility. and customers. Ability to respond to and accommodate demand variations. Range flexibility is defined as to what extent the operation can be changed.3 particular item or batch. and producing the desired output. the introduction of new products. . a reduction in system resources may negatively affect the supply chain's flexibility. (9) Customer complaints. . but will the supply chain be able to adjust to changes in. for example: product demand. can measure a system's ability to accommodate volume and schedule fluctuations from suppliers. or both) with which the operation can be changed. IJOPM (7) Manufacturing lead time. Indeed. . . Total amount of time required to produce a 19. A supply chain may be currently utilizing its resources efficiently. seasonality. A quantitative approach to flexibility measurement Numerous flexibility measures for flexible manufacturing systems (FMSs) on the machine and plant levels exist and have been well-studied. Although there will be a limit to the range and response flexibility of a supply chain. Reductions in the number of backorders. Reductions in the number of lost sales. or supplier shortages? Thus. For example.3 Flexibility Some advantages of flexible supply chain systems are: . time. Response flexibility is defined as the ease (in terms of cost. new markets. Ability to respond to and accommodate periods of poor delivery performance. Ability to respond to and accommodate periods of poor manufacturing performance (machine breakdowns). such as Downloaded by ASU Libraries At 01:52 31 March 2016 (PT) . flexibility is an important consideration in supply chain performance. The interested . . Flexibility. .

various measures for flexibility in manufacturing systems have been developed. Slack (1991) defines system flexibility as the flexibility of the entire operation. routing. several different types of flexibilities may be appropriate. Many of these types may have some application to specific supply chain systems. Each of these types of flexibility can be measured in terms of range and response. Flexibility type Definition Volume flexibility The ability to change the output level of products produced Delivery flexibility The ability to change planned delivery dates Mix flexibility The ability to change the variety of products produced New product flexibility The ability to introduce and produce new products (this Table IV. However. Examining historical data for the system can indicate which flexibility measure types are appropriate for the system of interest. includes the modification of existing products) System flexibility types . and . Downloaded by ASU Libraries At 01:52 31 March 2016 (PT) . as previously stated. Table V identifies supply chain characteristics and their corresponding appropriate flexibility types. Slack (1983) indicates that flexibility measures potential behavior. many different types of FMS flexibilities have been identified in the literature. these include machine. 285 whereas other operational objectives are actually demonstrated by the system's operating behavior (performance). such as supply chain systems. These factors are: . Slack (1983) identifies factors that cause difficulty in measuring the flexibility of an entire production system. market. more complex systems. process. flexibility does not have to be demonstrated by the system in order to exist. Flexibility measures are distinctly different from resource and output measures. as shown in Table IV below. Each of these types of system flexibility could be applied to supply chain systems. Although these system flexibility types are applicable to supply chains. such as volume or delivery. expansion. The author further identifies four types of system flexibility. reader is referred to Sethi and Sethi (1990) and Gupta and Goyal (1989) Measuring for comprehensive reviews of the literature in manufacturing system supply chain flexibility. has rarely been addressed. Therefore. and the diversity of these possible changes is large. Das (1996) concludes that since every manufacturing facility experiences different changes to different degrees. flexibility must be applied to other production objectives. product. However. Given the complexity of assessing a system's flexibility. each type may not be appropriate for every supply chain. the multiple dimensions of flexibility (range and response). flexibility is a measure of potential. the measurement of flexibility in performance larger.

The volume flexibility measure. Volume flexibility Variable demand Supply chain system Delivery flexibility Delivery dates change regularly and costs are associated characteristics and with not meeting new delivery dates associated flexibility Mix flexibility Stationary demand for multiple product types types New product flexibility Products with short life cycles . D respectively. corresponding to the mean demand and demand variance.1 Volume flexibility (Fv ) 286 Sethi and Sethi (1990) point out that a generalization of volume flexibility is to measure the range of volumes in which the organization can run profitably. measures the proportion of demand that Downloaded by ASU Libraries At 01:52 31 March 2016 (PT) can be met by the supply chain system. can be effectively estimated as D  and S 2 . For the development of a supply chain volume flexibility measure. IJOPM production. 2D ) and define Omin and Omax as the minimum and maximum profitable output volume during any period. volume flexibility is commonly desirable. assuming that the supply chain of interest has sufficient data regarding demand volumes. Even supply chains with relatively stationary demand experience some variation. we assume that demand volume (D) is a random variable with an approximate normal distribution.3 uncertain environment in which supply chain systems exist. then the parameters of the distribution for D…D . Fv. and T is the number of periods considered. respectively. given the universality of the 19. Now. and program flexibility. 5. However. For manufacturing systems. Flexibility type Supply chain system characteristics Table V. we are interested in how much of the demand can be met considering only the range of volumes that are profitable. the development of volume flexibility measures has generally considered the costs associated with volume changes. 2D †. i. where  ˆ P dt T D tˆ1 …1† T and P T 2 SD2 ˆ …dt ÿ d† tˆ1 …2† T ÿ1 where dt is the demand during period t. First.e. D ~ (N …D .

Standardized normal demand distribution Demand Demand Demand Demand Period volume Period volume Period volume Period volume (t) (units) (t) (units) (t) (units) (t) (units) 1 16 9 12 17 38 25 24 2 21 10 43 18 19 26 17 3 32 11 8 19 29 27 36 4 5 12 29 20 12 28 11 5 18 13 33 21 34 29 28 6 26 14 39 22 49 30 23 Table VI. Example. Suppose a particular supply chain has 32 weeks of weekly demand Downloaded by ASU Libraries At 01:52 31 March 2016 (PT) volume data available. This relation is illustrated below in Figure 3. with mean D and standard deviation D . P T dt  Dˆ tˆ1  24:69 …5† T ( 2( Figure 3. 1†. 7 40 15 7 23 16 31 32 Weekly demand 8 31 16 15 24 30 32 17 volume (example) . and Fv represents the long-run proportion of demand that can be met by the supply chain system. Then. Then we can define volume flexibility (Fv ) as: Measuring   Omin ÿ D  Omax ÿ D supply chain Fv ˆ P D …3† performance SD SD or    Omax ÿ D Omin ÿ D 287 Fv ˆ  ÿ …4† SD SD where Fv 2 ‰0. in which the demand is standardized and represented as a standard normal curve. These data are given below in Table VI. for this system.

the instantaneous delivery flexibility..3 uP u …dt ÿ d† 2 q ‡  ttˆ1 ‡ SD ˆ SD2 ˆ  11:35 …6† T ÿ1 If the supply chain has a maximum profitable output volume of 50 units per 288 time period. . define t as the current time period. . jˆ1 and the minimum delivery time for all jobs j is given by XJ …Ej ÿ t †: jˆ1 Thus FD . Delivery flexibility will be expressed as the percentage of slack time by which the delivery time can be reduced. J jobs in the system. and Ej as the earliest time period during which the delivery can be made for job j. then the total slack time for all jobs j is given by the quantity X J …Lj ÿ t †. IJOPM and v uT 19.2 Delivery flexibility (FD ) The ability to move planned delivery dates forward may be important in supply chain management. then the volume flexibility is given by:     50 ÿ 24:69 5 ÿ 24:69 Fv ˆ  ÿ 11:35 11:35 ˆ …2:23† ÿ …ÿ1:73† ˆ 0:9453: …7† Downloaded by ASU Libraries At 01:52 31 March 2016 (PT) 5. More specifically. Lj as the due date period (or the latest time period during which the delivery can be made) for job j. . and a minimum profitable output volume of five units per time period. may be measured as the proportion of excess slack across all jobs j. This ability allows the supply chain to accommodate rush orders and special orders. If there are j = 1. which can be formally defined as: PJ ……Lj ÿ t  †† ÿ …Ej ÿ t †† jˆ1 FD ˆ …8† P J …Lj ÿ t † jˆ1 which simplifies to P J …Lj ÿ Ej † jˆ1 FD ˆ …9† P J …Lj ÿ t † jˆ1 . and will be described as delivery flexibility.

the use of simple . with C  0. cost- based new product flexibility may be formally expressed as: Fn ˆ C …13† where C is the time required to add new products. with t > 0 and N …t† 2 I ‡ . there is very little available in supply chain performance measure selection. 5. then. The introduction of new products will generally involve some time for development and set-up. Summary and conclusion Performance measurement selection is a critical step in the design and evaluation of any system. Sethi and Sethi (1990) discuss measuring product flexibility as either the time or cost required to add new products to existing production operations. or . Of course. the number of different products that can be produced within a given 289 time period (product mix flexibility range). Fm . Generally. the time required to produce a new product mix (product mix flexibility response). is similar to. As such. the product mix flexibility range is given by: Fm ˆ N …t† …10† where N …t† is the number of different product types that can be produced Downloaded by ASU Libraries At 01:52 31 March 2016 (PT) within the time period t. the larger and more complex the system. and often used interchangeably with process supply chain and job flexibility. is defined as the ease with which new products are introduced to the system. Generally.4 New product flexibility (Fn ) New product flexibility. with T  0.3 Mix flexibility (Fm ) Measuring Mix flexibility. 5. may be calculated as: Fm ˆ Tij …11† where Tij is the changeover time required from product mix i to product mix j. Time-based new product flexibility may be formally expressed as: Fn ˆ T …12† where T is the time required to add new products. many of the existing models use inappropriate or ineffective performance measures that are limited in scope (non-inclusive). with Tij  0 for any i and j. mix flexibility measures either the range of performance different product types that may be produced during a particular time period. 6. While there is an ever- increasing number of supply chain models presented in the literature. the more challenging it becomes to measure effectively. Slack (1991) discusses measuring mix flexibility as: . The product mix flexibility response. or the response time between product mix changes. Fn . More specifically. Similarly. Formally.

IJOPM performance measures is tempting, since simple measures are more easily
19,3 implemented into numerical models; however, by limiting the scope of the
performance measurement, these models ignore important performance trade-
offs. The effects of these performance trade-offs are magnified when the supply
chain is reconfigured on the basis of a non-inclusive measurement system. In
order to improve the effectiveness of supply chain models, performance
290 measures must be selected that will allow for a more complete and accurate
analysis.
This research discusses the importance of a supply chain system to achieve
simultaneously a high level of efficiency, a high level of customer service and
the ability to respond effectively to a changing environment. Previous work in
performance measurement has generally focused on:
. developing new performance measures for specific applications;
Downloaded by ASU Libraries At 01:52 31 March 2016 (PT)

. benchmarking, as in Camp (1989); and
. categorizing existing performance measures, as in Neely et al. (1995).
The research presented here goes beyond this previous work by establishing a
foundation toward the development of a universal framework for the selection
of performance measures for supply chain systems. The categorization of
supply chain performance measures resulted in the identification of three types
of performance measures that are necessary components in any supply chain
performance measurement system: resource, output and flexibility. Although
many individual supply chain performance measures exist for resources and
output, the number of flexibility measures actually applied to supply chains is
few. Therefore, this paper also develops volume flexibility and delivery
flexibility measures for supply chains, and presents existing measures for mix
flexibility and new product flexibility. Supply chain models that utilize this
framework can more completely characterize the supply chain system and the
resulting reconfiguration effects, thus enabling the development of models that
are more complete, accurate, and therefore more effective.

References
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