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Principles of Supply Chain Management: A Balanced Approach by Wisner, Leong, and Tan.
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© 2005 Thomson Business and Professional Publishing
Chapter Fourteen Outline
Viewing the Supply Chain (SC) as Use of Firm-Wide Productivity &
a Competitive Weapon Utilization Measures
Understanding End Customers World-Class Performance
Understanding SC Partner Measurement Systems
Requirements Developing World-Class
Adjusting SC Member Performance Measures
Capabilities SC Performance Measurement
Traditional Performance Measures Systems
Use of Organization Costs, Specific Chain Performance
Revenue, & Profitability Measures
Measures The Balanced Scorecard
Use of Performance Standards & The SC Operations Reference
Variances Model
Principles of Supply Chain Management: A Balanced Approach by Wisner, Leong, and Tan.
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© 2005 Thomson Business and Professional Publishing
Introduction
“You can’t improve what you can’t measure”
Principles of Supply Chain Management: A Balanced Approach by Wisner, Leong, and Tan.
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© 2005 Thomson Business and Professional Publishing
Traditional Performance Measures
Principles of Supply Chain Management: A Balanced Approach by Wisner, Leong, and Tan.
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© 2005 Thomson Business and Professional Publishing
Traditional Performance Measures- Cont.
Principles of Supply Chain Management: A Balanced Approach by Wisner, Leong, and Tan.
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© 2005 Thomson Business and Professional Publishing
Traditional Performance Measures- Cont.
Principles of Supply Chain Management: A Balanced Approach by Wisner, Leong, and Tan.
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© 2005 Thomson Business and Professional Publishing
Traditional Performance Measures- Cont.
Principles of Supply Chain Management: A Balanced Approach by Wisner, Leong, and Tan.
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© 2005 Thomson Business and Professional Publishing
World-Class Performance Measurement
Systems
Developing World-Class Performance Measures
– Identify the firm’s strategic objectives.
– Develop an understanding of each functional area’s role & the
required capabilities.
– Identify internal & external trends likely to affect the firm & its
performance over time.
– For each functional area, develop performance measures that
describe each area’s capabilities.
– Document current performance measures & identify changes
that must be implemented.
– Assure the compatibility & strategic focus of the performance
measures to be used.
– Implement the new performance system.
– Periodically reevaluate the firm’s performance measurement
system.
Principles of Supply Chain Management: A Balanced Approach by Wisner, Leong, and Tan.
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© 2005 Thomson Business and Professional Publishing
World-Class Performance Measurement
Systems
Principles of Supply Chain Management: A Balanced Approach by Wisner, Leong, and Tan.
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© 2005 Thomson Business and Professional Publishing
SC Performance Measurement Systems
Principles of Supply Chain Management: A Balanced Approach by Wisner, Leong, and Tan.
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© 2005 Thomson Business and Professional Publishing
SC Performance Measurement Systems-
Cont.
Specific Supply Chain Performance Measures
– Total SCM costs: cost to process orders; purchase &
manage inventories; & information systems.
– SC cash-to-cash cycle time: Average # of days between
paying for materials and getting paid by SC partners.
– SC production flexibility: average time required to provide an
unplanned 20 % increase in production.
– SC delivery performance: average % of orders filled by
requested delivery date.
– SC perfect order fulfillment performance: average % of
orders that arrive on time, complete, and damage free.
– Supply chain e-business performance: average % of
electronic orders received for all supply chain members.
Principles of Supply Chain Management: A Balanced Approach by Wisner, Leong, and Tan.
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© 2005 Thomson Business and Professional Publishing
The Balanced Scorecard
Principles of Supply Chain Management: A Balanced Approach by Wisner, Leong, and Tan.
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© 2005 Thomson Business and Professional Publishing
The Balanced Scorecard- Cont.
Principles of Supply Chain Management: A Balanced Approach by Wisner, Leong, and Tan.
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© 2005 Thomson Business and Professional Publishing
The Balanced Scorecard- Cont.
Principles of Supply Chain Management: A Balanced Approach by Wisner, Leong, and Tan.
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© 2005 Thomson Business and Professional Publishing
Supply Chain Operations Reference
(SCOR) Model
Developed by the Supply-Chain
Council for supply chain management
diagnostic benchmarking, and
process improvement tool. The SCOR
model separates supply chain
operations into 5 process categories:
– Plan
– Source
– Make
– Deliver
– Return
Principles of Supply Chain Management: A Balanced Approach by Wisner, Leong, and Tan.
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© 2005 Thomson Business and Professional Publishing
Supply Chain Operations Reference
Model- Cont.
Principles of Supply Chain Management: A Balanced Approach by Wisner, Leong, and Tan.
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© 2005 Thomson Business and Professional Publishing
Supply Chain Operations Reference
Model- Cont.
Principles of Supply Chain Management: A Balanced Approach by Wisner, Leong, and Tan.
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© 2005 Thomson Business and Professional Publishing
Supply Chain Operations Reference
Model- Cont.
Principles of Supply Chain Management: A Balanced Approach by Wisner, Leong, and Tan.
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© 2005 Thomson Business and Professional Publishing