Empirical study of measuring supply chain performance dr. Developing key performance indicators for supply chain. Many companies use supply chain performance metrics that are easy to calculate but may not necessarily give a true. When asked how digital supply chain performance metrics. Let us look at the most important supply chain performance. A performance attribute is a grouping or categorization of metrics used to express a specific. Supply chain performance measures are critical for maximising value in the supply chain and maintaining oversight. The information on this page will help you get it right. Supply chain performance our supply chain strategy is a multiyear, port stakeholdersupported series of initiatives developed to achieve sustainable growth in all cargo sectors by coordinating development of the most reliable and consistent supply chain.
Performance by operational area metrics for effective supply chain execution now well look at specific examples of some of the more common and effective metrics used in warehousing and distribution to give you a good head start on developing your own. Support for this project was provided by oracle corporation. Agile supply chain strategy and supply chain performance. Downstream supply chain performance measurement by the. The study provides a snapshot of metrics currently being used by supply chain and procurement departments to. The important decision for any company is to prioritize which supply chain metrics are important and how they will be used. Performance measurement a report by the hospital supply chain metrics working group.
For example, customer satisfaction and product quality. Here, in this article, the bsc is applied to these metrics with the intent to evaluate scm performance. Measuring supply chain performance through kpi identification and evaluation niclas gamme, martin johansson department of technology management and economics chalmers university of technology abstract supply chain management has become one of the most discussed topics in business. You will explore service, asset, speed, and financial metrics, along with a special bullwhip metric to help you and your supply chain partners mitigate the bullwhip effect covered in module scm102. It further examines the moderating effect of information systems is capability for agility on this mediated relationship. This study aims to clarify the position of amazon in the retail industry which it primarily gained through high. Collaborate with suppliers on performance metrics, reporting, and improvements 4. Dec 12, 2017 theres a variety of metrics available when assessing supply chain performance metrics and each provide a different perspective of the piece of the supply chain it measures.
Now gartner has translated this framework into a dynamic benchmark database that enables you to compare key supply chain performance metrics with your peers. The types of measures that companies should use and their advantages and drawbacks are provided, alongside useful information on implementing a supply chain performance measurement system. Larry lapide, who directed the research, and becky schneck allen. Each supply chain performance metric gives a slightly different view of a piece of the supply chain. All 17 key metrics for supply chain management that you ever need updated view larger image to make rapid decisions in todays fastacting environment, we need smart, timesaving, easy to interpret and most importantly decisionsupporting key performance indicators or even better actionable insights. If you want to keep your company on track, it is imperative to implement the key strategies for measuring supply chain performance.
Ask any supply chain leader which metrics are the most important to deliver, and the most common answers are operating margin, inventory turns, and revenue growth. When your company implements a new supply chain execution system warehouse, labor, yard, or transportation, its an excellent time to evaluate your operations and metrics programs. Supply chain performance refers to the extended supply chain s activities in meeting endcustomer requirements, including product availability, ontime delivery, and all the necessary inventory and capacity in the supply chain to deliver that performance. Pdf this survey paper starts with a critical analysis of various performance metrics for supply chain management scm, used by a specific. The metrics are categorized for each stage of the supply chain with definition provided at the back of the document. The guide also includes functional level metrics that measure performance specific to the functions of inventory management and distribution management.
Understand the structure of scor there are over 250 scor metrics that are organized in a hierarchical and codified structure from organization level 1 to process level 2 to diagnostic level 3. Measuring supply chain performance through kpi identification. This licentiate thesis focuses on the analysis of the supply chain performance in manufacturing organisations, i. The study provides a snapshot of metrics currently being used by supply chain and procurement departments to gauge their performance and success. Measuring supply chain performance measures prioritizing. It is a wellknown fact that, people behave based o.
Then in section 4, the common frameworks and approaches available in literature for this purpose are classified into nine different groups and demonstrated in terms of history, criteria of measurement. To show improvement in operations, many supply chain management specialists co implementing supply chain performance indicators or metrics as one of the simples and least timeconsuming activities. Supply chain performance measurement in the manufacturing. Explore service, asset, speed, and financial metrics, along with a special bullwhip metric to help you and your supply chain. These metrics are also known as strategic metrics and key performance. At the same time, the demand for being able to measure supply chain performance has increased, implying that the need for finding new ways to measure performance. The metrics are categorized in five performance attributes. The objective of this document is define a bench marking framework capable of. Performance metrics in supply chain management article pdf available in journal of the operational research society 005.
This study creates a framework for supply chain measurement by presenting the main theory framework of supply chain performance measurement. Aligned and agreedupon supply chain metrics covering all perspectives in supply chain management and also process per formance indicators to enable root cause analyses in the event of deviations. All 17 key metrics for supply chain management that you ever. While some managers and researchers continue to use it interchangeably with logistics, there is an increasing understanding that supply chain management is much more than logistics rogers et al. Supply chain performance measures can broadly be classified into two categories. What are integrated performance measures for supply chains. Metrics are compatible with supply chain goals the selection of right performance metrics is another crucial issue. As called out by dod supply chain materiel management procedures in dod manual 4140. The goal of these metrics is to provide a key set of indicators, aligned with the business strategy, that provide early warnings of problems or early signals of successful project completion.
The study recommended omcs to put in place structured methods of the downstream supply chain performance. Although this framework is generally viewed from the top down, in many instances, a study of the six drivers may indicate the need to change the supply chain. Standardize supplier performance measurement procedures across the enterprise 3. Theres a wide variety of metrics available when assessing supply chain performance metrics and each will provide a slightly different perspective of the piece of the supply chain it measures. Supply chain performance refers to the extended supply chain. Companies must focus on two dimensions of performance to ensure supply chain. Supply chain management is a process that is often measured on its logistics costs. Measuring or monitoring supply chain performance reveals the gap between planning and execution and helps companies to identify potential problems and areas for improvement. Scor metrics are diagnostic metrics compare to how diagnosis is used in a medical office. Linking supply chain practices to operational and financial performance supply chain 2020 project working paper august 2005 this paper was written by dr. The department of defense dod supply chain metrics guide is the main source for detailed information on the supply chain metrics used by the department. All 17 key metrics for supply chain management that you ever need updated view larger image to make rapid decisions in todays fastacting environment, we need smart, timesaving, easy to interpret and most importantly decisionsupporting key performance. It is stated that supply chain performance measurement is ex tremely important in developing supply chain.
Performance measures and metrics in a supply chain environment. Scor recognizes three levels of predefined metrics. Level1 metrics are diagnostics for the overall health of the supply chain. Chain metrics working group, their work is set out in the report. For any company, an accurate overview of performance is essential. Metrics should measure the supply chain, not its logistics components. The study concluded that the downstream supply chain performance measurement is vital among the omcs in kenya with regard to enhancing the performance of their downstream supply chains. Nonfinancial metrics should be established as well 1. Ting shen at the mit center for transportation and logistics and edited by dr. The first part of this research describes the retail industry, especially e. Scor performance the performance or metrics section of scor focuses on understanding the outcomes of the supply chain and consists of two types of elements. Understanding of metrics used for supply chain management 28 understanding of metrics used for supply chain management jakub jancik1, bedrich e. However, it is recognized that developing key performance indicators kpis, or metrics, is very challenging and a set of practical guidelines is not readily available for companies and supply chain. Leonczuk 2016 sc performance is the ability of the entire supply chain to meet endcustomer needs, associated with ensuring the availability of product, deliver it on time in the right way and.
The iadc supply chain committee recognizes there are many other valuable metrics available to measure suppliers performance the committee considers the. R ecently, institute for supply man age ment ism surveyed supply chain leaders about departmental performance metrics. Editors pick kenco group logistics supply chain metrics. In addi tion to documenting which metrics are being used, this study examines which metrics. Is your supply chainprocurement department tracking and reporting the correct measures. The gartner supply chain hierarchy of metrics benchmarking. Measuring supply chain performance through kpi identification and. Supply chain performance refers to the extended supply chains activities in meeting endcustomer requirements, including product availability, ontime delivery, and all the necessary inventory and capacity in the supply chain to deliver that performance in a responsive manner. Learn performance measures, or metrics, for global supply chain performance improvements. Transparency of supply chain costs performance management in supply chain and operations steering value chain activities towards exceptional performance the supply chain reporting should provide a balanced view on customers, demand and supply as well as on financials. As part of a metrics survey published by mesa international and lns research1, 28 manufacturing metrics were identified as being the most utilized by discrete, process, and hybridbatch manufacturers.
According to yin 2003 a case study is an empirical. Abstract in todays world, supply chain management scm is a key. Metrics programs are key to supply chain success step 1. The four differentiators in supply chain performance. Many people get confused about kpis or key performance indicators in logistics and supply chain operations. Many companies use supply chain performance metrics that are easy to calculate but may not necessarily give a true indication of how the supply chain is performing. Performance measurement a report by the hospital supply. Jan 03, 2020 supply chain kpis are essential the right ones. In our plotting of industry results for the supply chain metrics. Modern supply chain execution systems warehouse, labor, and transportation produce a.
It is stated that supply chain performance measurement is extremely important in developing supply chain. To this end, supply chain performance measurement systems scpmss enable the adoption of performance metrics that span different firms and processes. They allow organizations to analyze risks and provide supply chain managers. Linking supply chain practices to operational and financial. Performance measurement of supply chain management. The misleading measurements directly affect the key functions of any company and lead to revenue loss and poor longterm growth. Although this framework is generally viewed from the top down, in many instances, a study of the six drivers may indicate the need to change the supply chain and potentially even the competitive strategy. When selecting a performance metric to use, a company should examine different characteristics that align with their business. The gartner hierarchy of supply chain metrics has long been regarded as the industry standard for endtoend supply chain performance measurement. Supply chain performance our supply chain strategy is a multiyear, port stakeholdersupported series of initiatives developed to achieve sustainable growth in all cargo sectors by coordinating development of the most reliable and consistent supply chain in north america. Supply chain metrics that matter will be a series of reports published intermittently throughout the year by supply chain insights. Supply chain sustainability performance indicators a content. Pdf categories of supply chain performance indicators. Supply chain performance measure can be defined as an approach to judge the performance of supply chain system.
Keywords supply chain management, performance measurement, customer satisfaction. In our plotting of industry results for the supply chain metrics that matter report s, we could see that certain. Now gartner has translated this framework into a dynamic benchmark database that enables you to compare key supply chain performance metrics. The measurement framework is a valid framework for supply chain performance measurement in manufacturing industry. As described in the background, supply chain management has gained more and more attention during the last four decades. What are the strategies for measuring supply chain.
Allows for comparison under different operating conditions 3. Supply chain metrics require the same observations, only instead of driving a car purchase, they speak to something far more important. Performance management in supply chain and operations. In todays economy the battlefield is shifting from individual company performance to what we call supply chain performance. Supply chain practice, supply chain performance indicators core. Lambert and pohlen 2001 state that in most cases articles about supply chain metrics mainly consider internal logistics performance measures.
What types of supply chain performance measures should be prioritized to. Pdf the increasing complexity of supply chains, whose structure is changing from a linear to network form creates the need to track a growing amount. The paper examines the mediating effect of supply chain sc practices on the relationship between agile supply chain asc strategy and sc performance. Supply chain performance improvements across the supply chain and illustrate the shortcomings of several common metrics. Track the performance of a broader portion of the supply base 2. Secondly, supply chain performance indicators include four subelements such as flexibility, efficiency, food quality and responsiveness. We have collected the most important supply chain metrics for you. Performance measures and metrics in logistics and supply chain. The proposed paper is focused on measurement and evaluation of supply chain performance in order to its sustainable improvement. In section 3, the evolution of supply chain performance measurement topic is discussed.
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