ch13_supply chain performance measurement

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Chapter 13:

Supply Chain Performance

Measurement



Chapter 13 Management of Business Logistics, 7 th Ed. 2

Learning Objectives - After reading this

chapter, you should be able to do the following:Understand the scope and importance ofperformance measurement.

Explain the characteristics of goodperformance measures.Discuss cost and service performancemeasurement and quantification.Understand transaction and revenuemeasurement and quantification.




Learning ObjectivesExplain supply chain channel measurement.Discuss overall supply chain metrics.




Logistics Profile: Micros

and More…A Final Sequel “If you can‟t measure it, you can‟t manage it.”;Micros and More was uncertain if their recentgains were appropriate.Micros and More was unsure about „wherethey are‟ and „where they have been‟; thismakes it difficult to evaluate performance.

Developing a set of performance metrics willhelp Micros and More chart a course for thefuture and evaluate their performance alongthe way.




Supply Chain Performance

Measurement: IntroductionThe Micros and More logistics profilepoints out a very important issue for all

organizations: Each needs performancemeasurements or metrics. Achieving efficiency and effectivenessobjectives requires a set of standards tocompare to actual performance.These standards are called metrics.




Dimensions of

Performance Metrics Establishing appropriate metrics is a complexproblem.

Measuring inappropriate performance canlead to a company chasing the wrong goal.Metrics drive behavior --- what youmeasure is what you get.

Logistics cost metrics should focus on thetotal supply chain, not on just one link.




Figure 13-1

Raising the Performance Bar




Overview of Performance

Measurement1

Figure 13-2 contains a list of performancemeasures captured on a regular basis within

companies.Knowing what metrics to use is a veryimportant issue.Figure 13-3 provides some insight into thecharacteristics of good performancemeasures.




Figure 13-2 Measures Captured on a Regular

Basis Within the Company




Figure 13-3 Characteristics of

Good Measures




Other Useful Performance

Guidelines2

The metrics must beconsistent with overallcorporate strategy.The metrics must focuson customer needs andexpectations.Prioritize your metrics.

Focus upon processesnot functions.

Use a balancedapproach in selectingand developing metrics.Precise costmeasurement is animportant aspect forgauging improvement.

Use technology toenhance efficientperformancemeasurement.




On the Line:

Measuring PerformanceThe current economic slowdown has sentmany companies looking for ways to cut

costs and improve productivity withoutincreasing resources.By establishing performance metricsthroughout the supply chain, companies aremore likely to reach overall corporate goals.Systems such as KPIs, SCOR, and e-SCORare being used to develop these metrics.




Evolution of

Metrics Utilization Most organizations go through several phasesin the development of meaningful metrics:

Stage 1 – awareness of the importance ofusing the appropriate metric

Stage 2 – developing the actual metric

Stage 3 – performance improvementStage 4 – integration internally and acrossthe supply chain




Performance

Categories There are a number of approaches that can beused to classify performance metrics.

The next two slides illustrate performancemetrics:Figure 13-4 identifies four principle processmeasure categories.

Figure 13-5 shows various customer servicemetrics and how important they are tocustomers.




Figure 13-4

Process Measure Categories




Figure 13-5 Do Customers Use TheseMeasures to Evaluate Your Performance?




Figure 13-6Logistics Quantification Pyramid




Another Approach toMetric Classification

The next four slides demonstrate other approaches tometric classification:

Figures 13-7 and 13-8 illustrate for ABC PowerTools, cost and management of inventory metrics.Figure 13-9 shows basic logistics service outputsor service performance for metrics development.Figure 13-10 shows the results of a 1999 surveyof the percentage of companies that measureperformance of each of the five service outputs aswell as the percentage that measures value.




Figure 13-7Distribution Inventory Costs




Figure 13-8Distribution Inventory Management




Figure 13-9 Logistics OutputsThat Influence Customer Service




Figure 13-10Service Measurement




Supply ChainMetrics

Supply chain metrics are very different fromtraditional logistics metrics in that they

measure inter-company performance ratherthan just internal performance.These measures of performance must becommon across the firms in the supply chainto be meaningful.




The Supply Chain OperationsReference (SCOR) Model

This model was attempts to integrate well known conceptsof process reengineering, benchmarking, and processmeasurement into a cross functional relationship by:

Capturing the “as is” state of a process and derive the “to be” future state (reengineering); Quantify the operational performance of similarcompanies and establish “best of class” performance

(benchmarking); and,Characterize and describe the management processesthat will result in “best in class” performance (bestpractice analysis).




Figure 13-11SCOR is Based on Five DistinctManagement Processes



Chapter 13:Summary and Review Questions

Students should review their knowledge of the chapterby checking out the Summary and Study Questions for

Chapter 13.



End of Chapter 13 Slides

Supply Chain PerformanceMeasurement

ch13_supply chain performance measurement

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