Performance Measurement in a Supply Chain

The supply chain is an important element in logistics development for all industries. It can improve efficiency and effectiveness of not only product transfer, but also information sharing between the complex hierarchy of all the tiers. There is no systematic grouping of the different performance measures in the existing literatures. This paper presents the formulisation of both quantitative and qualitative performance measurements for easy representation and understanding. Apart from the common criteria such as cost and quality, five other performance measurements are defined: resource utilisation; flexibility; visibility; trust; and innovativeness. In particular, new definitions are developed for visibility, trust, and innovativeness. Details of choices of these performance measurements are listed and suggested solutions are given, with the hope that a full picture of supply chain performance measurements is developed. In addition, a multi-attribute decision-making technique, an analytic hierarchy process (AHP), is used to make decisions based on the priority of performance measures. This paper outlines the application and particularly the pairwise comparison which helps to identify easily the importance of different performance measurements. An example from the electronic industry is used to demonstrate the AHP technique.

[1]  W. E. Wilhelm,et al.  Effectiveness of alternate operations in a flexible manufacturing system , 1985 .

[2]  Suresh P. Sethi,et al.  Flexibility in manufacturing: A survey , 1990 .

[3]  Subhash Wadhwa,et al.  Impact of Routing Flexibility on the Performance of an FMS—A Simulation Study , 1997 .

[4]  Markku Tuominen,et al.  An analytic approach to supply chain development , 2001 .

[5]  M. Tuominen,et al.  Benchmarking logistics performance with an application of the analytic hierarchy process , 1996 .

[6]  Andy Neely,et al.  The forces that shape organisational performance measurement systems:: An interdisciplinary review , 1999 .

[7]  T. Saaty Axiomatic foundation of the analytic hierarchy process , 1986 .

[8]  Farzad Mahmoodi,et al.  The Effects of Scheduling Rules and Routing Flexibility on the Performance of a Random Flexible Manufacturing System , 1999 .

[9]  Fred A. Kuglin,et al.  Customer-Centered Supply Chain Management: A Link-by-Link Guide , 1998 .

[10]  T. Saaty,et al.  The Analytic Hierarchy Process , 1985 .

[11]  Hungtao Joseph Wen,et al.  Formation and dynamic routing of part families among flexible manufacturing cells , 1993 .

[12]  Andy Neely,et al.  Performance measurement system design , 1995 .

[13]  Charu Chandra,et al.  Supply chain management in theory and practice: a passing fad or a fundamental change? , 2000, Ind. Manag. Data Syst..

[14]  Darryl D. Wilson,et al.  Supply management orientation and supplier/buyer performance , 2000 .

[15]  J. Fransoo,et al.  Measuring the bullwhip effect in the supply chain , 2000 .

[16]  Enver Yücesan,et al.  Lead times, order release mechanisms, and customer service , 2000, Eur. J. Oper. Res..

[17]  Luis G. Vargas An overview of the analytic hierarchy process and its applications , 1990 .

[18]  Andy Neely,et al.  Designing, implementing and updating performance measurement systems , 2000 .

[19]  Robert J. Vokurka,et al.  Defining supply chain management: a historical perspective and practical guidelines , 1999 .

[20]  Bowon Kim,et al.  The perception gap among buyer and suppliers in the semiconductor industry , 1999 .

[21]  A. Gunasekaran,et al.  Performance measures and metrics in a supply chain environment , 2001 .

[22]  Benita M. Beamon,et al.  A process quality model for the analysis, improvement and control of supply chain systems , 1998 .

[23]  D. S. Sink,et al.  Planning and Measurement in Your Organization of the Future , 1989 .

[24]  B. Beamon Supply chain design and analysis:: Models and methods , 1998 .

[25]  Colin New,et al.  Process variability and its effect on plant performance , 2000 .

[26]  Benita M. Beamon,et al.  Measuring supply chain performance , 1999 .

[27]  R. V. Hoek,et al.  “Measuring the unmeasurable” ‐ measuring and improving performance in the supply chain , 1998 .

[28]  Manoj K. Malhotra,et al.  A theoretical framework for analyzing the dimensions of manufacturing flexibility , 1999 .

[29]  T. Saaty How to Make a Decision: The Analytic Hierarchy Process , 1990 .

[30]  Les Oakshott Essential Quantitative Methods for Business, Management and Finance , 1998 .

[31]  John M. Kay,et al.  The role of performance measurement in business process re‐engineering , 2000 .

[32]  Yoke San Wong,et al.  Machine Selection Rules in a Dynamic Job Shop , 2000 .