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Supply Chain Performance Management

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Supply Chain Performance Management LOG 470 Contemporary Issues in Logistics Week 3 What is Performance? Performance is getting the job done. Producing the result ... – PowerPoint PPT presentation

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Title: Supply Chain Performance Management


1
Supply Chain Performance Management
  • LOG 470 Contemporary Issues in Logistics
  • Week 3

2
What is Performance?
  • Performance is getting the job done. Producing
    the result that you aimed at. Nothing else
    matters. There are no prizes for coming second.
  • http//www.lifehack.org/articles/lifehack/what-is
    -performance.html

3
Supply Chain Performance
  • Is two dimensional efficiency and effectiveness
  • There is not a common classification of supply
    chain performance measures.

4
Suuply Chain Performance
  • As Lambert and Pohlen (2001) observe most of the
    performance measures called supply chain metrics
    are nothing more than logistics measures that
    have an internal focus.
  • These measures may actually prove to be
    dysfunctional by attempting to optimize firms
    performance at the expense of the other firms in
    the supply chain.

5
Supply Chain Performance
  • Gunasekaran et al. (2004) propose supply chain
    performance metrics framework that divides supply
    chain activities / processes into four main
    parts
  • These are based on planning, sourcing,
    making/assembling and delivering all the parts
    are sub-classified into strategic, tactical and
    operational levels.

6
Supply Chain Performance
  • Balanced Scorecard (Kaplan and Norton,1996)
    proposed the usage of Balanced Scorecard as a
    strategic management system emphasizing the
    linked measures from financial, customer,
    internal business processes, learning and growth
    based.

7
Supply Chain Performance
Source Kaplan and Norton (1996)
8
Source Kaplan and Norton (2004)
9
Source Kaplan and Norton (1996)
10
Source Kaplan and Norton (1996)
11
Source Kaplan and Norton (1996)
12
Supply Chain Performance
  • Efficiency and effectiveness management are
    complementary to each other that efficiency is
    based on doing things right and effectiveness is
    dependent to doing the right things.

13
Supply Chain Performance
  • Supply chain effectiveness is measured and
    assessed in terms of consumer satisfaction (Zokai
    and Simons, 2006) and supply chain efficiency is
    related to the performance of the individual
    processes (Hewitt, 1994) in supply chain
    management.

14
Types of supply chains
  • Product oriented (e.g. making and selling beer)
  • Manufacturing centric
  • Capital intensive (usually) geographically
    concentrated
  • Physical product
  • Separation of provision and consumption,
    therefore movement
  • Inventory buffers demand variability
  • Service oriented (e.g. professional services
    house purchase)
  • People centric
  • Not capital intensive geographically more
    dispersed
  • Intangible
  • Customer and provider interact as part of the
    fulfilment process
  • Capacity buffers demand variability
  • Hybrids (e.g. equipment maintenance repair/
    construction/ retailing)
  • Both product and people skills equally required
    to deliver the solution
  • Capacity and inventory both important in managing
    demand variability

15
SCOR model
Supply Chain Council 2004
  • Overlapping process chains link entities
  • Make at the heart of the concept
  • Planning a central business activity
  • a process manufacturing viewpoint

16
Global Supply Chain Forum Framework
17
Performance Metrics
  • Performance metrics commonly used in business are
    based on individual ratio approach. For instance,
    as stated in the Gunasekaran et al. (2004) study
    percentage of defects, cost per operation hour,
    on time delivery of goods, etc. are among ratio
    based supply chain performance metrics.
  • Besides ratio approach other metric include
    non-monetary and monetary performance measures to
    determine supply chain performance.

18
Performance Metrics
  • Monetary performance indicator measures the costs
    which are related to inventory inaccuracy, the
    cost components are cost for out-of-stock items,
    inventory holding cost, additional inventory
    holding cost for misplaced items, handling cost
    for detected missing or unsalable items and cost
    for not detecting missing or unsaleable items in
    the incoming delivery (Fleisch and Tellkamp
    (2005).

19
Supply Chain Performance Measures
Table 1. Traditional Functional Performance Measures Table 1. Traditional Functional Performance Measures Table 1. Traditional Functional Performance Measures
Manufacturing Sales Marketing Engineering / RD
Unit cost Labor cost Labor productivity Quality, scrap rate Plant utilization Plan vs. actual production Market share Revenue Sales growth New "hot" products Customer satisfaction Functions/features Labor material cost Time-to-market Award-winning designs Design for manufacturability, assembly, etc.
Source http//www.supplychainonline.com/cgi-bin/p
review/SCM105/3.html
20
  • End of week 3.
  • Any questions?????
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