chapter 7 performance measures along the supply chain

Question 1

Discuss why managers need to measure and assess the performance of their companies as well as their supply chains.

Answer 1

To determine if supply
chains operate successfully, it is important to measure performance and link the
performance to the impact on the financial results.Companies need to make sure that they invest time and money to understand the customers’ needs and continue to improve their performance to the customer.It is imperative that supply chain strategies need to consider the potential trade-offs that exist between the cost, quality, sustainability and service requirements addressed as the customer segments. Due to the competitiveness of supply chains and the increasing efficiency of supply chains, companies are forced to adjust their production and delivering capabilities to ensure that the costs will be lower.

Question 2

Discuss the merits of financial and non-financial performance measures

Answer 2

Both financial and non-financial performance measures offer valuable insights into an organization’s success, but they serve different purposes. Financial measures are essential for assessing profitability and overall financial health, while non-financial measures provide a deeper understanding of operational efficiency, customer satisfaction, and strategic alignment.

Question 3

List a number of traditional and world-class performance measures.

Answer 3

Most performance measures that are still used today are the traditional cost based and financial statistics reported to shareholders in the form of annual reports, balance sheets and income statements
. Total supply chain management costs
* Supply chain cash-to-cash cycle time
* Supply chain production flexibility
* Supply chain delivery performance
* Supply chain perfect order fulfilment performance
* Supply chain e-business performance
* Supply chain environmental performance.

Question 4

Describe how the Balanced Scorecard and the SCOR models work.

Answer 4

Balanced Scorecard as: “A strategic performance management tool used for measuring whether the smaller-scale operational activities of a company are aligned with its larger-scale objectives in terms of vision and strategy. By focusing not only on financial outcomes but also on the operational, marketing and developmental inputs to these, the Balanced Scorecard helps provide a more comprehensive view of a business.score-carding is designed to provide managers with a formal framework to achieve a balance between non-financial and financial results across the long and short-term horizons.
The BSC framework consists of four perspectives (Financial, Customer, Learning and Growth, and Internal Business Processes) and developing metrics, collecting data and analysing it relative to each of these perspectives.

Question 5

Describe how to design a supply chain performance measurement system.

Answer 5

• Identify the company’s strategic objectives
• Develop an understanding of each functional area’s set of requirements for achieving the strategic objective
• Design and document performance measures for each functional area that adequately tracks each required capability
• Assure the compatibility and strategic focus of the performance measure to be used
• Implement the new performance monitoring system
• Identify internal and external trends likely to affect the company and functional area performance over time
• Periodically re-evaluate the company’s performance measurement systems as these trends and other environmental changes occur.

Question 6

define the scor model

Answer 6

The SCOR model provides a unique framework that links business processes, methods, best practises and technology features into a joint structure to support communication among supply chain partners and to improve the effectiveness of supply chain management and related supply chain improvement activities.
The SCOR model spans:
* All customer interactions, from order entry through to the paid invoice
* All product (physical material and service) transactions, from the supplier’s supplier to the customer’s customer, including equipment suppliers, spare parts, bulk products, software, etc.
* All market interactions, from the understanding of aggregate demand to the fulfilment of each orderThe SCOR model is an all-embracing model that comprehensively describes operations in terms of:
* Plan – Processes that align resources with requirements
* Source – Processes that connect you with suppliers
* Make – Processes that change the form of functions of materials
* Deliver – Processes that connect you with customers (not just delivering)
* Return – Processes that are associated with returns.SCOR identifies five core supply chain performance attributes.
SCOR identifies five core supply chain performance attributes