Current Lecture Lecture 20Chapter 14~Performance Measurement along the Supply ChainSCM 3301 1st EditionCurrent Lecture Lecture 20Chapter 14~Performance Measurement along the Supply ChainThe Importance of Numerical Measurement- Perceptions are Subjectiveo Everyone has a different perspective on the source and magnitude of problems- Measurement identifies problems- Measurement guides improvement- Measurement verifies solutions- Measurement is a persuasive change-agentTraditional Performance Measures- Organizational cost, revenue, profito Annual reports, balance sheets, income statements- Production or Operational Standardso Production Output, quality, labor productivity- Productivity and Utilization Measureso Total and Single-Factor productivityo Labor and Machine UtilizationWeakness of Traditional Measures:Lack of Customer FocusDeveloping World-Class Performance Measures- Identify the firm’s strategic objectiveso Customer Focused Performance Capabilities- Understand each functional area’s required capabilities- Develop measures to track capability performance- Assure (check) that the measures encourage pursuit of strategic objectives- Implement a performance monitoring system- Identify (measure) internal and external trends- Reevaluate the measurement system periodicallySpecific Supply Chain Performance Measures- Total Supply Chain Management Costso World-class (4-5%) of sales), Average (5-6% of sales)SCM 3301 1st Edition- Supply Chain cash-to-cash cycleo The average number of days from payment for materials to getting paid for your product.- Supply Chain Delivery Performanceo Percentage On-Time Delivery- Supply Chain Perfect Order Fulfillment Performanceo Average percentage of orders that arrive on time, complete and damage free.The Balanced ScorecardSCM 3301 1st EditionBalanced Scorecard Summary- Key: It aligns an organization’s performance measures with its strategic goals- Balances four key perspectives:o Customer Perspectiveo Internal Business Process Perspectiveo Learning and Growth Perspectiveso Financial PerspectiveEx: Dell Customer ServiceSupply Chain Operations Reference (SCOR) Model- Supplier-The Firm-Customero Plan Source, Make, Deliver- ReturnSCOR Model SummarySCM 3301 1st Edition- SCOR (Supply Chain Operations Reference)- Divides the Supply Chain: Key Componentso Plano Sourceo Makeo Delivero
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