Measuring supply chain performance measures : prioritizing performance measures

Abstract: The literature of the management of supply chains has during the last two decades rapidly evolved. The reason for this is the global competition and the introduction of information technology. To reduce cost and increase profitability has always been interesting for organisations that compete on a market. Some researchers claim that it is the supply chain itself that competes on a market not only the organisations with their specific strategies and goals. All members, both upstream and downstream the supply chain are actors that affects (e.g. quality, delivery, cost) the output of the chain. Hill (2000) describes in a model how organisations could win advantage in competition. He claims that the supply chain strategy is part of the overall manufacturing strategy of an organisation, and therefore the performance of the manufacturing affects the performance of the supply chain. The need for measuring the right metric of performance within an organisation is vital due to the facts that it may affect the decision process. For example if the measure not gives the right or suitable facts about the process being measured it could lead to inappropriate decision followed by catastrophically actions. Supply chain performance measures are often in research and by practitioners referred to be quality, delivery, cost/price and flexibility. These measures are often expressed by purchasing managers when choosing suppliers. The metrics describing those measures could be: time to deliver a product, number of products delivered without mistakes, cost of a product etc. This licentiate thesis is focused to analyse the supply chain performance of manufacturing organisations i.e. the measures and its metrics used to describe the performance of the supply chain. The main research question put forward in this paper is: What types of supply chain performance measures should be prioritised to measure in different types of supply chains? The objective of this licentiate thesis is to present a framework that concludes which performance measure and its metrics should be prioritised to measure dependent on which type of product and type of supply chain the organisation operates in i.e. efficient, quick, agile, market responsive, lean or hyrbrid. The objective is also to use the life cycle approach (Dean, 1950;Hill, 1993) of a market, in particular, in the introduction, growth, maturity and decline phases and combine it with the different supply chain measures i.e. quality, delivery, cost/price and flexibility. The method used to develop the framework in this thesis is built on the principle of adding small pieces of theory to existing well known theories. The starting point is the famous model of the product life cycle (PLC) with its four phases. This model is then used as a base for adding both old and new theory i.e. which type of products and supply chain are connected to each phase in the product life cycle and which type of performance measures and its metrics are suitable for manufacturing organisations to measure and finally where in the supply chain they should measure each performance measures. The framework presented consist of three different descriptions of theories when combined together gives valuable directions of what performance measure a manufacturing organisation should prioritise to measure. This description of theory has different levels of support from theory. The three descriptions of theories are presented below: 1)Type of supply chain i.e. efficient, quick, market responsive, lean and hybrid 2)Type of supply chain performance measure i.e. quality, delivery, cost and flexibility3)Scope of measurement in the supply chain i.e. type 1, 2, 3 or 4. (functional, internal integrated supply chain, one sided integrated supply chain and total chain).