PERFORMANCE MEASUREMENT IN AGRI-FOOD SUPPLY-CHAIN NETWORKS
CHAPTER 2
PERFORMANCE MEASUREMENT IN AGRI-FOOD
SUPPLY-CHAIN NETWORKS
An overview
JACK G.A.J. VAN DER VORST
Logistics and Operations Research Group, Wageningen University, Hollandseweg
1, 6706 KN Wageningen, The Netherlands
Abstract. Many researchers and practitioners are working on the enhancement of supply-chain collaboration in order to improve performance of the individual supply-chain members and supply-chain performance as a whole. Performance measurement fulfils a crucial role in the development of supply chains as it can direct the design and management of the chain towards the required performance. It is the key instrument to discuss and evaluate the effectiveness of (potential) chain partnerships. This paper presents a framework for the development of innovative food supply-chain networks and discusses the implications for performance measurement systems. Current bottlenecks and research opportunities are presented. Keywords: performance indicators; network optimization; (bottlenecks and) research opportunities
INTRODUCTION
The importance of performance measurement has long been recognized.
Manufacturing and management consultant Oliver Wright almost 30 years ago offered the oft-repeated saying, “You get what you inspect, not what you expect”
(Melnyk et al. 2004). Metrics are therefore needed to evaluate how work is done and to direct the activities, since what we measure indicates how we intend to deliver value to our customers. Incorrect performance measurement systems (PMS) can create disincentives and unwanted behaviour.
The number of publications on performance measurement has increased significantly in the last decade (e.g. Beamon 1999; Lohman et al. 2004;
Gunasekaran et al. 2004). This is mainly because of a number of fundamental changes in the business environment, especially in agri-food chains. Consumers in
Western-European markets have become more demanding and place new demands on attributes of food such as
PERFORMANCE MEASUREMENT IN AGRI-FOOD
SUPPLY-CHAIN NETWORKS
An overview
JACK G.A.J. VAN DER VORST
Logistics and Operations Research Group, Wageningen University, Hollandseweg
1, 6706 KN Wageningen, The Netherlands
Abstract. Many researchers and practitioners are working on the enhancement of supply-chain collaboration in order to improve performance of the individual supply-chain members and supply-chain performance as a whole. Performance measurement fulfils a crucial role in the development of supply chains as it can direct the design and management of the chain towards the required performance. It is the key instrument to discuss and evaluate the effectiveness of (potential) chain partnerships. This paper presents a framework for the development of innovative food supply-chain networks and discusses the implications for performance measurement systems. Current bottlenecks and research opportunities are presented. Keywords: performance indicators; network optimization; (bottlenecks and) research opportunities
INTRODUCTION
The importance of performance measurement has long been recognized.
Manufacturing and management consultant Oliver Wright almost 30 years ago offered the oft-repeated saying, “You get what you inspect, not what you expect”
(Melnyk et al. 2004). Metrics are therefore needed to evaluate how work is done and to direct the activities, since what we measure indicates how we intend to deliver value to our customers. Incorrect performance measurement systems (PMS) can create disincentives and unwanted behaviour.
The number of publications on performance measurement has increased significantly in the last decade (e.g. Beamon 1999; Lohman et al. 2004;
Gunasekaran et al. 2004). This is mainly because of a number of fundamental changes in the business environment, especially in agri-food chains. Consumers in
Western-European markets have become more demanding and place new demands on attributes of food such as
References: Beamon, B.M., 1999. Measuring supply chain performance. International Journal of Operations and Production Management, 19 (3/4), 275-292. Beulens, A.J.M., Coppens, L.W.C.A. and Trienekens, J.H., 2004. Traceability requirements in food supply chain networks Caplice, C. and Sheffi, Y., 1994. A review and evaluation of logistics metrics. International Journal of Logistics Management, 5 (2), 11-28. Chopra, S. and Meindl, P., 2001. Supply chain management: strategy, planning, and operation. Prentice Hall, Upper Saddle River. Christopher, M., 1998. Logistics and supply chain management: strategies for reducing costs and improving services Davenport, T.H., 1993. Process innovation: reengineering work through information technology. Harvard Business School Press, Boston. Gunasekaran, A., Patel, C. and McGaughey, R.E., 2004. A framework for supply chain performance measurement Håkånsson, H. and Snehota, I., 1995. Developing relationships in business networks. Routledge, London. Kaplan, R.S. and Norton, D.P., 1992. The balanced scorecard: measures that drive performance. Harvard Business Review, 70, 71-79. Kleijnen, J.P.C. and Smits, M.T., 2003. Performance metrics in supply chain management. Journal of the Operational Research Society, 54 (5), 507-514. Lambert, D.M. and Cooper, M.C., 2000. Issues in supply chain management. Industrial Marketing Management, 29 (1), 65-83. Lazzarini, S.G., Chaddad, F.R. and Cook, M.L., 2001. Integrating supply chain and network analyses: the study of netchains Lohman, C., Fortuin, L. and Wouters, M., 2004. Designing a performance measurement system: a case study Melnyk, S.A., Stewart, D.M. and Swink, M., 2004. Metrics and performance measurement in operations management: dealing with the metrics maze Porter, M.E., 1985. Competitive advantage: creating and sustaining superior performance. Free Press, New York. Van der Vorst, J.G.A.J., 2000. Effective food supply chains: generating, modelling and evaluating supply chain scenarios Van der Vorst, J.G.A.J., 2004. Performance levels in food traceability and the impact on chain design: results of an international benchmark study al. eds. Dynamics in chains and networks: proceedings of the sixth international conference on chain and network management in agribusiness and the food industry (Ede, 27-28 May 2004) Van der Vorst, J.G.A.J., Beulens, A.J.M. and Van Beek, P., 2005. Innovations in logistics and ICT in food supply chain networks