Supply Chain Management Measures and SCM Matrix
Rahul R. Naik
School of Management Studies
MBA IB S3
Abstract: Supply chain management (SCM) has been a major component of competitive strategy to enhance organizational productivity and profitability. In recent years, organizational performance measurement and metrics have received much attention from researchers and practitioners. The role of these measures and metrics in the success of an organization cannot be ignored because they affect strategic, tactical and operational planning and control. Performance measurement and metrics have an important role to play in setting objectives, evaluating performance, and determining future courses of actions. Performance measurement and metrics pertaining to SCM have not received adequate attention from researchers or practitioners. Therefore a framework to promote a better understanding of the importance of SCM performance measurement and metrics has been put forward here.
Keywords: Supply chain; Performance measurements; Metrics.
By the late 1980s, outsourcing in US industries contributed to nearly 60% of the total product cost (Ballou, 1992). In the UK, a survey showed that 40% of the UK’s gross domestic product was spent on distribution and logistics related activities (Department of Trade and Industry, UK, 1990). Such findings and developments present significant visible impact of distribution, purchasing, and supply management on company assets. Managers in many industries, especially those in manufacturing, are trying to better manage supply chains. Important techniques/methodologies like just-in-time (JIT), total quality management, lean production, computer generated enterprise resource planning schedule (ERP) and Kaizen have been embraced. The concept of supply chain management (SCM), according to Thomas and Griffin (1996) represents the most advanced state in the evolutionary development of purchasing, procurement and other supply chain activities. At the operational level, this brings together functions that are as old as commerce itself—seeking goods, buying them, storing them and distributing them.
At the strategic level, SCM is a relatively new and rapidly expanding discipline that is transforming the way that manufacturing and non-manufacturing operations meet the needs of their customers. Development of cross-functional teams aligns organisations with process oriented structure, which is much needed to realise a smooth flow of resources in a supply chain. As suggested by Trent and Monczka (1994), such teams promote improved supply chain effectiveness. They minimise or eliminate functional and departmental boundaries and overcome the drawbacks of specialisation, which according to Fawcett (1995), can distribute the knowledge of all value adding activities such that no one, including upper level managers, has complete control over the process. Such teams helped in the formation of modern supply chains by promoting greater integration of organisations with their suppliers and customers. Supplier partnerships and strategic alliances refer to the co-operative and more exclusive relationships between organisations and their upstream suppliers and downstream customers.
Today many firms have taken bold steps to break down both inter and intra firm barriers to form alliances, with the objective of reducing uncertainty and enhancing control of supply and distribution channels. Such alliances are usually created to increase the financial and operational performance of each channel member through reductions in total cost and inventories and increased sharing of information (Maloni and Benton, 1997). Rather than concerning themselves only with price, manufacturers are looking to suppliers to work co-operatively in providing improved service, technological innovation and product design. This development has produced a significant...
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