Measuring the unmeasurable – measuring and improving performance in the supply chain

Remko I Van Hoek

Supply Chain Management

1998, Vol. 3, No. 4, pp. 187-192

 

1)      Logistics optimization

  1. a) Optimization of logistics must contribute to overall supply chain optimization
  2. b) Companies my have to sacrifice internal efficiencies to gain overall supply chain optimization
  3. c) Traditional measurement strategies are too simple to apply to modern complex supply chains

2)      Measurement approach

  1. a) Specific measures used are dependant on the company and its activities
  2. b) Measures must be non-financial as well as financial
  3. c) Purpose of measurement and control is to provide management with actions that can be taken to improve competitiveness and planning
  4. d) Three fundamental steps necessary
  5. i) Extend supply chain definition
  6. ii) Develop new measures and benchmarks

iii)     Develop tools to implement new measures

3)      Framework

  1. a) Performance measures used should drive performance improvement
  2. b) The entire supply chain must be included in the measurement system
  3. c) The tools used differ depending on supply chain operating format and the companies strategies

 

Key Points:

  1. Measurement systems must be all-inclusive
  2. Sacrifices must be made by some players to achieve optimization
  3. Measures should include both quantitative and qualitative measures