Supply chain essay: Performance measures in sustainable supply chain management

As per Beamon (1999) the performance measures in supply chain management can be broadly classified into two broad categories one being qualitative measures and the other being quantitative measurers. Qualitative measures include things such as customer satisfaction and product quality while quantitative measures include quantifiable things like order-to-delivery lead time, supply chain response time, flexibility, and resource utilization and delivery performance. According to Bolstorff and Rosenbaum,(2003) although there are multiple measures of performance measurement in supply chain which includes the Balanced Scorecard, The Supply Chain Council’s SCOR Model, The Logistics Scoreboard, Activity-Based Costing (ABC), Economic Value Analysis (EVA) and Balanced Scorecards however the basic classification of the various performance measures can be said to be the following:

Quantitative measures:

Cycle Time:

The first performance measure in quantitative scenario is the cycle time that exists in the supply chain of the organization. According to Chopra and Meindl (2001), it is the end to end delay in the business process of the organization. For supply chains, the business processes of interest are the supply chain process and the order-to-delivery process. The product that has to be delivered to the customer should be delivered on time and if the product is in stock then there is a better chance of the product to be delivered to the customer in time and thus this is another performance measure in supply chain management which has to be used to determine the efficiency of the supply chain.

Customer service level:

There are various ways in which this performance measure can be used to determine the level of customer service that an organization tends to follow. The first is the order fill rate in which the amount of goods that have been given to the customers is counted. The next is the stock out rate which complements the order fill rate and determines the amount of orders that have been lost due to the lack of stock. The last but not the least is the backordered level which is used to determine the number of orders that are waiting to be delivered. Another form can be the probability of on time delivery to the customer which has a great impact on the overall customer service levels.

Inventory levels:

Another form of performance measures in supply chain management is the inventory levels that have to be maintained by the organization. As per Christopher (1998), although there are a lot of aspects of cost but the inventory levels are something that can have a very high impact on the total available cots. It has to be ascertained that the inventory levels are in accordance with the minimum costs that can be maintained by the organization but should not be so low that it results in the loss of customers for the organization.

Resource utilization:

The supply chain does not only deal with the customers but it also aims to reduce the costs of the organization and this can be achieved by optimum resource utilization. According to Cohen and Roussel (2004), the organization has to make sure that the resources that they have purchased or have been allotted to them they shall have to utilize them to the full extent possible. Be it the manufacturing resources or be it the human resources or the natural resources. The organization has to make sure that the resources are used to the best level possible as this kind of wastage can have devastating results for the organization. As this can drive up costs and can also result in other society welfare organization asking the company about the various operations that they shall undertake.

Financial measures:

As per Eccles (1991), the various fixed and operational costs that are involved in the process of supply chain management to have to be taken care of here. The organization has to make sure that they do not overshoot the costs that have been assigned to them nor they under perform on the costs as if they do not use the resources available to them then they are letting go of opportunity to grow in the future. This is something that has to be understood by the organization. Some of the costs that are associated include, raw material costs; activity-based costs including material handling, manufacturing and assembling; inventory holding costs; and transportation costs

Qualitative measures:

According to Harbour (1997), some of the qualitative measures of the performance of supply chain management are the customer satisfaction and the product quality. The qualitative measures of the same are as important as the quantitative measures. The measures have been used to understand the impact that things that cannot be measured have a great impact on the performance of the organization. This is also the basis on which the organization can measure the various supply chain consequences on their performance

Thus these are some of the measures that can be used to measure the performance of supply chain management

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