PERFORMANCE MEASUREMENT OF AN AUTOMOTIVE SUPPLY CHAIN

Abstract

Supply chain management 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. Performance measurement and metrics have an important role to play in setting objectives, evaluating performance, and determining future courses of actions. Supply chain management creates value for companies, customers and stakeholders interacting throughout a supply chain. The strategic dimension of supply chains makes it paramount that their performances are measured. Improving supply chain performance has become one of the critical issues for gaining competitive advantages for companies. To meet objectives, the output of the processes enabled by the supply chain must be measured and compared with a set of standards. In order to be controlled, the process parameter values need to be kept within a set limit and remain relatively constant. This will allow comparison of planned and actual parameter values, and once done, the parameter values can be influenced through certain reactive measures in order to improve the performance or re-align the monitored value to the defined value. Thus, control of processes in a supply chain is crucial in improving performance and can be achieved through measurement. In this report, a literature review on performance measurement in supply chain is done to promote a better understanding of the importance of SCM performance measurement. Various systems and approaches used for measuring performance has been studied in which the concept of balanced scorecard approach was selected in this study. The construction of balanced scorecard and the process of its implementation in the enterprise is introduced, and areas for future research are suggested. Also, a balanced scorecard is developed for automobile industry with a case study of a company ABC Ltd. Finally, a hierarchy-based framework is proposed based on interpretive structural modeling (ISM) approach to understand the relationships among different measurement variables of supply chain performance measurement system.