SUPPLY CHAIN MANAGEMENT

Supply Chain Management

1. Abstract

In today's world, supply chain management (SCM) is a key strategic factor for increasing organizational effectiveness and for better realization of organizational goals such as enhanced competitiveness, better customer care and increased profitability. The era of both globalization of markets and outsourcing has begun and many companies select supply chain and logistics to manage their operations. Based on a literature survey, an attempt has been made in this paper to develop a framework for measuring the strategic, tactical and operational level performance in a supply chain. In addition a list of key performance metrics is presented. The emphasis is on performance measures dealing with suppliers, delivery performance, customer-service and inventory and logistics costs in a SCM. In developing the metrics, an effort has been made to align and relate them to customer satisfaction.

Table of Contents

1. Abstract2

2. Introduction4

2.1. Aim4

2.2. Key Definitions5

3. Literature Review6

3.1. SCM - Overview6

3.2. Metrics, different types of metrics in SCM6

3.3.Performance Management in SCM, some keys methods in practice10

5.Discussion13

4.1. How metrics are used and why?13

4.2. How can performance in supply chain be increased with the help of metrics16

5. Conclusion & Recommendations22

6. References25

7. Appendices30

2. Introduction

In today's markets technological and competitive forces are changing at an ever increasing rate. To respond to these forces, radical changes in organisations have become necessary. The viability of a firm now depends largely on how well it is capable of responding to customer requirements while becoming lean. It is becoming increasingly more difficult and less economical for companies to produce their needs on their own. Instead outsourcing is becoming one of their main strategies. Also the ever-increasing trend in globalization and customer orientation requires a logistics-sensitive organisation. Supply chain management (SCM) is an approach that has evolved out of the integration of these considerations.

From the beginning of this decade, this subject has been studied and practiced and has been reported in the literature. While there are many ongoing research efforts on various aspects and areas of SCM, so far little attention has been given to the performance evaluation and hence, to the measures and metrics of supply chains. A notable work in this area is by Stewart (1995). New (1996) has used a taxonomy to discuss a framework for improving supply chain performance. As a pitfall in managing supply chain inventories, Lee and Billington (1992) also draw attention to the lack of supply chain metrics.

2.1. Aim

Following are the aims & objectives of the paper:

To discuss the overview for supply chain management.

To explain the metrics in Supply chain management & how they are used and why.

To explore the performance management in supply chain management.

To examine how can performance in supply chain be increased with the help of metrics.

2.2. Key Definitions

Supply chain management: A definition of supply chain (Stevens, 1989) is:

A system whose constituent parts include material suppliers, production facilities, distribution services and customers linked together via the feed forward flow of materials and the feedback flow of information.

Performance Metrics: Performance metrics quantify the units ...