Supply Chain Performance Measurement
using Analytical Framework
Prasanta Kumar Dey
Aston Business School
[email protected]
British Council funded on-going research
project under PMI 2 Connect
It reports a few initial findings
Collaborating organizations
University of Thai Chamber of Commerce, Bangkok
Rolls Royce, Derby
Land Rover, Solihull
Brintons Carpets, Kidderminster
TEP KINSHO, Thailand
JONG PATTANA, Thailand
THAI URETHANE PLASTIC, Thailand
Context and Problem
Statement
Conventional performance measurement
Internally focused
Reactive in nature
Disintegrated functional focused (e.g. finance,
production, supplier performance)
Supply chain performance measurement
Although covers upstream suppliers, internal supply
chain and downstream customers, but does not integrate
across the decision levels (strategic, tactical and
operational)
Literature review–SC performance
Balanced Score card perspective – Kaplan and Norton (1997)
(Financial, internal process, innovation and improvement, customer)
Component of performance measures – Beamon (1999)
(Time, resource utilization, output, flexibility)
Location of measures in supply chain links – Gunasekaran et al. (2001)
(Planning and product design, supplier, production, delivery, customer)
Decision-making level - Gunasekaran et al. (2004, 2007)
(Strategic, Tactical and Operational)
Financial base – De Toni and Tonchia (2001)
(financial and non-financial)
Traditional vs. Modern measures – Bagchi (2006)
(Functional-based, value-based)
Objectives
Supply chain performance management
Identifying critical success factors / key performance indicators
(performance metrics)
Developing framework for performance measurement
Measuring supply chain performance of participating organizations
Benchmarking supply chain performance of participating
organizations
Suggesting improvement measures
Methodology
Literature review
(Phase 1)
Performance measurement
constructs & framework
Supply chain
performance measurement
constructs & framework
Gaps
Literature review
(Phase 2)
Supply chain
characteristics
Performance metrics
/constructs/
critical success factors
Questionnaire for observing
SCM practices of
the case study organizations
in the UK and Thailand
SCM characteristics of
the case study organizations
in the UK and Thailand
Measurement
frameworks
/ methods
Multiple criteria
decision-making
technique
Delphi technique
Customized Supply
Supply chain performance chain performance
measurement framework measurement framework
for each organization
Measuring supply chain
performance of each
organization
Benchmarking
Conceptual framework for measuring
supply chain performance
Identifying critical success factors with respect to
Customer relationship management
Internal supply chain management
Supplier relationship management
In Strategic, tactical and operational levels
Developing hierarchical framework for performance measurement using
the analytic hierarchy process
Supply chain Performance constructs
Customer
relationship
Management
Strategic
Tactical
Operational
Internal supply
chain
management
Supplier
relationship
management
Integrated supply chain
performance measurement
framework
Supplier Relationship Management
Strategic
Quality supplier
selection
Supplier performance
•Operational
Tactical
•Quality of products
•Delivery performance
• Overall reliability
Selection process
•Robust selection criteria
•Clear scope, specification
and criteria for selection
•Effective negotiation
•Right contract
Green purchasing strategy
•Environment policy
•Design
•Manufacturing
•Reverse logistics
Supplier integration
Coordination and
resource sharing
•Operations
•Decision-making
•Production planning
Information integration
•Information sharing
•Collaborative planning
•Joint demand forecasting
•Standardised means of
communication across
functions and suppliers
Organizational relationship
•Designing and maintaining
of communication channels
•Risk sharing
•Common objective and teamwork
Use of information technology
•State of art system in place
•System’s effectiveness
•System improvement
Effective procurement
processes
Effective communication
with production
•Developing right material specification
•Identifying right suppliers for
specific materials
Effective management
of purchase portfolio
• Segregation of materials
as per value and criticality
•Maintaining up-to-date supplier database
•Making purchase decision accordingly
Effective contract
administration
•Contract selection
•Inspection and verification
•Payment
•Evaluation
Internal Supply Chain Management
Strategic
Facilit
y
Inventory
Transportation
(inbound and outbound)
Internal
integration
Human
Resources
Operations
Capacity utilization
Capacity utilization
•Percentage capacity
utilization
Efficiency
•Capital cost
•Operating cost
Optimal inventory
policy
•Decrease inventory levels
• Decrease inventory costs
•Shared inventory with
customer
•Shared inventory with
suppliers
Flexibility
•Ability to change
product mix
Quality
•State of art technology
•Continuous improvement
possibility
Reliability
Tactical
•Operational
•Environment friendly
•Safe
•Availability /
Effective maintenance
•Percentage capacity
utilization
Efficiency
•Capital cost
•Operating cost
Flexibility
• Raw material
•Finished products
•Spares and maintenance
materials
•Improve data validity
•Information systems flexibility
•Information accuracy
•Enterprise application
integration
•Real-time monitor
•Information sharing
Internal quick response
•Ability to change
Warehouse utilization
Information integration
Reliability
•Adhering to delivery
schedule
•Environment friendly
•Safe
•Availability /
Effective maintenance
•Strengthen information
sharing
•Information timeliness
•Information availability
Information technology
•State of art system
•System’s effectiveness
•System improvement
Environmental
performance
•Environment policy
•Environmental audit
•Energy consumption
•Emission
•Reverse logistics
• State of art technology
•Continuous improvement
•Capital cost
•Operating cost
Safety
•Flexibility
•Customer services
•Consistence quality
•Reliability
•Waste reduction
Innovation
Efficiency
Motivation
Operational performance
Training
Innovation
and learning
Customer Relationship Management
Strategic
Customer service
Responsiveness
•Quality
• Innovation
•Customer satisfaction
Customer order
processing & delivery
•Response time
•Order fill rate
•Order flexibility
•Delivery performance
Handling customer
complaints
•System in place
•Number of complaints received
•Number of response made
Customer integration
Demand forecasting
Extent of cooperation
to improve quality
Forecasting system
in place
•New product and
service development
•Regular operations
•Under contingency
Information integration
•Information sharing
•Collaborative planning
•Joint demand forecasting
•Standardised means of
communication across
functions and customers
Organizational relationship
•Designing and maintaining
of communication channels
•Risk sharing
•Common objective and teamwork
Use of information technology
Tactical
•Operational
Value added service
•Flexibility of services to meet
particular customer needs
•After sales services
•State of art system in place
•System’s effectiveness
•System improvement
•State of art technology
•Forecasting model
•Forecasting process
Market analysis
Market equity
•% market share
•% change
•Trend
Customer acquisition
Decision-making
•Governance
•Fast decision-making
Reliability of
demand data
•% increase
•Critical zone
Customer retention
•% shift
•Critical zone
Government policy over
market equity
•Subsidy of raw materials
•Equal trade opportunity
•Accuracy of forecasting techniques
•Knowledge sharing among
•Improve response to customer demands public and private sector
•Decrease prediction errors
•Forecast volatility
•Increase employee’s adaptation for changes
Case study: TEP Kinsho Food
Limited
Production facilities
Factory No.1, Production of Frozen Seafood,
Factory No.2, Production of Hoof Animal Meat,
Factory No.3, Production of Imported Fish,
Factory No.4, Production of local Fish,
Factory No.5, Production of Breaded Products
High Level Process Map
Suppliers
Revise
Production Plan
Special
Order
Order,
Raw Material
Check
ProductionInventory Status
Production Start
Logistics Planning
Comment
System,
Forecasting
Demand
Warehouse
TKF
Direct Ship
Customers
Warehouse
3Rd-Party
Typical Supply chain
Factory
Warehouse
Information
Information
Internal SC
Logistics
Supplier
Customer
Quality Control
Raw Material
Ingradient
Packaging
Retail_Domestic
Information and DCM
Office of MD
Retail_Oversea
Methodology
Customized supply chain performance measurement framework for
TEP Kinsho was developed through focus group
The outcomes are as follows:
Supplier Relationship Management
Strategic
Quality supplier
selection
Supplier integration
Effective procurement
processes
Tactical
•Operational
Supplier performance
•Quality of products
•Delivery performance
• Overall reliability
Green purchasing strategy
•Environment policy
•Design
•Manufacturing
•Reverse logistics
Information integration
•Information sharing
•Collaborative planning
•Joint demand forecasting
•Standardised means of
communication across
functions and suppliers
Use of information technology
•State of art system in place
•System’s effectiveness
•System improvement
Effective communication
with production
•Developing right material
specification
•Identifying right suppliers
for specific materials
Effective contract
administration
•Contract selection
•Inspection and verification
•Payment
•Evaluation
Internal Supply Chain Management
Strategic
Facilit
y
Inventory
Transportation
(inbound and outbound)
Internal
integration
Operations
Capacity utilization
Capacity utilization
•Percentage capacity
utilization
Efficiency
•Capital cost
•Operating cost
Optimal inventory
policy
•Decrease inventory levels
• Decrease inventory costs
•Shared inventory with
customer
•Shared inventory with
suppliers
Flexibility
•Ability to change
product mix
Quality
•State of art technology
•Continuous improvement
possibility
Reliability
Tactical
•Operational
•Environment friendly
•Safe
•Availability /
Effective maintenance
•Percentage capacity
utilization
Efficiency
•Capital cost
•Operating cost
Flexibility
•Ability to change
Warehouse utilization
• Raw material
•Finished products
•Spares and maintenance
materials
Reliability
•Adhering to delivery
schedule
•Environment friendly
•Safe
•Availability /
Effective maintenance
Information integration
•Improve data validity
•Information systems flexibility
•Information accuracy
•Enterprise application
integration
•Real-time monitor
•Information sharing
Internal quick response
•Strengthen information
sharing
•Information timeliness
•Information availability
Information technology
•State of art system
•System’s effectiveness
•System improvement
Efficiency
•Capital cost
•Operating cost
Operational performance
•Flexibility
•Customer services
•Consistence quality
•Reliability
•Waste reduction
Environmental
performance
•Environment policy
•Environmental audit
•Energy consumption
•Emission
•Reverse logistics
Customer Relationship Management
Strategic
Customer service
Responsiveness
•Quality
• Innovation
•Customer satisfaction
Customer order
processing & delivery
•Response time
•Order fill rate
•Order flexibility
•Delivery performance
Customer integration
Demand forecasting
Extent of cooperation
to improve quality
Forecasting system
in place
•New product and
service development
•Regular operations
•Under contingency
Information integration
•Information sharing
•Collaborative planning
•Joint demand forecasting
•Standardised means of
communication across
functions and customers
Organizational relationship
•Designing and maintaining
of communication channels
•Risk sharing
•Common objective and teamwork
Tactical
•Operational
Use of information technology
•State of art system in place
•System’s effectiveness
•System improvement
•State of art technology
•Forecasting model
•Forecasting process
Market analysis
Market equity
•% market share
•% change
•Trend
Customer acquisition
Decision-making
•Governance
•Fast decision-making
•% increase
•Critical zone
Customer retention
•% shift
•Critical zone
Reliability of
demand data
•Accuracy of forecasting techniques
•Improve response to customer demands
•Decrease prediction errors
•Forecast volatility
•Increase employee’s adaptation for changes
Conclusion
Case study organization’s supply chain performance measurement
constructs match closely with the generic framework
Thank you for your attention