A framework for supply chain performance measurement

ARTICLE IN PRESS346A. Gunasekaran et al. / Int. J. Production Economics 87 (2004) 333–347improved performance is not automatic. As withany other organisationalundertaking, it must bedone well to yield positive results. This is why webelieve it is important to assess performance inSCM and the reason we developed the SCMperformance measurement framework.To bring about improved performance in asupply chain and move closer to attainment of theillusive goal of supply chain optimization, performancemeasurement and improvement studiesmust be done throughout the supply chain. Allparticipants in the supply chain should be involvedand committed to common goals, such as customersatisfaction throughout the supply chain andenhanced competitiveness. A performance measurementprogram for a supply chain should becomplete—important aspects of performance inany link are not ignored—and they must betailored to varying needs of participants. A goodSCM program will bring about improved crossfunctionalandintra-organisationalprocess planningand control and more complete supply chainintegration. A supply chain wide performancemeasurement initiative would seem most appropriate.This is not to suggest that one party dictatemeasurement programs for all supply chainparticipants, but rather that all participants takepart in developing a well planned, well coordinated,supply chain-wide performance measurementinitiative to which all can and will becommitted. A comprehensive controlsystem wi lbe necessary in order to assure effective andefficient performance measurement all along thesupply chain, but it must not be done in such away as to unduly limit the decision makingauthority of managers in participating organizations.Care must be exercised in developing such asystem in order that it promotes mutually advantageousexchange among participants, so thatrelationships endure the test of time.Additionalresearch and practitioner-driven initiativesare needed in the area of SCM performancemeasurement. Creative efforts are neededto design new measures and new programs forassessing the performance of the supply chain as awhole as well as the performance of eachorganization that is a part of the supply chain.Organisation, suppliers and customers shouldcome together to discuss how they will addressthe measurement and improvement of SCMperformance. Industry consortiums, consultants,and researchers could be helpful in promotingSCM performance measurement generally, and indeveloping measures and measurement techniquesspecifically. They could play a significant role inhelping firms address the present and futurechallenges of managing supply chains. Clearlytremendous opportunity exists to develop measuresthat facilitate progress and promote greatersupply chain integration.AcknowledgementsThe authors gratefully acknowledge the constructiveand helpful comments of two anonymousreferees on the earlier version of the manuscript.ReferencesBallou, R.H., 1992. Business Logistics Management. Prentice-Hall, Inc., Englewood Cliffs, NJ.Benjamin, R., Wigand, R., 1995. Electronic markets and virtualvalue chains on the information superhighway. SloanManagement Review 36 (2), 62–72.Cavinato, J.L., 1992. Total cost value model for supply chaincompetitiveness. Journalof Business Logistics 13(2), 285–291.Christopher, M., 1992. Logistics and Supply Chain Management.Pitman Publishing, London.De Toni, A., Tonchia, S., 2001. Performance measurementsystems: Models, characteristics and measures. InternationalJournalofOperations & Production Management 21(1/2), 46–70.Ellram, L.M., 1991. A managerial guide for the developmentand implementation of purchasing partnerships. InternationalJournalofPurchasing and Materials Management 27(3), 2–8.Fawcett, S.E., 1995. Using strategic assessment to increase thevalue-added capabilities of manufacturing and logistics.Production and Inventory Management Journal36 (2),33–37.Fisher, L.M., 1997. What is the right supply chain for yourproduct? Harvard Business Review 75 (2), 105–116.Graham, T.S., Dougherty, P.J., Dudley, W.N., 1994. The longterm strategic impact of purchasing partnerships. InternationalJournalofPurchasing and Materials Management 30(4), 13–18.Gunasekaran, A., Patel, C., Tirtiroglu, E., 2001. Performancemeasure and metrics in a supply chain environment.