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ISSN: 2169-0316

Industrial Engineering & Management


The International Open Access
Industrial Engineering & Management

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San Jose State University, USA

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Digital Object Identifier: http://dx.doi.org/10.4172/2169-0316.1000e120


Khan, Ind Eng Manage 2013, 2:5
Industrial Engineering & Management http://dx.doi.org/10.4172/2169-0316.1000e120

Editorial Open Access

Importance of Measuring Supply Chain Management Performance


Sharfuddin Ahmed Khan*
Industrial Engineering & Management Department, University of Sharjah, Sharjah, 27272, United Arab Emirates

Abstract
Due to globalization, customer demand variations and market competition, it is essential for organizations to
evaluate and benchmark their Supply Chain Management (SCM) system. Managers are eager to evaluate overall
supply chain management system to find out which area in entire supply chain requires more attention in order to remain
competitive in market. This paper focuses on why there is a need for a research in measuring supply chain performance,
the relevance of the chosen criteria with respect to the major performance issues in a supply chain management and,
finally it will provide some future direction on how to develop a model to measure overall supply chain management
performance.

Introduction Future direction in supply chain management performance


measure
A supply chain is a system of facilities that procure raw materials,
transform them into intermediate goods and then final products, and The supply chain management is an innovative and a practicable
finally deliver the products to customers through a distribution system idea that should allow businesses to get a snapshot of their supply
that includes a (probably multi-echelon) inventory system. Thus, it chain performance. This shows that there is a need to develop a model
spans procurement, manufacturing, and distribution, with effective that reflects the impact of changes immediately though this impact
inventory management as one key element. To fill orders efficiently, it would only reflect to the degree to which the criteria are important.
is necessary to understand the linkages and interrelationships of all the Since, overall supply chain management depends on many criteria,
key elements of the supply chain [1]. therefore, multi-criteria decision making tools such as AHP, Fuzzy,
DEA can be useful in developing model that evaluate overall supply
The above definition of a supply chain thus sets the perspective chain management performance. Developed model should be consist
for a compelling need for an elaborate and an integrated performance for all sectors, manufacturing or service and measure overall supply
measurement system. Indeed, the complexity of the supply chain management performance effectively and efficiently.
chain linkages and the conflict of interests amongst collaborative
organizations compound the challenge and any proposed performance
measurement system requires both an intensive examination of the
processes at the interfaces of organizations and an extensive view of an
enterprise’s own operational environment.
Performance measurement describes the feedback on operations
which are geared towards customer satisfaction and strategic decisions RESULTS
and objectives [2].The performance of each activity can be easily The end outcome of
the evaluation process
modeled based on its well-defined parameters such as the inventory EVALUATION OR
will result in the
BENCHMARKING
turnover ratio and the rejection rate of the manufacturing process. The evaluation process
development of a
dimensionless unit -
There is a lack of models that integrate most of the related major CRITERIA will provide the SCMPI. It will be useful
computaional in evaluating and
functions in the company [3]. The performance environment for ranking monitoring the overall
criteria will identify the criticality of supply chain
key performance performance measures
Developing the Principle measures with by engaging the
management
performance and in
respect to major viewpoints of experts setting targets of a
supply chain
Current trends in increasing number of conferences and literature functions.
across the enterprise. desired performance
level.
articles shows that supply chain management performance evaluation
is the major area for researcher to explore. Many performance measure Figure 1: The Modeling Hierarchy.
models are available but all performance measures have different
system and different ways for integrating supply chain performance
measure. All the existing performance measure system are only capable *Corresponding author: Sharfuddin Ahmed Khan, Industrial Engineering &
to answer the basic questions such as what is to be measured, what Management Department, University of Sharjah, Sharjah, 27272, United Arab
measures are to be integrated and what is the frequency of integration Emirates, Tel: +971552563074; Email: skhan@sharjah.ac.ae
etc. Therefore, there is a need to develop a supply chain management Received December 16, 2013; Accepted December 17, 2013; Published December
performance model which integrate all functions of supply chain and 21, 2013
measure overall supply chain performance. The model should helps Citation: Khan SA (2013) Importance of Measuring Supply Chain Management
the managers to monitor and guide organization within acceptable and Performance. Ind Eng Manage 2: e120. doi: 10.4172/2169-0316.1000e120
desirable parameters. Figure 1 shows the hierarchical approach that Copyright: © 2013 Khan SA. This is an open-access article distributed under the
provides the central idea of the entire evaluation process (Figure 1). terms of the Creative Commons Attribution License, which permits unrestricted
use, distribution, and reproduction in any medium, provided the original author and
source are credited.

Ind Eng Manage Volume 2 • Issue 5 • 1000e120


ISSN: 2169-0316, IEM an open access journal
Citation: Khan SA (2013) Importance of Measuring Supply Chain Management Performance. Ind Eng Manage 2: e120. doi: 10.4172/2169-
0316.1000e120

Page 2 of 2

Model requirement way to measure up to this persistent deluge of business opportunism


and onus alike is to try to control the transformation processes in a
• Model should identify and include all major criteria and
very fundamental way. An effective way to do that is to establish
relevant sub-criteria that required to measure overall supply
business process model that appeal to reason and are definable at the
chain management performance.
first place and measurable consequently. And a good way to ensure that
• Model should measure overall supply chain performance such model do evolve reliably is to let the reasoning process surface
effectively and efficiently management in all sector such as from a common platform that involves all the stakeholders. This paper
service or manufacturing. highlighted the importance of such a model that can measure overall
supply chain management performance. It is also recommended that
• The model should be used to evaluate the performance of the the developed model can be based on any multi-criteria decision
organization and benchmark its performance both externally making technique because of the conflicting criteria in developing the
and internally for the ultimate goal of continuous improvement. performance model.
• Model should be useful regardless of business nature or size. References

Concluding Remarks 1. Beamon BM (1999) Measuring Supply Chain Performance. Int J Oper Prod
Man 19: 275-292.
As the supply chain management paradigm becomes more pervasive 2. Bhagwat R, Sharma MK (2007) Performance Measurement of Supply Chain
by virtue of global connectivity through advances in information Management: A Balanced Scorecard Approach. Comput Ind Eng 1: 43-62.
technology and product innovation, the much-hyped need for the 3. Dong, Ming (2001) Process Modeling, Performance Analysis and Configuration
‘competitive edge’ escalates into a ‘cut-throat’ competition. The only Simulation in Integrated Supply Chain Network Design. Digital Library and
Archives, Virginia Polytechnic Institute and State University, USA.

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Ind Eng Manage Volume 2 • Issue 5 • 1000e120


ISSN: 2169-0316, IEM an open access journal