Are your performance measurements destroying your supply chain? Part II

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By Steven A. Melnyk, Michael Bourne, David Frayer and Will Rifkin ·

January 17, 2020

Editors Note: This is the second of a two-part article on performance measurement, and continuation of our series on the future of the strategic supply chain by Steven A. Melnyk. Part 1 appeared in the November 2019 issue of Supply Chain Management Review.


The business environment is changing. The rise of new technologies such as the Internet of Things, 3D printing and RFID, the use of Big Data and a change in customer expectations means that issues such as responsiveness, innovation and sustainability are determining the way that companies manage their businesses and operate their supply chains.
While cost will always be important, today’s supply chain is changing from one that is driven y price and decoupled from the business strategy to a value-driven supply chain that is tightly coupled to the business strategy. As the supply chain morphs, so too will performance measurement in order to be more consistent with this environment. What follows are nine guidelines that we believe are essential to the strategic supply chain.

1.) Performance measures must become the vehicle for communicating the voice of the customer and the firm’s value proposition.

This is perhaps the most important change, and the one that will consume most of this article. In “The Customer-Centric Supply Chain,” an article from the July 2017 issue of SCMR, the performance measure links strategy to execution by communicating what the customer wants and what the value proposition promises. To the people involved in the execution of the process, this helps to answer the questions of what the customer wants and what have we promised in meaningful ways. It identifies the shared vision and the priorities of action. As the focus of the supply chain shifts away from cost, we expect the number of measures focused on responsiveness and quality to increase while the number of measures dealing with cost to decrease.

By Steven A. Melnyk, Michael Bourne, David Frayer and Will Rifkin ·

January 17, 2020

Editors Note: This is the second of a two-part article on performance measurement, and continuation of our series on the future of the strategic supply chain by Steven A. Melnyk. Part 1 appeared in the November 2019 issue of Supply Chain Management Review.


The business environment is changing. The rise of new technologies such as the Internet of Things, 3D printing and RFID, the use of Big Data and a change in customer expectations means that issues such as responsiveness, innovation and sustainability are determining the way that companies manage their businesses and operate their supply chains.
While cost will always be important, today’s supply chain is changing from one that is driven y price and decoupled from the business strategy to a value-driven supply chain that is tightly coupled to the business strategy. As the supply chain morphs, so too will performance measurement in order to be more consistent with this environment. What follows are nine guidelines that we believe are essential to the strategic supply chain.

1.) Performance measures must become the vehicle for communicating the voice of the customer and the firm’s value proposition.

This is perhaps the most important change, and the one that will consume most of this article. In “The Customer-Centric Supply Chain,” an article from the July 2017 issue of SCMR, the performance measure links strategy to execution by communicating what the customer wants and what the value proposition promises. To the people involved in the execution of the process, this helps to answer the questions of what the customer wants and what have we promised in meaningful ways. It identifies the shared vision and the priorities of action. As the focus of the supply chain shifts away from cost, we expect the number of measures focused on responsiveness and quality to increase while the number of measures dealing with cost to decrease.

 

 



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Article Topics

Benchmarks &middot

Labor &middot

RFID &middot
All Topics

Link to Original Source
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2020-01-17 06:16:00

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