Supply Chain Metrics

TLDR

Supply‑chain metrics are largely internal logistics measures, but defining them is difficult because of overlapping chains, yet managers pursue them to gain visibility over indirect performance drivers. We provide a framework that translates performance into shareholder value. The framework manages customer and supplier relationship processes at each link, translating process improvements into profitability to identify opportunities and align objectives across firms.

Abstract

Most discussions and articles about supply chain metrics are, in actuality, about internal logistics performance measures. The lack of a widely accepted definition for supply chain management and the complexity associated with overlapping supply chains make the development of supply chain metrics difficult. Despite these problems, managers continue to pursue supply chain metrics as a means to increase their “line of sight” over areas they do not directly control, but have a direct impact on their company's performance. We provide a framework for developing supply chain metrics that translates performance into shareholder value. The framework focuses on managing the interfacing customer relationship management and supplier relationship management processes at each link in the supply chain. The translation of process improvements into supplier and customer profitability provides a method for developing metrics that identify opportunities for improved profitability and align objectives across all of the firms in the supply chain.