Performance metrics in supply chain management

Abstract

This survey paper starts with a critical analysis of various performance metrics for supply chain management (SCM), used by a specific manufacturing company. Then it summarizes how economic theory treats multiple performance metrics. Actually, the paper proposes to deal with multiple metrics in SCM via the balanced scorecard — which measures customers, internal processes, innovations, and finance. To forecast how the values of these metrics will change — once a supply chain is redesigned — simulation may be used. This paper distinguishes four simulation types for SCM: (i) spreadsheet simulation, (ii) system dynamics, (iii) discrete-event simulation, and (iv) business games. These simulation types may explain the bullwhip effect, predict fill rate values, and educate and train users. Validation of simulation models requires sensitivity analysis; a statistical methodology is proposed. The paper concludes with suggestions for a possible research agenda in SCM. A list with 50 references for further study is included.

Keywords:

• supply chain
• logistics
• performance measurement
• balanced scorecard
• simulation
• system dynamics

Acknowledgements

We thank three anonymous referees and the Joint Editor of JORS, and also Jakko Kleijnen (Philips, Sunnyvale), Ryan R Peterson (Instituto de Empressa, Madrid), Robert-Jan Streng (Atos Origin, Utrecht)), and Frans van Schaik (Deloitte & Touche, The Hague) for their comments on earlier versions.