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Supply Chain Scorecards As Performance Metrics For Logistic Network

Apr 21, 2008
Supply chain scorecards are designed to help businesses measure the logistic aspect from the raw materials procurement to distribution of final goods in the market. The scorecard can be of great importance to businesses that belong in the logistics industry. However, for companies that integrate supply chain within their organizations to better reach out to their customers, the supply chain scorecard should then be used for it is a great tool to measure the performance of the different activities involved in the supply chain.

The supply chain is a system that involves the distribution of a product or service from the supplier to the end consumer or customer. The supply chain also refers to the supply network wherein it does not only include organizations but technology, resources, activities, information, methods, and people as well. The activities involved in supply chain convert raw materials into a finished product for distribution to the end consumer. Hence, supply chain involves a process of transformation and moving from the supplier to the final consumer or customer. It starts with the procurement of raw materials and components to the delivery of finished goods to the end customers.

Determining the performance of the supply chain would entail a great deal of processing. This is because a company must start from where the materials are obtained. There are deliveries involved in the process, from the purchase of raw materials, to the work-in process manufacturing and distribution of the final goods, to the wholesale or retail markets or directly to the consumers. The supply chain is indeed a network of processes inherent in businesses.

To measure the performance in the supply chain, various metrics can be used. Using the KPI or key performance indicators can be useful in assessing the quantitative aspects of the supply network. These metrics can include monthly inventory of supplies, inventories of raw materials, work-in-process goods and finished products in the warehouse, transit time, defects per million of opportunities, freight costs claims percentage, and customer order.

The key performance indicators in supply chain can be integrated in the development of supply chain scorecards. The scorecard can be a great measure, not just on the quantitative aspect, but also the qualitative performance in the supply chain.

As a rule in developing the balanced scorecard, the elements found in the supply chain scorecards must be kept to a minimum. Normally, in summarizing the performance details to derive the total performance, say for instance a supply chain, four perspectives are used. However, a company can also include another general perspective. The general perspectives typical in balanced scorecards include financial, internal process, learning and growth, and customer perspectives.

In supply chain scorecards, perspectives found in the metric framework may include major activities and aspects, such as manufacturing, warehousing, and transportation. The customer satisfaction and financial performance are usually integrated as equivalent to the customer and financial perspectives, respectively.

Supply chain scorecards can be used as tools for management to come up with solutions for certain problems found within the supply chain. If the results found in the scorecard are beneath the satisfactory level set by the organization, the management can come up with decisions and possible actions. The framework of supply chain performance measurement can also be utilized in the creation of the plan for next business period.
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