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Supply Chain Metrics

Authors:
Douglas M. Lambert at The Ohio State University
Douglas M. Lambert
Terrance L. Pohlen at University of North Texas
Terrance L. Pohlen
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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.
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... Although some logistics activities were progressively outsourced, performance metrics were mostly internal in the 1980s and early 1990s (Lambert & Pohlen, 2001). To balance service quality and costs, material flow processes needed to be better integrated and logistics management more consistent, leading to the creation of dedicated departments in charge of the overall management of flows. ...
... Defining SC metrics to evaluate and align performance across multiple companies in the SC became an issue both for practitioners and researchers (Lambert & Pohlen, 2001). Owing to the development of outsourcing, both for manufacturing and logistics activities, most SC managers considered SC 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" (Lambert & Pohlen, 2001, p. 1). ...
... To give greater voice to SC departments in the company strategy conversation and justify investments in developing SCM, it was also necessary to clearly demonstrate the contribution of SCM to financial value creation. This justified the introduction of financial measures such as Economic Value Added (EVA) as detailed in Lambert and Pohlen (2001). ...
Performance Measurement: Value Creation
Chapter
  • Feb 2024
Performance measurement–value creation is a core competence of supply chain management (SCM). It is an important topic for researchers, a key competence for supply chain managers, and an important subject for students. This chapter is aimed at both SCM novices and professionals, working in research, teaching or involved in practice, and its purpose is to provide valuable knowledge as well as to motivate readers to think and ask questions about this complex topic. This chapter provides an in-depth analysis of the “performance measurement–value creation” topic in supply chain management (SCM) from the 1970s until now, highlighting the successive issues and key points discussed over time. A general review of this evolution shows the increasing importance of supply chain (SC) performance measurement and value creation, but also points out its com- plexity in practice. This analysis pinpoints strategic issues as well as difficulties, in particular with regard to SC performance management systems (SCPMSs). The current questions identified by the overall analysis reveal the need for renewed approaches to designing SCPMSs from both the research and practice perspec- tives. This chapter offers a conceptual basis to address the performance measure- ment–value creation topic and to think about how to design relevant, useful, and impactful SCPMSs that help SCM to create more value. This chapter looks at under-researched questions and raises important issues for future research. It includes a comprehensive framework that provides guidelines for practice.
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... In addition, 13 studies focus on order management; 36 consider value orientation, and 12 discuss the interrelationship of metrics, but these aspects rarely occur together. Only six studies on order management either focus on value orientation (Lambert & Pohlen, 2001;Rahiminezhad Galankashi & Rafiei, 2022) or statistically test interrelations of metrics * This document can be found at this link. (Brabazon & MacCarthy, 2017;Nazari-Ghanbarloo, 2022;Sharma, 2021;Yildiz & Ahi, 2020). ...
... To measure the impact of specific value drivers on EVA, supply chain metrics are needed to help evaluate performance so that it can be translated into value (Lambert & Pohlen, 2001). Because value drivers have causal relationships (Wall & Greiling, 2011), metrics that measure the performance of value drivers may also be interrelated. ...
... These financially oriented results of the value level are further broken down at the performance level into their (qualitative and quantitative) performance-oriented value drivers (Koller et al., 2020;Lambert & Pohlen, 2001). High logistics efficiency is achieved by high logistics performance on the one hand and low logistics costs on the other (VDI, 2002). ...
Value Driver Trees for KPI-Based Decision Analytics: Process Performance in the Order-to-Delivery Process
Conference Paper
Full-text available
  • Jan 2024
The order-to-delivery process is one of the most complex logistics processes. Knowing how to successfully satisfy customers through this process is a critical competitive factor for companies. However, there are no suitable methods for value-based decision-making in this process. One goal of this research is to systematically derive a value driver tree based on axiomatic design. Value driver trees are conceptual models that mathematically or logically explain the cause-and-effect relationships between value drivers and their key performance indicators. A systematic literature review and expert interviews in the German manufacturing industry were conducted to provide practitioners with a validated model. In addition, statistical certainty about the relationships between the drivers of the tree is required. A correlation analysis based on real-world case study data confirmed monotonic relationships between selected metrics extending decision analytics research.
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... SCM is an integrative philosophy that manages the whole flow in the SC [28]. SCP measures should be comprehensive, measurable, not far from the real world, and universal, and consider the SC as a whole [29,30]. Moreover, they should be consistent with organizational goals and allow comparison under different conditions [31]. ...
... Return on equity (ROE) has increased. 29 Return on working capital has increased. 30 The cash conversion cycle (CCC) has decreased. ...
Measuring Supply Chain Performance as SCOR v13.0-Based in Disruptive Technology Era: Scale Development and Validation
Article
Full-text available
  • Sep 2023
Background: Supply chain performance measurement is an integral part of supply chain management today, as it makes many critical contributions to supply chains, especially for companies and supply chains to identify potential problems and improvement fields, evaluate the efficiency of processes, and enhance the health and success of supply chains. The purpose of this study is to contribute to future research and practical applications by presenting a more standard, comprehensive, and up-to-date measurement scale developed based on the SCOR model version 13.0 performance measures in the disruptive technology era. Methods: The study was performed in seven stages and the sample size consists of 227 companies for pilot data and 452 companies for the main data. The stages comprise item generation and purification, exploratory factor analysis for the pilot study and main study, confirmatory factor analysis for the main study, convergent, discriminant, and nomological validity appraisal, and investigation of bias effect. Results: The scale was developed and validated as a five-factor and thirty-one item structure. Conclusions: Some key trends and indicators must be followed today to perceive the landscape of future supply chains. This measurement scale closely follows the future supply chains. Additionally, the findings have been confirmed by the contributions of disruptive technologies and the conceptual structure of supply chain management.
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... Economic value-added (EVA) and return on capital employed (ROCE), which emphasize profitability and asset utilization, are widely adopted to determine corporate financial performance within SCM (Christopher & Ryals, 1999;Akyuz & Erkan, 2010). The value-driver tree of Lambert and Pohlen (2001) follows a similar structure to determine corporate financial performance via accounting information. For shareholder value creation, its appraisal needs to consider a more complex interplay of financial messages. ...
... Gelsomino et al. (2016) indicated that the interplay between business operations and finance performance has attracted considerable attention in the SCM literature, because value creation and financial market success are intertwined. Lambert and Pohlen (2001) described how firm value is influenced by profit-generating factors and asset-utilization factors, but also works on examining how SCM value drivers (i.e., profit-generating factors and asset-utilization factors) influence financial market success are still scant. Shi and Yu (2013) evaluated a firm's operation performance and SCM practices on its business performance and financial success via questionnaire collection. ...
Valuing and Risk Analysis for Supply Chain Management: A Fusion Approach
Article
Full-text available
This research presents the contribution of profitability and asset utilization to a firm's value generation from a financial market viewpoint via slack-based measure network data envelopment analysis (SBM-NDEA). Despite its superiority in performance measurement, SBM-NDEA has a limitation when confronted with new added datasets as it lacks predictive ability. To overcome this, the authors integrate twin support vector machine into it. A manager's attitude toward risks also plays an essential role in efficiency improvement and value generation, but numerical messages do not convey such information. Textual messages with elastic natures thus bring information beyond just numerical messages. To assist users in quantifying risk types, the authors introduced an advanced text analyzer to conjecture a manager's attitude toward each risk. The results show that the performance evaluation model with forecasting capability can shift the manager's role from monitoring the past to planning the future. This study also demonstrates that the model with textual information reaches superior forecasting performance.
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... Mohan and Deshmukh (2013) explained how the process of CRM integration must be carried out logically and incrementally through the deployment of technologies along with strategic initiatives to achieve greater coordination and mitigate the risk. This is also in line with the finding of Lambert and Pohlen (2001), which demonstrated that CRM and SRM are very important in capturing the overall performance of a supplier and customer relationship, which can be used to support the entire customer journey process. Together, the CRM and IoT data capture the total value. ...
Promoting a revamped CRM through Internet of Things and Big Data: an AHP-based evaluation
Research
  • Feb 2019
Abstract Purpose – Internet of things (IoT) and big data (BD) could change how the societies function. This paper explores the role of IoT and BD and their impact on customer relationship management (CRM) investments in modern customer service. The purpose of this paper is to develop an analytic hierarchy planning framework to establish criteria weights and to develop a general self-assessment model for determining the most important factors influencing the IoT and BD investment in CRM. The authors found that most studies have focused on conceptualizing the impact of IoT without BD and with limited empirical studies and analytical models. This paper sheds further light on the topic by presenting both IoT and BD aspects of future CRM. Design/methodology/approach – The analytic hierarchy process (AHP) methodology is used to weight and prioritize the factors influencing the IoT and BD investment in modern CRM in the service industry. The AHP framework resulted in a ranking of 21 sustainability sub-factors based on evaluations by experienced information technology and customer service professionals. Findings – The paper provides significant insight on the new frontier of CRM, focusing on the use of IoT and BD and the respective solutions to address them were identified. This study primarily contributes in providing the process of effectively managing and implementing IoT and BD in big businesses by identifying the connecting link between firms and customers. Practical implications – The understanding of new frontier of CRM connective via IoT and BD can solve the dilemmas and challenges linked to the practice of implement IoT and BD in the information systems field. The study provides valuable information and critical analysis of IoT and BD with regard to the integration of CRM. Finally, this study further provides directions for future researchers. Originality/value – IoT and BD are a growing phenomenon, which business decision-makers and information professionals need to consider seriously to properly ascertain the modern CRM dimensions in the digital economies. They also should embrace the proper CRM innovation, which is powered by IoT and BD, and discover how IoT and BD can bring the next level of maturity to CRM “CRM of everything.” Keywords Customer relationship management, Internet of things (IoT), Big data (BD), Analytic hierarchy planning framework (AHP), Modern customer service (CRM) Paper type Research paper
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Developing an entrepreneurial mindset in supply chain managers: Exposing a powerful potential
Article
  • Feb 2024
Entrepreneurship and supply chain management (SCM), respectively, have enjoyed meteoric rises in business practice and scholarly attention over the past three decades. Further, each of the two disciplines has much to offer the other. Yet, we have not witnessed sustained, meaningful integration of principles, practices, and influences despite powerful potential. This paper explores this potential by featuring prospects for entrepreneurship to influence SCM, and vice versa, bringing an entrepreneurial mindset to SCM and supply chain orientation (SCO) to entrepreneurial activities. In particular, we illustrate a validated assessment and diagnostic tool, the Corporate Entrepreneurship Assessment Instrument (CEAI), adapted for supply chain managers with the intent of instilling corporate entrepreneurial activity among supply chain professionals. Granted, supply chain managers are typically tasked with meeting expectations toward customer service effectiveness, efficiency, asset utilization, and safety. Yet, we believe that forming an organizational environment conducive to entrepreneurial thinking could be extremely valuable in the supply chain realm, enhancing capabilities like agility, plasticity, and responsiveness such that innovation and business growth are achieved alongside traditional SCM expectations. Further, we feature several avenues for future research at the interface of entrepreneurship and SCM.
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Capítulo 11: Diagnóstico de administración de la cadena de suministro en hoteles boutique del centro histórico de Cartagena
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  • Nov 2023
El libro 59 de “Gestión del Conocimiento. Perspectiva Multidisciplinaria” de la Colección Unión Global, es resultado de investigaciones. Los capítulos del libro son resultados de investigaciones desarrolladas por sus autores. El libro es una publicación internacional, seriada, continua, arbitrada de acceso abierto a todas las áreas del conocimiento, que cuenta con el esfuerzo de investigadores de varios países del mundo, orientada a contribuir con procesos de gestión del conocimiento científico, tecnológico y humanístico que consoliden la transformación del conocimiento en diferentes escenarios, tanto organizacionales como universitarios, para el desarrollo de habilidades cognitivas del quehacer diario. La gestión del conocimiento es un camino para consolidar una plataforma en las empresas públicas o privadas, entidades educativas, organizaciones no gubernamentales, ya sea generando políticas para todas las jerarquías o un modelo de gestión para la administración, donde es fundamental articular el conocimiento, los trabajadores, directivos, el espacio de trabajo, hacia la creación de ambientes propicios para el desarrollo integral de las instituciones.
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The moderating effect of supply chain collaboration on servitization
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  • Oct 2023
  • J BUS IND MARK
Purpose Supply chain collaboration (SCC) is an important element that contributes to enhanced performance. Nonetheless, there is still a need to understand its role in servitization implementation and outcomes. This study aims to address this gap by looking at the impact of SCC on servitization and performance when considering service levels (base, intermediate and advanced). Design/methodology/approach Following a quantitative research design, data were collected from firms in pharmaceutical sector. Findings Moderation effects were tested. Results suggest that SCC is a crucial moderator when it comes to the influence of service levels on servitization consequences and performance, particularly to advanced and intermediate services. Originality/value This study contributes to the literature by providing further empirical evidence of the impact of intermediate and advanced services shedding light into the moderating role of SCC.
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Supply Chain Management, A Key for Success of Commercial Companies in Burundi: A Case Study of SOSUMO Company
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  • Aug 2023
The purpose of this study was to analyze the contribution of supply chain management in the Success of Commercial Companies in Burundi. The interest for the researcher is to examine supply chain management practice at SOSUMO as a Para-governmental company to ascertain the effect or influence of supply chain management practice to SOSUMO performance and to make recommendations for improvements. The results of this research and presents findings, data analysis and interpretations. Based on the results, the majority of respondents, 80, 7 % of the sample, appreciate that SOSUMO has guidelines regarding the distribution of sugar. For the first research question, we found at 80,7% that SOSUMO's Supply Chain practice is noticeable through some initiatives such as: SOSUMO has guidelines regarding the distribution of sugar , SOSUMO has permanent wholesalers, SOSUMO has Own transport vehicles from the factory to the wholesalers , There is a strong cooperation between SOSUMO and the distributors, SOSUMO has well- managed warehouses, The main distributors are involved in the planning of the supply system, the delivery time is reasonable, sugar distributors get information through today's technology, SOSUMO staff is aware of the current supply system.
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