Supply Chain Performance Management: Current Approaches

Citation

Young, R.R. (2010), "Supply Chain Performance Management: Current Approaches", International Journal of Physical Distribution & Logistics Management, Vol. 40 No. 6, pp. 516-517. https://doi.org/10.1108/09600031011062227

There probably is no more contentious issue than how to manage supply chain performance. The leading academic journals routinely run articles on the subject, yet misunderstanding and ineffectual practices continue to vex manufacturing, distribution, and transportation firms, worldwide. Divided into the four key elements of performance measurement, supply management, inventory management, and supply chain optimization, this book is a compilation of 15 academic articles that collectively attempt to provide a holistic treatment of performance management. In writing its review, however, the challenge was the need to address the individual chapters as well as the manner in which they aggregate into the common unified theme.

Most of the chapters are grounded in empirical knowledge based on either case studies, surveys, or prescriptive mathematical models tested with case data. Holistically, the book appears to contain many of the topics that a supply chain professional would expect to find, to wit collaboration between supply chain members, relationships between suppliers and customers, objectives for developing suppliers, the management of different types of inventories, and location determinants. However, if one were to divide the topics among the five key functions defined in the SCOR[1] model – source, make, deliver, and return with an overarching plan activity – the book does not appear to offer sufficient balance. While there appears to be coverage of the source function by chapters that address relationships, innovation, and supplier development, the reader is left wondering, for example, how a purchaser might measure supplier performance to assure conformance with the firm's long‐term competitive strategy. The make function is covered by such topics as the management of materials inventories, maintaining inventories of spare parts, quality assurance and inspection, and management of decentralized and autonomous manufacturing modules. While each of these carries much merit, the reader is again left asking about the lack of coverage of such pressing issues as effective outsourcing decision support criteria. Moreover, there were no chapters that examined any aspect of the distribute function where complex organizations are routinely concerned with balancing finished goods inventories between nodes, optimizing cost tradeoffs between inventory holding and transportation, and adjusting distribution points due to market shifts, product changes, and mergers or acquisitions. The single chapter on the return function provides a model and a case study of its application for sludge disposal. Perhaps the principal lesson learned is that return flows need to seek optimality not unlike their forward flow counterparts where location, storage, and transportation parameters require a framework for evaluating the relevant tradeoffs.

The most laudable aspect of this book may be those chapters discussing the plan function where individual topics holistically view of the entire supply chain addressing such issues as the balance between profit and risk sharing, performance measurement and system dynamics, and metrics for supply chain collaboration. Many practitioners realize that supply chain management is relatively simple to explain in theory, but difficult to both implement and maintain over time. In that regard, the authors provide some useful insights:

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  supply chain partner firms are often more concerned about how the risks will be shared between them than they are about the aggregate profitability of their relationship; and

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  the opportunities derived from more intense collaboration are plentiful.

No matter what methodologies may be applied to evaluating supply chain performance, the issue remains one of seeking optimality through evaluating tradeoffs. While different readers will find various degrees of utility from the various chapters, the one concept that every reader should come away with is that too often important variables may either be assumed away or minimized with the unfortunate result being that the solutions are suboptimal. In short, supply chains are complex and dynamic meaning that there are no magical formulas for truly achieving optimality.

Finally, the reader must remain mindful that this volume is the 11th in the series Operations and Technology Management that includes Volume 2: Complexity Management in Supply Chains,[2] Volume 4: Innovative Logistics Management: Operations and Technical Management, Volume 6: RFID in Operations and Supply Chain Management: Research and Implications, and Volume 8: Management in Logistics Networks and Nodes: Concepts, Technology, and Applications. This volume appears to be written for the academic rather than the practitioner. Nevertheless, industry practitioners could draw parallels and, therefore, suggestions for how they may better manage the performance of their respective supply chains.

Notes

The supply chain operational reference model was developed and advanced by the Supply Chain Council.

See review in IJPDLM, Vol. 37 No. 9, pp. 775‐6.