Supply chain performance, drivers

This chapter showed how the choice of metric of competition and the existence of competitors affects the performance of a supply chain. The first part of the chapter examined the many alternate metrics that can determine performance, including costs, profitability, service, variety, and lead time. Each of these alternate metrics implies different choices for supply chain architecture as well as for the details of operation. In addition, in the presence of competitors, agreements that are good for the supply chain in a monopolistic setting may be bad for the supply chain in a competitive environment. Thus one may find an industry supply chain stuck in a bad equilibrium with frequent harmful promotions or advance order discounts, unable to pull itself out of this state due to competitive pressures. This chapter thus su ests that competitiveness can be a significant driver of supply chain performance. 

Enablers and Drivers of Supply Chain Performance 1.4.1 Supply Chain Enablers... 

Supply chain drivers represent the critical areas of decision making in SCE, those that ultimately generate the outcomes that impact the supply chain performance. Thus, they appear as the decision/design variables in the optimization models used in SCE decision making. The key drivers of supply chain performance are described next, and the chapters at follow are organized along the key drivers of supply chain performance. 

The idea that there are key drivers of supply chain performance is useful in thinking about another theme emphasized by many authors and first proposed by Fisher (1997) in an important article that advanced the notion that "one size... 

Describe the four major drivers of supply chain performance. For each driver, identify one efficiency measure and one responsiveness measure. 

Identify the major drivers of supply chain performance. 

In this chapter, our goal is to link key financial measures of firm performance to supply chain performance. We introduce the three logistical drivers—facilities, inventory, and transportation—and the three cross-functional drivers—information, sourcing, and pricing—that determine the performance of any supply chain. We discuss how these drivers are used in the design, planning, and operation of the supply chain. We define several metrics that can be used to gauge the performance of each driver and its impact on financial performance. 

In Chapter 1, we discussed how growing the supply chain surplus is the ultimate goal of a supply chain. Our premise was that increasing the surplus allows for a growth of supply chain profitability, which facilitates an improvement in the financial performance of each member of the supply chain. In this section, we define important financial measures that are reported by a firm and affected by supply chain performance. In later sections, we link supply chain drivers and associated metrics to the various financial measures. The definitions of financial measures in this section are taken from Dyckman, Magee, and Pfeiffer (2011). To illustrate the various financial measures, we use the financial results reported in 2013 by Amazon.com and Nordstrom Inc. and assume a tax rate of 0.35. 

In the next section, we identify key drivers of supply chain performance that influence the financial performance of a firm. Our goal is to understand how these drivers may explain the difference in financial performance between firms such as Amazon and Nordstrom. 

Before we discuss each of the six drivers in detail, we put these drivers into a framework that helps clarify the role of each in improving supply chain performance. 

Identify the major drivers of supply chain performance. The major drivers of supply chain performance are facilities, inventory, transportation, information, sourcing, and pricing. 

Sustainability has become a key priority in the design and operation of supply chains in the twenty-first centnry. A focus on sustainability allows a supply chain to better serve more environmentally conscious customers while often improving supply chain performance. In this chapter, we explore the importance of sustainability, some challenges to designing and operating more snstainable supply chains, and the role of different supply chain drivers in improving snstainability. 

A literature analysis marks the starting point of the research process. Relevant research fields are, for instance, supply chain performance measurement or customer service literature rooted in marketing. The theory-based analysis helps to keep track of initial theoretical or practical indications and crystallize them Avithin a first conceptual model explaining the relation between the value drivers of SCM and the EVA as relevant business metric. This part expresses deductive research. The conceptual model is subsequently tested in practice to disclose inconsistencies and customize the degree of specification. Remarks and suggestions made by practice, reflecting the inductive research, inspire fiuther descriptions and improvement. The knowledge acquisition... 

Ellram Liu (2002), Hofinann Locker (2009) and Pohlen Coleman (2005) discuss this link in the context of supply chain performance management on a conc tual basis. They distinguish between direct and indirect value drivers, where their central value driver for revenues is logistics customer service. This is additionally confirmed by enqpirical quantitative studies, for instance, those of Ozmcnt Chard (1986), Tracey (1998) and Yeung (2008). 

Besides conceptual contributions about supply chain performance measurement configurations and the operationalisation of value drivers, academic efforts have generated methodic-instrumental quantification attempts. Wildemann (2004), for example, presents a tool that allows the assessment of logistical performance and costs within the supply chain. Based on a benchmark of over 500 companies the tool identifies potential which can be raised by SCM. In doing so, he uses an estimation... 

The research on value determination of SCIs is mainly rooted in the fields of supply chain control as well as supply chain performance management and measurement. As the state of the art review covering these research fields shows, research predominately addresses the design of measurement systems and cause-and-effect relationships of SCM s value drivers in a conceptual way. The available instruments and methods, such... 

A perfect structure and process flow does not necessarily mean that the supply chain is performing well. For this purpose, key performance indicators and the drivers for the economic value added (EVA) are calculated. 

In the same way, we may note that performance indicators have moved from a management philosophy focused on the achievement of local performance to a philosophy of management of the supply chain as a driver of value creation for all stakeholders. 

This figure symbolizes all the logistic supply chain components drawn from the Supply Chain Master reference model. To improve their logistic performance, companies have these drivers available dedicated to reliability. 

They proposed that logistics complexity is a driver to define the way a company manages and emphasizes the different supply chain objectives and decision areas, and based on this, a contingency approach for supply chain management is required, where different contextual conditions drive the way the supply chain choices are made and management activities are performed, as opposed to a best practice approach where there would be some universally applicable principles that would be appropriate regardless of the particular conditions under study. 

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