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1. CLICK TO ADD TITLE The 5th Global Health Supply Chain Summit November 14 -16, 2012Kigali, Rwanda Supply Chain Performance Measurement in the Private Sector: Theory and Practice Noel Watson PhD [SPEAKERS NAMES] [DATE]

2. Purpose • Provide an introduction to theory and use of • Performance Measurement (PM) systems for general business administration and • Supply Chain Performance Measurement (SCPM) systems designed primarily for the private sector. • Relate open research questions on general PM and SCPM that could be relevant for global health.

3. Agenda • General Business Performance Measurement (PM) • Role of PM systems and traditional limitations • Popular PM system example: Balanced Scorecard • Other efforts in developing PM frameworks • Open Research Question on PM systems • Supply Chain Performance Measurement (SCPM) • SCPM vs general PM • SCPM in practice: survey • Supply Chain Operations Reference (SCOR) model • Academic Review • Open Questions on SCPM systems

4. General Performance Measurement Approaches

5. Definition and Role of General Performance Measurement

6. Limitations of Traditional Performance Measurement Approaches • Improper Focus • Encourage short termism, e.g., delay capital investment • Encourage local optimization, i.e., patches, in response to performance breakdowns rather than fundamental continual improvement • Focus on cost to detriment of non-cost indicators • Insufficient Information • on what customers want • On what competitors are doing • Fit with organization • Can lack alignment to strategic goals, organization culture or reward systems

7. Popular Performance Measurement System: Balanced Scorecard

8. Other Efforts in General Performance Measurement Systems Research • Other Performance System Frameworks • Performance measurement matrix by Keegan, et. al. • Measure categories: internal, external, cost, non-cost • Results & Determinants Framework by Fitzgerald et al. • Business Excellence Model – enablers & results - by European Foundation for Quality Management' • The SMART performance pyramid by Lynch and Cross. • Performance System design Process • The Cambridge performance measurement design process by Neely et al. 2000. • Focus on criteria/principles for system design, Globerson, e.g., • Criteria chosen from company’s objectives and through discussion with people involved • Measures can vary between locations and should stimulate continuous improvement

9. Open Research Questions

10. Supply Chain Performance Measurement

11. General Performance Measurement vs Supply Chain Performance Measurement • Similarities • Supply chain control is part of organizational control • Limitations of traditional approaches • improper focus e.g., too inwardly focused • insufficient information, e.g., limited cost information • fit to organization’s strategy, e.g., focus on cost when flexibility needed • Differences • Academic attention • SCPM - Topic has only within the last 10-15 years received attention within academia • PM – Topic has received significant attention over past 50 years

12. Supply Chain Metrics in Practice • Sample of over 250 different organizations across a wide sector base (Harrison and New, 2002) • 92% thought that supply chain strategy important, significant (31.3%) or highly significant (36.3%) • 50% had at best limited formal means of SCPM • Metrics • Customer delivery performance (86%), inventory turns (76%), supplier delivery performance (66%), perfect order fulfillment (54%), delivery cost per unit (41%) • No overall cost measures in the top 50%

13. Cross-Industry Standard - Supply Chain Operations Reference (SCOR) model • Integrates process reengineering, process measurement and benchmarking • History • First introduced in 1996 • Continually evolving based on need and use • Latest version is 10.0 • Components • Hierarchy of standard definitions of supply chain processes • Levels I-III defined by SCOR Model • Level IV (tasks & interactions) defined by organization • Set of measures for each level of process hierarchy • Best practice definitions • Enabling software functionality

14. SCOR approach to measurement • Performance Attributes • Group of dimensions used to express a strategy • Cannot be itself measured • Five core SC performance attributes • SC Metrics • 3 Levels • Level I: overall SC health - strategic - related to performanceattribute • Level II: diagnostic for level I • Level III: diagnostic for level II

15. Supply Chain Performance Measurement in Academia • Topic has only within the last 10-15 years received attention within academia • Limited number of articles deal with performance metrics in a supply chain environment • Few attempts to systematically collate measures & lack of consensus over the way to categorize them • No minimum set of metrics recommended • Fundamental performance dimensions: cost (42%), quality (28%), time (19%), flexibility (10%), and innovativeness (1%); • Supply Chain process: plan (30%), source (16%), make (26%), deliver (20%), customer satisfaction (5%); • Measurement Base: Quantitative (82%), qualitative (18%)

16. Some Academic Approaches

17. Research Recommendations I • Individual Measures • Develop measures of supply chain relationships and the supply chain as a whole, rather than measures of intra-organizational performance • Identify qualitative metrics and non-financial measures of innovativeness and customer satisfaction • Measurement Systems • Examine systematic methods for prioritizing measures

18. Research Recommendations II • Relationship to Environment • Design performance measurement systems that complement human resource management and modern manufacturing and supply chain practices, e.g., JIT, TQM, VMI, • Operations • What factors influence success or failure of implementation of SCPM systems? • What factors influence the evolution of SCPM systems. • How should SCPM systems be maintained? Re-evaluated? • What is the true cost-benefit analysis of SCPM systems for small enterprises, e.g., supply partners

19. Conclusions • A focus on SCPM cannot ignore experience of general performance measurement systems • Common purpose of organizational control • Common criticisms of traditional SCPM & general PM • Improper focus • Insufficient information • Fit with organizational strategy • Applications to Health • Open questions on SCPM and general PM could probably be applied to health. • SCOR model is a well-tested approach used in practice that could have success within public health.

21. References I ANGAPPA GUNASEKARAN* and BULENT KOBU, Performance measures and metrics in logistics and supply chain management: a review of recent literature (1995–2004) for research and applications, International Journal of Production Research, Vol. 45, No. 12, 15 June 2007, 2819–2840 Beamon, Benita M, Measuring supply chain performance, Publication info: International Journal of Operations & Production Management 19. 3 (1999): 275-292. Craig Shepherd and Hannes Gunter, Measuring Supply Chain Performance: Current Research and Future Directions European Foundation for Quality Management, Business Excellence Model, http://www.efqm.org/en/ Fitzgerald, L., Johnston, R., Brignall, S., Silvestro, R. and Voss, C. (1991), Performance Measurement in Service Business, CIMA, London. Globerson, S., "Issues in developing a performance criteria system for an organisation", International Journal of Production Research, Vol. 23 No. 4, 1985, pp. 639-46. Gunasekaran, A; Patel, C; Tirtiroglu, E, Performance measures and metrics in a supply chain environment, International Journal of Operations & Production Management 21. 1/2 (2001): 71-87.

22. References II Harrison A. and C. New, “The role of coherent supply chain strategy and performance management in achieving competitive advantage: an international survey,” Journal of Operational Research Society, 2002, 53, 263-271. Hieber, R. (2002). Supply Chain Management: A Collaborative Performance Measurement Approach. Zurich: VDF. Keegan, D. P., Eiler, R. G., & Jones, C. R. (1989). Are your performance measures obsolete? Management Accounting, June, 134–147. Lynch, R.L. and Cross, K.F., Measure Up -- The Essential Guide to Measuring Business Performance. Mandarin, London, 1991. Neely, A., Gregory, M., & Platts, K. (1995). Performance measurement systems design: a literature review and research agenda. International Journal of Operations & Production Management, 15(4), 80–116. Neely, A., Mills, J., Platts, K., Richards, H., Gregory, M., Bourne, M., et al. (2000). Performance measurement system design: developing and testing a process-based approach. International Journal of Operations & Production Management, 20(9–10), 1119–1145.

23. Appendix

24. SCOR Implementation Hierarchical Process Framework Implementation Principle • Level I – process types • Plan, source, make, deliver and return • Level II • 26 process categories, e.g., MTO, MTS • Level III • Detail process definitions (185), performance metrics and best practices • Level IV • Detailed tasks within each of Level III activities • SCOR defines some general aspects of supply chain processes in Levels 1-3, while leaving the tasks and interaction unique to each business captured in (Level 4 and below) to be created by users.

25. Other Performance Measurement Frameworks (Neely et. al. 2000) Results and Determinants Framework Performance Pyramid Business Excellence Model