1

MARKS AND SPENCER

LOGISTICS AND SUPPLY CHAIN MANAGEMENT

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Contents

Introduction: .................................................................................................................................... 5

What is Logistics Management? ..................................................................................................... 5

How Logistics Management Enhances the Competitiveness of Marks and Spencer? ................... 6

Definition of Supply Chain Management ....................................................................................... 9

Competitiveness and customer service ......................................................................................... 12

Choice of Partners ......................................................................................................................... 13

Network of organizations .............................................................................................................. 13

Leadership ..................................................................................................................................... 13

Information and communication technology ................................................................................ 14

Process orientation ........................................................................................................................ 14

Advanced planning ....................................................................................................................... 14

Value Chain versus Supply Chain ................................................................................................ 15

Linking Value Chain Analysis to Competitive Advantage of M&S ............................................ 16

Similarities and Differences between a Supply Chain and a Value Chain ................................... 18

The Benefits of Promoting a Sustainable Supply Chain in M&S ................................................. 19

Barriers to the High-performance Supply Chain .......................................................................... 20

Lack of Visibility / Data Silos ...................................................................................................... 21

Lack of Predictability.................................................................................................................... 22

Incomplete Information ................................................................................................................ 23

Local Optimization ....................................................................................................................... 23

Marks and Spencer Competitive Advantage................................................................................. 24

Marks and Spencer performance .................................................................................................. 24

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Void and replication in literature review: ..................................................................................... 25

Retailing, supply chains and their management ........................................................................... 27

What is general systems theory? ................................................................................................... 30

Strategic measurement analysis and reporting technique system ................................................. 38

Organizational performance measurement questionnaire ............................................................. 38

Strategic organizational performance measurement system ......................................................... 38

Holistic process organizational performance measurement system ............................................. 38

Performance metrics and measurement of supply chain management ......................................... 38

Metrics for performance evaluation of planned order procedures ................................................ 39

The order entry method ................................................................................................................. 39

Order lead-time ............................................................................................................................. 39

The customer order path ............................................................................................................... 40

Supply chain partnership and related metrics ............................................................................... 41

Measuring customer service and satisfaction ............................................................................... 42

Flexibility ...................................................................................................................................... 42

The customer query time .............................................................................................................. 43

Post transaction measures of customer service ............................................................................. 43

Production level measures and metrics ......................................................................................... 44

Range of products and services..................................................................................................... 44

Capacity utilization ....................................................................................................................... 44

Effectiveness of scheduling techniques ........................................................................................ 45

Performance evaluation of delivery link ....................................................................................... 45

Measures for delivery performance evaluation............................................................................. 46

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Supply chain finance and logistics cost ........................................................................................ 47

Cost associated with assets and return on investment .................................................................. 48

Total inventory cost ...................................................................................................................... 48

Relationship Between E-Business and E-Commerce ................................................................... 50

E-Commerce: ................................................................................................................................ 50

E-Business..................................................................................................................................... 51

Summary ....................................................................................................................................... 51

How Marks & Spencer Can Benefit from the Recent Innovations in E-Commerce and E-

Business ........................................................................................................................................ 51

Best Practices Implemented by Marks And Spencer .................................................................... 52

Content of the scorecards .............................................................................................................. 55

The use of scorecards .................................................................................................................... 55

Practicalities of applications ......................................................................................................... 56

Difficulties in BSC deployment and the lessons learnt ................................................................ 56

References ..................................................................................................................................... 62
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Chapter 1: Introduction

Introduction:

M&S is a business in view of powerful standards of advancement, Inspiration, Integrity

and In Touch. In like manner, these qualities have been at the core of how the association direct

their business since start of their excursion at Penny Bazaar at Leeds Kirk entryway Market in

1884. M&S is one of the UK's driving retailers, with obligation to making each minute

extraordinary through organization's stock system which fuses three area production network, for

example, claim mark nourishment, pieces of clothing and home things stockiest, that are

correspondingly offer in stores, comprehensive of internet showcasing and home transportation.

M&S inventory network covers arranging, sourcing, inside and outside business, Customer

Logistics Services and the Supply Chain Strategy and Development. The business fuses other

Supply Chain parts, for instance, Quality and Compliance, Environment, Sustainable Health and

Safety measures and Technical Operations. (Campbell, A. &Tawadey, K., 2016)

What is Logistics Management?

Logistics management is a production network administration segment that is utilized to

meet client requests through the arranging, control and execution of the powerful development

and capacity of related data, merchandise and ventures from root to goal. Logistics

administration enables organizations to decrease costs and upgrade client benefit. The logistics

administration process starts with crude material amassing to the last phase of conveying

merchandise to the goal. By holding fast to client needs and industry principles, logistics

administration encourages process technique, arranging and execution. Logistics administration

includes various components, including: (Bowersox, D.J. et al, 2002)

 Selecting fitting sellers with the capacity to give transportation offices

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 Choosing the best courses for transportation

 Discovering the most skilled conveyance strategy

 Using programming and IT assets to capably deal with related procedures

In logistics administration, incautious choices make various issues. For instance,

conveyances that fizzle or are postponed prompt purchaser disappointment. Harm of

merchandise because of indiscreet transportation is another potential issue. Poor logistics

arranging steadily builds costs, and issues may emerge from the execution of insufficient

logistics programming. A large portion of these issues happen because of uncalled for choices

identified with outsourcing, for example, choosing the wrong seller or doing conveyance

undertakings without adequate assets. (Lambert, D.M. & Stock, J.R., 1993)

How Logistics Management Enhances the Competitiveness of Marks and Spencer?

As far as Strategic management is concerned, vital system enhancement, including the

number, area and size of warehousing, dissemination focuses, and offices. Strategic

organizations with providers, merchants, and clients, making correspondence channels for basic

data and operational upgrades, for example, cross docking, coordinate delivery, and outsider co-

ordinations. (Mellahi, K., et al, 2002)

Item life cycle administration, so new and existing items can be ideally coordinated into

the production network and limit administration exercises.

 Data innovation chain operations.

 Where-to-make and what-to-settle on or-purchase choices.

 Adjusting general hierarchical technique to supply methodology.

 It is for long haul and needs asset responsibility

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To have an effective production network administration framework there needs to have

great materials administration, Just-in-Time Inventory framework, proficient store network

coordination, Modern IT programming and so forth. Materials administration envelops the

exercises important to get sources of info and segments to a creation office (counting the cost of

acquiring contributions), through the generation procedure and out through an appropriation

framework to the end client. Enhancing the effectiveness of the materials administration work

commonly requires the selection of a Just-in-Time (JIT) stock framework, intended to streamline

on stock holding costs by having parts land at an assembling plant in the nick of time to enter the

creation procedure or to have merchandise touch base at a retail location just when stock is

practically exhausted. (Burt, S.L., et al, 2002)

Marks and Spencer is the UK's driving retailers having 21 million individuals going to its

store every week. In spite of the fact that, it offers beautiful, top notch, extraordinary esteem

attire and home items, exceptional quality nourishment, the production network administration is

as yet secret and that will be understood in this investigation. The tactics involved are as follows:

 Sourcing contracts and other buying choices.

 Creation choices, including contracting, booking, and arranging process definition.

 Stock choices, including amount, area, and nature of stock.

 Transportation system, including recurrence, courses, and contracting.

 Benchmarking of all operations against contenders and usage of best practices all through

the venture.

 Point of reference installments.

 Concentrate on client request

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Marks and Spencer is additionally the main supplier of women ware and undergarments

in the UK and is quickly expanding its piece of the overall industry in menswear, kids wear and

home ware. 49% of its business is in apparel and home ware and the rest 51% in sustenance.

Other than that, it is likewise condition well-disposed and to introduce us a green earth it has a 5-

year eco design named Plan A. (Probst, G. & Raisch, S., 2005)

M&S Direct is critical to enhancing client accommodation and administration including

by means of our site and our recently propelled 'Shop Your Way' office. Its objective is to

accomplish £500m in deals by 2010/11. It stays focused on building a world-class retailer

through expanding the pace of progress and driving operational magnificence in the business;

building multi-channel ability; developing its global portfolio; and, as the economy comes back

to a more grounded balance, reviving its image correspondences. Its encouraging was hindered -

however not modified - by the subsidence. A year ago, It kept on actualizing here and now

destinations to direct M&S through the financial downturn. Because of this conclusive activity

our long-haul methodology stays set up. It has constructed a solid stage for development and

have enhanced or kept up piece of the pie in all its center regions. (Palmer, M. and Quinn, B.,

2005)
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Chapter 2: Literature Review

Definition of Supply Chain Management

Supply Chain: The supply chain encompasses all activities associated with the flow and

transformation of goods from the raw materials stage (extraction), through to end users, as well

as the associated information flows. Material and information flows both up and down the supply

chain. The supply chain includes new product development, systems management, operations

and assembly, purchasing, production scheduling, order processing, inventory management,

transportation, warehousing, and customer service. Supply chains are essentially a series of

linked suppliers and customers; every customer is in turn a supplier to the next downstream

organization until a finished product reaches the ultimate end user. Supply Chain Management is

the integration of all the activities in the supply chain to achieve a sustainable competitive

advantage. D. Levi (2002) emphasizes supply chain management plays an integral and crucial

role in giving an organization a competitive advantage by keeping business costs at a minimum

and profitability as high as possible.

According to Hayes (2002), supply chain management can be defined as the process of

coordinating and integrating materials, finances, and information between the supplier,

manufacturer, and wholesaler with the goal to reduce inventory, thereby increasing profits. A

good manager or management team handling this aspect of the business is invaluable in

achieving both long and short term goals.

Council of Logistics Management (CLM) (2000) defines SCM as “the systemic, strategic

coordination of the traditional business functions and tactics across these businesses functions

within a particular organization and across businesses within the supply chain for the purposes of

improving the long-term performance of the individual organizations and the supply chain as a
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whole”. SCM has been defined to explicitly recognize the strategic nature of coordination

between trading partners and to explain the dual purpose of SCM: to improve the performance of

an individual organization, and to improve the performance of the whole supply chain. Feldmann

M and Müller S (2003) indicated that the goal of SCM is to integrate both information and

material flows seamlessly across the supply chain as an effective competitive weapon .

There is no commonly accepted definition of supply chain management - it means

different things to many different people and numerous developing definitions. Although the

literature is fraught with many definitions this paper presents its own high-level definition that

sets the concept within the specific research problem statement context that is related to

organizations’ competitive advantage.

According to Seuring (2001), supply chain management (SCM) is a recent development

in management theory and was introduced as a result of increased competition on international

markets. Two major streams can be distinguished within SCM. The first stream puts SCM into

the context of logistics. The second, wider definition used in this paper is given as follows:

Based on Chen, A. Paularj (2004), illustration in his article that supply chain

encompasses all activities associated with the flow and transformation of raw material’s stage

(extraction), through to the end user, as well as the associated information flows. Materials and

information flows both up and down the supply chain with the purpose of producing a useful

product for the end user (customer). The supply chain also includes new product development,

systems management, operations and assembly, purchasing, production scheduling, order

processing, inventory management, transportation, warehousing, and customer service.

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Supply chains are essentially a series of linked suppliers and customers; every customer

is in turn a supplier to the next downstream organization until a finished product reaches the

ultimate end user.

According to Handfeild RB and Niclos El (1999), “supply chain Management (SCM) is

the process of integrating organizational units along SC activities through improved supply chain

relationships, and coordinating materials, information and financial flows in order to fulfill

customer demands with the aim of improving performance of the organization as a whole and

achieve a sustainable competitive advantage”. This definition distinguishes between the supply

chain as the physical side and the management of supply chain itself.

Schfonsleben (1998) assumed that supply chain can be broadly classified of comprising

of three networks – Supplier, firm and Distribution. The supplier network consists of all

organizations that provide inputs, either directly or indirectly, to the focal firm (i.e., the

purchaser). Focal firms network is involved in the conversion of input material to the output

material. The distributive network consists of all downstream organizations from the focal firm

that ensure that the right quantity of goods is delivered to the appropriate customer location in a

timely manner.
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This classification is best visualized by house of SCM (Fig. 2) and will be described in

greater detail below:

The detailed description of this House of SCM follows:

Competitiveness and customer service

The roof of the house of SCM depicts the ultimate aim of SCM, namely improving

competitiveness of a SC as a whole. This is achieved by directing the SC in a sustainable,

strategic position compared to its competitors (this is in line with the ideas of Porter (1998, p. 55)

for a single company).

The roof of the house of SCM rests on two pillars, ‘integration of organizational units’

and ‘Coordination of flows’. Of the many facets of SCM, three building blocks in each ‘pillar’

are outlined due to the important and innovative role they play in SCM.
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Choice of Partners

Starting with the integration of organizational units we have to design the SC first, i.e.

find those partners with the best fit to the existing SC and the needs of the customers to be

served.

Network of organizations

A SC can be regarded as a network of organizations with some common goals. The

challenge in controlling such a network stems from the nature of relationships between SC

partners.

They are neither part of a single hierarchy nor loosely coupled by market relations.

Hence, control mechanisms for a hybrid between market and hierarchy are regarded as a risk of

loosing crucial partner (Sydow, 1999).

Leadership

The third building block concerns leadership within the SC. Two extremes are pointed

out in the following, namely, focal and polycentric SCs (Wildemann, 1997). A focal SC is

characterized by the presence of a partner who is the ‘natural’ leader, e.g. due to his financial

power or exceptional knowledge of products and processes. Leadership then is similar to a

hierarchy even if SC partners are legally separated (e.g. in the European automotive industry). In

the other extreme, a polycentric network, all partners are regarded equal (e.g. in consumer goods

manufacturing and retailing). Here, a steering committee might be appropriate for aligning

decisions of partners, e.g. stipulating transfer prices and compensations. The steering committee

might also have access to a SC wide data and make use of SC-wide planning models (e.g. master

planning),
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Information and communication technology

Building blocks enabling improved coordination of material, information and financial

flows across the SC represent the second pillar of the house of SCM.

New opportunities of today’s information and communication technology enable

information exchange between partners within instants by means of the Internet and related

services. Thus, sales data, forecasts, orders and any kind of messages can be exchanged across

the SC immediately at low costs.

Process orientation

Process orientation, the second building block of the coordination pillar, not only aims at

tearing down barriers between business functions in order to accelerate the execution of

processes and associated activities but also between organizations. In contrast to the original

work of Hammer and Champy (1993) who propose a radical redesign of processes for gaining

competitive advantage, incremental improvements are also looked for in SCs. Nonetheless, one

should not stop with linking existing activities more effectively but also consider a redesign of

processes, by eliminating duplicate or unnecessary activities. As Hammer (2001, p. 84) puts it

‘streamlining cross-company processes is the next great frontier for reducing costs, enhancing

quality, and speeding operations.’

Advanced planning

It is well-known that the strength of transactional enterprise resource planning (ERP)

systems is not in the area of planning. Hence, APS have been developed to fill this gap. It

exhibits a common architecture based on the principles of hierarchical planning (Anthony, 1965;

Hax and Meal, 1975) and make extensive use of solution approaches known as mathematical

programming and meta-heuristics. The main focus is on supporting the material flow across a
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supply chain and related business functions: procurement, production, transport and distribution

as well as sales.

Value Chain versus Supply Chain

Value chain and supply chain, two classic business concepts, have traditionally been

considered very similar. Lambert, Douglas, Martha, and Janus in their paper (1988), ‘‘Supply

Chain Management: Implementation Issues and Research Opportunities’’ have discussed the

assumption that everyone who touches a product or service adds some value to it.

The value chain is a systematic approach that describes the activities which take place in

an organization and relates them to both the competitive advantage and an analysis of the

competitive strength of the business. Influential work by Michael Porter in his book, Competitive

Advantage (1980) suggested that the activities of a business could be grouped into two headings

'primary activities' and 'support activities.

Primary Activities are those that are directly concerned with creating and delivering a product

(e.g. component assembly); while,

Support Activities, which are not directly involved in production, but may increase effectiveness

or efficiency (e.g. human resource management). However, it is rare for a business to undertake

all primary and support activities. Porter (1998), emphasize that Value Chain Analysis is one

way of identifying which activities are best undertaken by a business and which are best

provided by others "out sourced."

Following diagram depicts the Value Chain framework of Micheal Porter which is a model that

helps to analyze specific activities through which firms can create value and competitive

advantage.
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Figure 3: The Value Chain Analysis Technique (Porter)

Linking Value Chain Analysis to Competitive Advantage of M&S

What activities a business undertakes is directly linked to achieving competitive advantage. For

example, a business that strives to outperform its competitors by differentiating itself through

higher quality will have to perform its value chain activities better than the opposition. By

contrast, a strategy based on seeking cost leadership will require a reduction in the costs

associated with the value chain activities, or a reduction in the total amount of resources used.

According to the Value Chain technique defined by Porter (1985), the activities conducted in any

in any process or combination of processes in any industry can be divided into two categories,

namely: primary activities and support activities; shown conceptually in below table :

Primary value chain activities include:

Primary Description

Activity
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Inbound All those activities concerned with receiving and storing externally sourced

logistics materials

Operations The manufacture of products and services - the way in which resource inputs

(e.g. materials) are converted to outputs (e.g. products)

Outbound All those activities associated with getting finished goods and services to

logistics buyers

Marketing and Essentially an information activity - informing buyers and consumers about

sales products and services (benefits, use, price etc.)

Service All those activities associated with maintaining product performance after the

product has been sold

Support activities of M&S include:

Secondary Definition

Activity

Procurement This concerns how resources are acquired for a business (e.g. sourcing and

negotiating with materials suppliers)

Human Those activities concerned with recruiting, developing, motivating and

Resource rewarding the workforce of a business

Management

Technology Activities concerned with managing information processing and the

Development development and protection of "knowledge" in a business

Infrastructure Concerned with a wide range of support systems and functions such as finance,

planning, quality control and general senior management

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Source: Michel Porter (1985), ‘Competitive Advantage – creating and sustaining superior

performance’

Similarities and Differences between a Supply Chain and a Value Chain

In common parlance, Ramsay (2005) demonstrated that a supply chain and a value chain are

complementary views of an extended enterprise with integrated business processes enabling the

flows of products and services in one direction, and of value as represented by demand and cash

flow in the other. Both chains overlay the same network of companies. Both are made up of

companies that interact to provide goods and services. When we talk about supply chains,

however, we usually talk about a downstream flow of goods and supplies from the source to the

customer. Value flows the other way. The customer is the source of value, and value flows from

the customer, in the form of demand, to the supplier. That flow of demand, sometimes referred to

as a “demand chain” (Walters and Rainbird, 2004), is manifested in the flows of orders and cash

that parallel the flow of value, and flow in the opposite direction to the flow of supply. Thus, the

primary difference between a supply chain and a value chain is a fundamental shift in focus from

the supply base to the customer. Supply chains focus upstream on integrating supplier and

producer processes, improving efficiency and reducing waste, while value chains focus

downstream, on creating value in the eyes of the customer. This distinction is often lost in the

language used in the business and research literature.

The Supply Chain also focuses on the activities involved with acquiring raw materials and sub

assemblies, then getting them through business manufacturing process smoothly and

economically; while Value Chain Management looks at every step, from raw materials

(including those business suppliers’ suppliers use) to business customers and the eventual end

user, right down to disposing of the packaging. The goal is to deliver maximum value to the end
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user for the least possible total cost. And it involves business, its suppliers and the suppliers’

suppliers.

The Order Fulfillment Value Chain is depicted in the following figure as a pictorial of the

comparison between SCM and VC.

Figure # 4 A Comparison of a Value Chain with a Supply Chain.

The Benefits of Promoting a Sustainable Supply Chain in M&S

In their seminal article, Greengard and Samuel ( 2001) draw attention to the ways that effective

supply chain management (SCM) has the potential to fundamentally change the way companies

do business, serving as an important catalyst for enhancing profitability in today’s tumultuous

environment

Supply chain management (SCM) provides an immense opportunity for organizations to reduce

costs and improve performance, especially in businesses with multiple centers of decision-

making (Mentzer JT; DeWitt W et al, 2001).

K. Patterson, C. Grimm; and T Corsi (2003) argued that with the implementation of supply chain

management, the narrow focus of managers and the adversarial relationships between logistics

providers, suppliers, and customers are replaced by strategic alliances and long-term cooperative
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relationships. Suppliers and customers are viewed as partners instead of adversaries with the

objective of ‘‘maximizing competitiveness and profitability for the company as well as for the

whole supply chain network including the end-customer”

R. Levary (2000) suggests that the benefits of a supply chain include:

(1) Minimizing the bullwhip effect,

(2) Maximizing the efficiency of activities,

(3) Minimizing the inventories,

(4) Minimizing cycle times,

(5) Achieving an acceptable level of quality.

According to Farhoomand and Ng (2000), the prospect that SCM can make firms more customer

responsive and thus more profitable has led managers to spend vast sums to improve supply

chain processes. For example, UPS has spent $9 billion since 1986. Yet, managing supply chains

is complex.

Barriers to the High-performance Supply Chain

Based on investigation by Mahoney and Chris (2001), there are many barriers to building a high

performance supply chain. In this paper, the four most common barriers to be examined are:

Lack of visibility, due to data silos

Lack of predictability, due to a lack of visibility and the inability to identify changes necessary to

get processes back on-track.

Incomplete information, due to incompatible or incomplete reporting systems.

Optimization at the local level

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Lack of Visibility / Data Silos

A study by Lundegaard and Karen (2001) evaluated the lack of visibility and data silos as a

barrier to supply chain performance. The study revealed that even the simplest supply chain

generates a tremendous amount of data with its ERP system and supporting applications. This

data lets managers perform deep dives into some aspects of their operations and most ERP

systems do provide basic reporting capabilities. However, these reports are rarely flexible

enough to address specific questions or immediate needs. Nor do they encompass the entire

supply chain. Managers have a choice: work from an incomplete view, or spend hours compiling

information to create it.

A high-performance supply chain performance management system must enable visibility across

operations. The ability to follow a process from the moment raw materials ship from the

supplier to the moment finished product arrives at the customer is critical. Yet the sheer volume

of data that managers need to work with makes this difficult to achieve. On the sell side, data

about sales, accounts receivable, fulfillment, finished goods inventory, and logistics. On the buy

side, data about purchasing, accounts payable, raw materials and semi-finished goods inventory,

production and logistics. There is also data from customers, logistics providers, and suppliers.

All of these have their respective applications and data silos.

The study also investigated that system must integrate data from all of these sources and present

information consistently, in a way that provides different views of performance (customer-

centric, product-centric, and process-centric); highlights issues clearly; and provides answers

when managers still have time to act on them, rather than after the fact.
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In addition, it has been assumed throughout this study that managers also know they need better

visibility into their customers’ needs. They rank customer service as their second-highest

priority, trailing only quality.

However, a recent survey by Deloitte shows that a mere eight percent collaborate with customers

across key areas, from strategic planning and forecasting to inventory management and cost

reduction. The reason is poor visibility. The result is Strains on key processes. Deloitte observes:

“It is no surprise manufacturers report that visibility of customer forecast data and inventories at

key customer and supplier sites is largely mediocre. This strains production planning, work floor

systems, logistics systems, and other supply chain activities.”

KILGER C (2000), emphasized that few companies have developed and synchronized the supply

and demand sides of their businesses to reduce the barriers to flexibility and profitability. This

lack of visibility leads to the second barrier to high-performance supply chains: the lack of

predictability.

Lack of Predictability

Predictability is known as that a plan will unfold as it should, at a known cost. The more

confidently a manager can predict demand, quantity, costs, and targets, the better able they are to

secure suppliers and build processes. Sourcing can happen sooner.

KILGER C (000), argues that production can ramp up earlier, lead times can be reduced, buffer

inventory investment can be minimized and problems can be identified and resolved before a

production run begins.

Unpredictability causes variation between expected and actual results. Left uncorrected, the

problem is likely to reoccur with continued detrimental impact on the supply chain. Usually, this

is because the root cause of the variation can’t be found and the process isn’t fixed. When this
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happens, managers fall into a constant game of catch-up – moving resources and materials

around the globe at the last minute, rather than proactively driving performance.

Incomplete Information

The constant game of catch-up is often due to the third barrier: incomplete information. Lacking

the time to fully analyze and understand a problem, managers have no choice but make hasty

decisions based on pre-configured ERP reports that provide a historical or partial view of the

problem. These reports help managers solve their immediate problems but prevent them from

making improvements that can lower costs or improve efficiency on a larger scale. In the high-

performance supply chain, every piece of information is delivered in the greater context of the

entire process. Effects of decisions can be evaluated so that people understand the cost-to-serve

and make better decisions. Complete information enables better collaboration. If a flaw or delay

is identified, managers, suppliers, partners, and customers can be alerted and work out a

collaborative solution (ZORYK-SCHALLA, A.J.; FRANSOO, J.C.; DE KOK, T.G., 2004).

Local Optimization

Manufacturers are spreading supply chain operations across the world. Yet according to Deloitte,

most optimization is still done at a local level – by product, function (say, production), facility,

country, or region. Few companies make global optimization a top priority or allocate human

resources to achieving it. This localized approach to optimization is to be expected, given that

most managers see silos of information rather than a complete, integrated view.

Also, without a clear link to strategy, managers cannot see or predict the impact their actions will

have further down the line. Their actions can bring about delays, changes, cost increases, or

shortfalls further down the line that ultimately hurt customer satisfaction (Ronnqvistm, 2003).
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Marks and Spencer Competitive Advantage

McGinnis and Vallopra (1999), showed a study entitled, “Purchasing and supplier involvement

in process improvement: a source of competitive advantage”, which discuss that competitive

advantage is the extent to which an organization is able to create a defensible position

over its competitors. It comprises capabilities that allow an organization to differentiate itself

from its competitors and is an outcome of critical management decisions. The empirical literature

has been quite consistent in identifying price/cost, quality, delivery, and flexibility as important

competitive capabilities (Tracey et al., 1999). In addition, recent studies have included time-

based competition as an important competitive priority. Research by Stalk (1988), Vesey (1991),

Handfield and Pannesi (1995), Kessler and Chakrabarti (1996), Zhang (2001), identifies time as

the next source of competitive advantage.

On the basis of prior literature, Koufteros et al. (1997), describe a research framework for

competitive capabilities and define the following five dimensions: competitive pricing, premium

pricing, value-to-customer quality, dependable delivery, and production innovation. These

dimensions are also described by ( Roth and Miller, 1990). Based on the above, the dimensions

of the competitive advantage constructs used in this study are price/cost, quality, delivery

dependability, product innovation, and time to market.

Marks and Spencer performance

According to Yamin et al. (1999), organizational performance refers to how well an organization

achieves its market-oriented goals as well as its financial goals. The short-term objectives of

SCM are primarily to increase productivity and reduce inventory and cycle time, while long-term

objectives are to increase market share and profits for all members of the supply chain (Tan et

al., 1999). Financial metrics have served as a tool for comparing organizations and evaluating an
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organization’s behavior over time (Holmberg, 2000). Any organizational initiative, including

supply chain management, should ultimately lead to enhanced organizational performance.

A number of prior studies have measured organizational performance using both financial and

market criteria, including return on investment (ROI), market share, profit margin on sales, the

growth of ROI, the growth of sales, the growth of market share, and overall competitive position

(Stock et al, 2000). In line with the above literature, the same items will be adopted to measure

organizational performance in this study.

Void and replication in literature review:

This study fills a void in current research literature by: using an empirical approach to analyze

and identify the relationships among SCM practices, competitive advantage and organizational

performance.

It is expected that the current research, by addressing SCM practices simultaneously from both

upstream and downstream sides of a supply chain, will help researchers better understand the

scope and the activities associated with SCM and allow researchers to test the antecedences and

consequences of SCM practice. Further, by offering a validated instrument to measure SCM

practices, and by providing empirical evidence of the impact of SCM practices on an

organization’s competitive advantage and its performance, it is expected that this research will

offer useful guidance for measuring and implementing SCM practices in an organization and

facilitate further research in this area.

The abstraction is performed through the use of general systems theory, in particular that view of

general systems theory developed and applied by Yourdon (1989) to the field of information

systems. Abstraction should allow real world complexity to be removed and so reveal the more

fundamental aspects of supply chains. A benefit of developing this more fundamental view of
 26

supply chains should be greater insight into how supply chains operate and how their

management can be improved. For example, using Yourdon's (1989) third theory of structured

decomposition the basic building blocks or components of supply chains can be revealed. The

general systems theory concept of a system boundary can then be used to better understand how

these supply chain components interact. Given greater understanding of the supply chain concept

it is hoped that greater agreement emerges about what constitutes a supply chain, and that with

this a more consistent approach to supply chain management also develops.

The chapter reviews the history of general systems theory noting the significant contributions

made by von Bertalanffy (1969) and Weinberg (1975). The work of Miller (1978) and his

application of general systems theory in the field of biology was a source of inspiration for

Yourdon (1989) in his application of general systems theory to the field of information systems.

The work of Yourdon (1989) is seen by the authors as truly innovative in the sense that he

applied general systems theory to intangible objects and concepts as compared to earlier

researchers such as von Bertalanffy (1969), Weinberg (1975) and Miller (1978) who applied

general systems theory to tangible objects. Supply chains are considered to have similarities to

information systems: for example, they are more intangible than tangible, they have defined and

repeatable operating procedures, and they exist in order to assist the commercial objective of a

business—the exchange goods or services. Given these similarities it was felt that the work of

Yourdon (1989) would have applicability. Accordingly, the major aim of this chapter is to apply

Yourdon's (1989) four general systems theories of information systems to supply chains. These

four theories are:

Theory 1: The more specialized or complex a system, the less adaptable it is to a changing

environment.
 27

Theory 2: The larger the system, the more resources are required to support it, with the increase

being non-linear rather than linear.

Theory 3: Systems often contain other systems or are themselves components of larger systems.

Theory 4: Systems grow over time, both in terms of size as well as structural complexity.

Not only do these theories have applicability for information systems, but it is posited by the

authors that they also have applicability to supply chains. It is considered that the analysis and

discussion presented in this chapter has benefits for both academics and practitioners. For

academics, greater insight should lead to a more informed and consistent discussion of the

supply chain concept. For practitioners greater insight should lead to better supply chain

management practice, at the operational level—in the sense of more effective and efficient

supply chains—as well as at the strategic level—in the sense of more flexible and adaptable

supply chains.

Retailing, supply chains and their management

‘Supply chains’ and their management, typically referred to as ‘supply chain management’, are

terms that emerged during the late 1980s (Harland, 1996) and have been popular terms used

widely in textbooks, professional magazines, academic journals, courses of study and individual

subject offerings (Chopra and Meindl, 2004; Christopher, 2005; Lysons and Farrington, 2006;

Simchi-Levi et al., 2000). This practical and practitioner-based background has meant little

conceptual work has been undertaken. For example, in many research studies there is a

presumption that the terms ‘supply chain’ and ‘supply chain management’ are well defined and

clearly understood by all (Hull, 2002; Moon, 2004). However, from a conceptual perspective this

presumption should be tested. Handfield and Nichols (1999, p. 21) state that the supplier network

consists of ‘all Marks and Spencer that provide inputs, either directly or indirectly, to the focal
 28

firm’. That is, the ‘supply chain’ may not be a chain, in which the links are considered to join

peer companies, but rather a ‘supply wheel’ in which a number of subservient companies supply

a dominant master (Avery, 1999). There are some obvious examples of supply wheels. A number

of authors refer to the relationships between General Motors and its suppliers as an example of a

supply wheel (Keen, 1991; Schwartz, 2000; La Londe, 2005). In addition, Keen (1991) made an

interesting observation: does a supply wheel identify a single ‘organization’ made up of the

master plus the participants, rather than a group of separate but collaborating organizations? This

issue is further discussed later in terms of the general systems concept of a boundary and the

types of interactions that occur across boundaries.

Other supply chain topologies exist. Christopher (2005) and Kemppainen and Vepsäläinen,

(2003) argue for ‘supply networks’ in which there is still a dominant or focal firm, but the

linkages between suppliers and customers with the dominant firm are not necessarily direct.

Well-known examples of a network supply chain topology are StorebrandXchange.com

(Beldona and Raisinghani, 2004) and Covisint (Kandampully, 2003; Johnson and Johnson,

2005). Covisint represents an evolution of supply chain topology: it has evolved from a supply

wheel—originally a supply chain e-marketplace for the motor vehicle manufacturers General

Motors, Ford and DaimlerChrysler—into a supply chain network that now services the

healthcare industry as well as other motor vehicle manufacturers in addition to the three

mentioned above (Covisint, 2006). Accordingly, the literature discussed above indicates that a

number of different supply chain topologies exist, which means that the presumption of one

generic topology is not correct.

Furthermore, not only does diversity exist in supply chain models, the literature review

conducted indicates that several definitions exist for ‘supply chain’ and ‘supply chain
 29

management’, none of which could be considered dominant or generic. In most cases, these

definitions are derived from a particular sub-group or category of supply chains rather than

referencing or including all categories of supply chains. Alternatively the definition is asserted as

an already accepted and generic definition of what is a ‘supply chain’ (Chan et al., 2003; Duclos

et al., 2003; Kemppainen and Vepsäläinen, 2003; Lummus and Vokurka, 1999; Motwani et al.,

2000; Stonebraker and Afifi, 2004; Svensson, 2000; Vickery et al., 1999). Flowing from these

different definitions are argument, interpretations and conclusions that are divergent rather than

convergent, and more importantly self-justifying by recursively indicating that support of the

conclusion flows from the definitions asserted at the beginning of the discussion. The outcome of

this is that comparisons of research findings are difficult and that any assertions about the

general validity of the findings are difficult to support.

A common, agreed upon view about supply chain management is also lacking. For example, in

discussing this activity, Gattorna and Walters (1996) observe that in a short period of time,

‘physical distribution management’ became ‘logistics management’, and then ‘supply chain

management’. For Gattorna and Walters (1996), this evolution reflected the increasing strategic

importance of this activity. On the other hand, Handfield and Nichols (1999) claim that a

‘logistics renaissance’ era has arrived, in which new and emerging information technologies are

used to meet the challenges of globalising markets with increasing domestic and international

competitiveness. Handfield and Nichols (1999) also claim that supply chain management

includes managing information systems involved in sourcing and procurement, production,

scheduling, order processing, inventory management, warehousing, distribution, and customer

service. This implies that an important characteristic of supply chain management is the
 30

technological infrastructure that facilitates the information flows (Childerhouse et al., 2003;

Dawson, 2002; Ho et al., 2003; Zeng and Pathak, 2003; Kim et al., 2005).

An argument could be put forward that variety and diversity reflect the fact that supply chains

and supply chain management are emergent fields of knowledge. Given this fact it is premature

to abstract to more fundamental concepts. The counter claim to this argument is that it has been

done with respect to the information systems field of knowledge which is also an emergent field

of knowledge. Yourdon (1989) adapted and applied the work of Miller (1978), who had earlier

applied general systems theory to the field of biology to derive characteristics that could be used

to distinguish between living and non-living systems. Yourdon's (1989) efforts did indeed show

that there were benefits in undertaking this work. For example the process of abstraction allowed

Yourdon (1989) to define abstract concepts such as the boundary of an information system; that

is, the things the information system would do and more importantly what it would not do.

Another insight was the development of the concept of structured decomposition—breaking a

complex information system down into simpler components or sub-systems. That is, the process

of abstracting information systems from their real world context led to new and deeper insights

into how information systems operated and new techniques to use to build better information

systems. In a similar vein it is proposed to take the work of Yourdon (1989) and apply it to

another intangible system, namely supply chains to see if there are benefits from doing this in

terms of a better understanding or insight into how supply chains work and how they can be

better managed.

What is general systems theory?

General systems theory has a reasonably long history with major initial contributions by

Boulding (1956), (Forrester, 1958), (Forrester, 1961) and (Forrester, 1975), and von Bertalanffy
 31

(1969). Von Bertalanffy (1969) is recognized generally as the principal thinker in this area

(Mulej et al., 2004). Other contributions to general systems theory have been made by (Klir,

1969) and (Klir, 1972), Weinberg (1975), Miller (1978), and Yourdon (1989). As indicated

above it is Yourdon's (1989) work that forms the focus for this paper. In addition, contributions

to the related areas of flexible system thinking, physical system theory, and the tools of systems

thinking, have been made by Senge (1990), Senge (1992), Fowler (1999), Lin (1999), Skyttner

(2001), Sushil (2002), and Liu (2003). Sushil (2002) considers that although there are differences

between physical (or tangible) systems, and ‘conceptual physical’ (or intangible) systems, these

two categories also have things in common. For example both categories can be disaggregated

into smaller yet discrete components. This statement can be directly related to the general

systems concept of decomposition: systems are constructed of sub-systems which are themselves

constructed of sub-systems. As these discrete components are themselves sub-systems there is

also the issue of the interactions between these discrete components. This interaction between

system components is related to the general systems concept of a system's boundary. A boundary

is necessary in order for systems to be able to interact with one another. Sushil (2002) also raises

the question of whether supply chains are primarily tangible systems, mere dealing with the

physical flow of goods; or are supply chains primarily intangible in nature, dealing with the flow

of information or services (Johnson et al., 1995), or constructed out of a set of relationships

between two or more organizations (Cousins and Robey, 2005; Daniel et al., 2004; Murtaza et

al., 2004). Rather than attempting to classify supply chains as either tangible or intangible a

better approach may be to use the concept of decomposition and so consider supply chains as a

collection of sub-systems, most of which are intangible, e.g. systems that allow the transfer of
 32

information from one organization to the other, while others are tangible, e.g. delivery systems

that allow the transfer of goods from one organization to the other.

Are supply chains systems?

To define the nature of supply chains, Skyttner (1996) outlines the work of a number of leading

general systems theorists and their views on what would constitute a system. Furthermore,

Skyttner (1996) makes interesting comments on what a system is: it is not normally something

that is ‘presented to the observer’ (Skyttner, 1996, p. 16), but rather something that is recognized

by that observer. Thus systems do not ‘exist in the real world independent of the human mind’

(Skyttner, 1996, p. 16). Skyttner (1996) also discusses various other definitions of a system as

being anything unitary enough to deserve a name (Weiss, 1971), anything that is not chaos

(Boulding, 1985), and a structure with organized components (Churchman, 1979). The common

themes emerging from these definitions is that a system is composed of finite elements or

components; the components combine to form an integrated whole; and the integrated whole

exists in order to achieve some purpose.

Accordingly, in order for supply chains to be considered systems the above-mentioned themes

should be present. Supply chains are composed of components: people, Marks and Spencer,

technological infrastructure, information flows, flows of physical goods, and flows of intangible

services. From the perspective of purpose, supply chains are created for the benefit of the

participants in terms of improving the flow of goods, services and information from one Marks

and Spencer to another. This argument indicates that supply chains are systems.

Ackoff (1981) states an important element of a system is its dynamic nature, with interactions of

sub-systems across their boundaries: see also Klir (1991) and Backlund (2000). Ackoff's (1981)

analysis of system dynamics led to three important conclusions: (a) systems interact and are
 33

influenced by their environment and by other systems; (b) the operation of each system

component has an effect on the way the system operates as a whole; and (c) the operation of each

system component is interdependent (also see Carbone (1999); Forrester (1961); and Lin and

Cheng (1998)). Are Ackoff's (1981) conclusions applicable to a conceptual view of supply

chains?

As part of an overall review of the supply chain literature, Caddy and Helou (1999) concluded

that there was no generally accepted model of a supply chain. However, their findings outlined

three common themes or constructs within existing supply chain models: (a) a focus on

organization structure and/or organization strategy; (b) people and people-related issues such as

interpersonal relationships and the roles of these relationships within supply chains (see also

Talaq and Ahmed (2004)); and (c) use of information and communication technology within

supply chains. Using these three basic themes, Caddy and Helou (1999) developed the Generic

Supply Chain Model (GSCM).

Ackoff's (1981) conclusions about what is a system are reflected in this model. For instance with

respect to the third conclusion, the three supply chain components are important in their own

right, but each by itself does not provide a complete and comprehensive view of what a supply

chain is and how best to manage it. Each component provides a separate as well as a related

conjoint contribution which is Ackoff's (1981) second conclusion. Again these are arguments

supporting the contention that supply chains are systems.

The model shown above, through the interactions of the components indicated by the arrows in

the model, also supports the conclusion made by Ackoff (1981) and others that systems are

dynamic. Burkhardt and Brass (1990), like Germain and Droge (1998) claim that Marks and

Spenceral structure is influenced by technological change. Specifically, these researchers assert

 34

that a change in technology is, or should be, followed by a change in structure. That is, a change

of the level or type of technology used in the supply chain will have an impact on the way both

Marks and Spencer and their employees interact with the supply chain. Caddy and Helou (1999)

considered that the type and level of interaction would be contingent upon factors such as Marks

and Spenceral culture, the environment in which the Marks and Spencer operates, the types of

personnel that interface with the supply chain, and the frequency and types of exchanges that

occur among the Marks and Spencer using the supply chain.

The above discussion indicates that supply chains can indeed be considered as systems.

Furthermore, this model also indicates the power of abstraction. For example, as an abstracted or

conceptual model, there can be different real world implementations of it in which the

importance of each of these components, with respect to the others, can differ. Therefore a single

abstracted model can lead to different real world expressions with at least three different

categories, namely as information and communication technology dominant supply chains, or

human factor (relationships) dominant supply chains or structure/strategy dominant supply

chains.
 35

Chapter 3: Research Methodology

For understanding and organizing the results of the review of literature, in this study, the

following simple conceptual framework is used:

Above figure presents a proposed study framework which has been developed to handle

SCM within a specific scope, so as to meet the proposed objectives of the thesis. The framework

is built around the concept that SCM practices will have an impact on organizational performance

both directly and also indirectly through competitive advantage. The main pillars of the study are:

Supply Chain Management Practices;

Competitive advantage; and

Organizational performance

The five dimensions are strategic supplier partnership, customer relationship, level of

information sharing, quality of information sharing, and postponement. A detailed description of

the development of the SCM practices construct is provided in the following paragraphs.
 36

Competitive advantage and organizational performance are concepts that have been under

operations in the existing literature (Koufreros et al.; Zhang, 2001). Using literature support, the

expected relationships among SCM practices, competitive advantage, and organizational

performance are discussed, and hypotheses relating these variables are developed.

Scanning the recent SCM literatures, one may see that it is a scene of rapid change and

replete with buzzwords such as supplier integration, partnerships, supply base management,

supplier alliances, supply chain synchronization and supply chain management to address

elements or stages of this new management philosophy (Tan et al., 1998; La Londe and Masters,

1994). The term supply chain management (SCM) is most widely used to describe this

management philosophy. This new philosophy was viewed as a viable initiative to enhance

competitive advantage.

The need of organizational performance measurement systems at different levels of

decision-making, either in the industry or service contexts, is undoubtedly not something new

(Bititici, Cavalieri, & Cieminski, 2005). Kaplan and Norton (1992) have proposed the balanced

scorecard (BSC), as a means to evaluate corporate performance from four different perspectives:

the financial, the internal business process, the customer, and the learning and growth. Their

BSC is designed to complement “financial measures of past performance with their measures of

the drivers of future performance”. The name of their concept reflects an intent to keep score of a

set of items that maintain a balance “between short term and long term objectives, between

financial and non-financial measures, between lagging and leading indicators, and between

internal and external performance perspectives”. The early image of the BSC serving the CEO

like a control panel serves an aircraft pilot seems to have expanded to include mechanisms to
 37

alter the course of action as well. Now, the BSC seems to serve as a control panel, pedals and

steering wheel (Malmi, 2001). Table 1 outlines the four perspectives included in a BSC.

Table 1:

The four perspectives in a balanced scorecard of Marks and Spencer (Kaplan & Norton, 1992)

Customer perspective (value-

Financial perspective (shareholders’ view)
adding view)

Mission: to achieve our vision by Mission: to succeed financially, by delivering value to our

delivering value to our customer shareholders

Internal perspective (process-

Learning and growth perspective (future view)
based view)

Mission: to promote efficiency Mission: to achieve our vision, by sustaining innovation and

and effectiveness in our business change capabilities, through continuous improvement and

processes preparation for future challenges

Many companies are adopting the BSC as the foundation for their strategic management

system. Some managers have used it as they align their businesses to new strategies, moving

away from cost reduction and towards growth opportunities based on more customized, value-

adding products and services (Martinsons, Davison, & Tse, 1999). A large number of methods of

organizational performance measurement systems have been reported in the literature ([Bititici

and Nudurupati, 2002], [Chan and Qi, 2003a], [Chan and Qi, 2003b], [Chan et al., 2006] and

[Sharma et al., 2005]). A comparison between the BSC approach and other approaches used to

measure supply chain management performance is briefly described as follows:

 38

Strategic measurement analysis and reporting technique system

Wang Laboratories, Inc. (Cross & Lynch, 1989) developed this system and it consists of

a four-level pyramid of objectives and measures: corporate vision/strategy, business unit market

and financial objectives, business unit operational objectives and priorities, departmental level

operational criteria and measures.

Organizational performance measurement questionnaire

It (Dixion, Nanni, & Vollmann, 1990) involves a workshop to develop, revise, and

refocus the set of performance measures. It has the advantage of providing a mechanism for

identifying the improvement areas of the company and their associated performance measures.

However, it cannot be considered a comprehensive integrated measurement system and does not

consider continuous improvement.

Strategic organizational performance measurement system

Vitale, Mavrinac, and Hauser (1994) presented an action-focused tool, which

concentrates on the organization’s strategies. The concepts and ideas were developed by hands-

on experience.

Holistic process organizational performance measurement system

Kueng (2000) presented it especially for modern process-based businesses. It assesses the

performance of the processes for five aspects: financial view, employee view, customer view,

societal view, and innovation view. The BSC for supply chain management framework presented

here in this article is structurally similar to the BSC framework proposed by Kaplan and Norton.

Performance metrics and measurement of supply chain management

According to Chan (2003), organizational performance measurement describes the

feedback or information on activities with respect to meeting customer expectations and strategic
 39

objectives. It reflects the need for improvement in areas with unsatisfactory performance. Thus

efficiency and quality can be improved. In this section, we make an attempt to summarize some

of the most appropriate performance metrics and measures of supply chain management

identified and discussed by Gunasekaran et al. (2001), and Gunasekaran, Patel, Ronald, and

McGaughey (2004).

Metrics for performance evaluation of planned order procedures

The way the orders are generated and scheduled determines the performance of the

downstream activities and inventory levels. Hence, the first step in assessing performance is to

analyze the way the order-related activities are carried out. To do this, the most important issues

– such as the order entry method, order lead-time and the path of order traverse – need to be

considered.

The order entry method

The order entry method determines the way and the extent to which the customer

specifications/requirements are converted into useful information, and are passed down along the

supply chain. According to Mason-Jones and Towill (1997), such information connects all levels

of supply chain and affects the scheduling of all activities. Proper control of the order is possible,

provided that the order entry method is capable of providing timely, accurate and usable data at

various entry levels, and hence, can be used as a metric of performance measure.

Order lead-time

The total order cycle time, which is called “order lead time ”, refers to the time, which

elapses between the receipt of the customer’s order and the delivery of the goods. This includes

the following time elements:

 40

Total order cycle time = Order entry time (through forecast/direct order from the

customer) + Order planning time (Design + Communication + Scheduling time) + Order

sourcing, assembly and follow up time + Finished goods delivery time.

A reduction in the order cycle time leads to a reduction in the supply chain response time

(Gunasekaran et al., 2001). This is an important measure as well as major source of competitive

advantage ([Bower and Hout, 1988] and [Christopher, 1992]). According to Towill (1997), it

directly influences the customer satisfaction level. Equally important is the reliability and

consistency of the lead-time. Because of bottlenecks, inefficient processes and fluctuations in the

volume of orders handled, there will be variations in activity completion times. The overall effect

of this may lead to a substantial reduction in delivery reliability and customer service level. To

deal with these, for example, the concept of “manufacturing cell” can be applied, in which well

integrated actions are performed in parallel by cross functional teams to effectively decrease the

order lead-time and reduce the redundancies (Schonberger, 1990). In fact, Schonberger notes

that, in one case study, Ahlstrom, a Finnish company, was able to reduce the lead-time from one

week to one day. Hence, therefore, measurement of total cycle time is very important in the

context of customer service, and to serve as a feedback to control the day-to-day operations.

The customer order path

The path that order traverse is another important measure whereby the time spent in

different routes and non-value adding activities can be identified, and suitable steps can be taken

to eliminate those (Gunasekaran et al., 2001). For example, by tracing through the order path, the

delays in the paperwork, time consumed while the product sits in the warehouse, time spent in

checking and rechecking can be identified and eliminated using methods such as JIT,
 41

reengineering, and information technology (e.g. e-commerce, electronic data interchange (EDI)

and Internet).

Supply chain partnership and related metrics

Recently, buyer–supplier partnership has gained a tremendous amount of attention from

industries and researchers, resulting in a steady stream of literature promoting it (e.g. [Ellram,

1991], [Fisher, 1997], [Graham et al., 1994], [Gunasekaran et al., 2001], [Landeros et al., 1995],

[Maloni and Benton, 1997], [McBeth and Ferguson, 1994], [New, 1996], [Thomas and Griffin,

1996], [Toni et al., 1994] and [Towill, 1997]). Most of these studies stress the partnership for

better supply chain operations. Accordingly, an efficient and effective performance evaluation of

buyer and/or suppliers is not just enough; the extent of partnership that exists between them

needs to be evaluated and improved, as well. The parameters that measure the level of

partnership are summarized in Table 2.

Table 2:

Partnership evaluation parameters in a supply chain (Gunasekaran et al., 2001)

Partnership evaluation criteria References

Toni et al. (1994), Mason-Jones and Towill

Level and degree of information sharing
(1997)

Buyer–vendor cost saving initiatives Thomas and Griffin (1996)

Extent of mutual co-operation leading to improved

Graham et al. (1994)
quality

The entity and stage at which supplier is involved Toni et al. (1994)
 42

Partnership evaluation criteria References

Extent of mutual assistance in problem solving

Maloni and Benton (1997)
efforts

Measuring customer service and satisfaction

This measurement is aimed to integrate the customer specification in design, set the

dimensions of quality and the feedback for the control process. They contain product/service

flexibility, customer query time, and post-transaction service.

Flexibility

Being flexible refers to making available the products/services to meet the individual

demand of customers. This has become possible as a result of the development of such

technologies as flexible manufacturing systems (FMS), group technology (GT), and computer-

integrated manufacturing (CIM). In addition, other methods such as single minute exchange of

die (SMED), as well as information technology (IT) and communication systems (CS), which

provide online information, further facilitate quick response of the control system. The flexibility

that these systems impart has a high impact on winning customers. For example, Toyota is using

FMS and logistic principles to provide a high level of responsiveness to customer needs (Bower

& Hout, 1988). Stewart (1995) presents a list of practices that world-class companies employ to

improve flexibility. His analysis reveals a strong correlation of supply chain response time and

flexibility.

Hence, by defining flexibility as a metric and by evaluating it (Gunasekaran et al., 2001),

companies can achieve what was previously impossible: rapid response to meet individual

customer requirements.
 43

The customer query time

The customer query time refers to the time it takes for a firm to respond to a customer

enquiry with the required information. On several occasions, a customer enquires or needs to be

informed about the status of an order, and the potential problems on stock availability or

delivery. Providing such information genuinely helps the customers to schedule their activities,

and helps the firm to retain them as customers. Thus, providing online information is an

important element of customer service, and it can be evaluated for improving the same. To

measure customer service, questions “what are the response times”, and “what procedures exist

to inform customers” should be considered.

Post transaction measures of customer service

The function of a supply chain does not end by providing goods to the customer. The post

transaction activities play an important role both as part of customer service, and for valuable

feedback for further improvements in the supply chain. For example, timely availability of spares

helps companies to provide better customer service, and to trace the problems arising from

warranty claims; then making improvements on them. Apart from these, there are other post-

transaction elements that need to be evaluated as discussed hereunder:

– Service level compared to competitors: to be competitive, an organization must measure how

well its service performance compares against the competitors’.

– Measuring customer perception of service: this is done primarily through direct interviews

with customers. What are their needs? What is the service level they receive versus what are

their expectations? These are the questions firms should ask the customers to improve on

products/services, and for an increased confidence in the firm’s supply chain.

 44

Production level measures and metrics

As an important part of supply chain management, the performance of the production

process also needs to be measured, managed, improved, and suitable metrics for it should be

established. This category consists of range of product and services, capacity utilization, and

effectiveness of scheduling techniques.

Range of products and services

According to Mapes, New, and Szwejczewski (1997), a company that manufactures a

wide range of products is likely to introduce new products at a slower rate than companies with a

narrow product range. Based on a statistical analysis of “UK Best Factory Awards Database”,

these authors show that plants that manufacture a wide range of products are likely to perform

poorly on added-value per employee, speed and delivery reliability. Furthermore, a company

with an extensive product portfolio less frequently breeds new products of innovation. This

indicates the impact of “product range” on supply chain performance, and so, it needs to be

measured. The same analysis can be applicable for services, as well.

According to Fisher (1997), the selection of right supply chain strategy depends upon the

nature of product variety and innovation. This also implies that the range of products and

services acts as an important strategic metric, and hence, it should be considered in performance

evaluation.

Capacity utilization

According to Wild (1995): “All the operations planning takes place within the framework

set by capacity decisions.”

From the above statement, the role of “capacity” in determining the level of all supply

chain activities is clear. This highlights the importance of measuring and controlling the capacity
 45

utilization. According to Slack, Chambers, Harland, Harrison, and Johnston (1995), capacity

utilization directly affects the speed of response to customers’ demand. Hence, by measuring

capacity, gains in flexibility, lead-time and deliverability will be achieved.

Effectiveness of scheduling techniques

Scheduling refers to the time or date at which activities are to be undertaken. Such fixing

determines the manner in which the resources flow through an operating system. The

effectiveness of this has a significant impact on the performance of supply chain (Gunasekaran et

al., 2001). For example, scheduling based on JIT has tremendous influence on inventory levels.

Similarly, computer generated schedules based on systems like MRP, and more recently ERP,

provide a detailed and accurate bill of materials. These impact the effectiveness of purchasing,

throughput time and batch size. However, the applications of such systems should not be limited

to scheduling of shop floor activities and comparing their performance with others. In the case of

supply chains, since scheduling depends heavily on customer demand and supplier performance,

the scheduling tools/methods should also be viewed from that context. Based on these, it can be

concluded that measuring and improving effectiveness of scheduling techniques will improve the

performance of a supply chain.

Performance evaluation of delivery link

These measures are designed to evaluate the performance of delivery and distribution

cost in supply chain. The typical measures for delivery performance evaluation are lead-time

reduction in the delivery process, on-time delivery (delivery-to-request date, delivery-to-commit

date and order fill lead-time), distribution mode, the delivery channel, vehicle scheduling, and

warehouse location, the percentage of goods in transit, quality of information exchanged during
 46

delivery, number of faultless notes invoiced, flexibility of delivery systems to meet particular

customer needs ([Gelders et al., 1994], [Novich, 1990] and [Stewart, 1995]).

Measures for delivery performance evaluation

In any typical delivery distribution mode, the delivery channel, vehicle scheduling, and

warehouse location play an important role in delivery performance (Gunasekaran et al., 2001).

An increase in delivery performance is possible by selecting suitable channel, scheduling and

location policies. A survey conducted by Gelders et al. (1994) in Belgium shows that tremendous

opportunities exist to improve the supply chain performance based on lead-time reduction in the

delivery process. What is needed, according to Gelders et al. (1994), is an understanding of the

link between delivery channels and organizational operating schedules.

Another important aspect of delivery performance is on-time delivery. This determines

whether a perfect delivery has taken place or not, and it acts as a measure of customer service

level. Stewart (1995) identifies the following as the measure of delivery performance:

 Delivery-to-request date;

 Delivery-to-commit date; and

 Order fill lead-time

His study reveals a trend in the reduction of lead-time as an operational strategy for

improving delivery performance.

Another aspect of delivery performance evaluation is the percentage of goods in transit.

A higher percentage signifies low inventory turns, leading to unnecessary increase in tied up

capital. Various factors that can be attributed to this are vehicle speed, driver reliability,

frequency of delivery, and the location of depots. An increased effectiveness in these areas may

well lead to a decrease in inventory levels under consideration.

 47

Like other activities, delivery heavily relies on the quality of information exchanged. For

example, once the activities are scheduled, continuous monitoring is possible based both on

information derived and information supplied across the channels of distribution. Thus, the

quality and the way the information is presented determine the delivery performance to a large

extent, which, therefore, can be used to measure and improve performance (Gunasekaran et al.,

2004).

Moreover, the following aspects of delivery also reflect customer satisfaction:

- Number of faultless notes invoiced: An invoice shows the delivery date, time and the

condition under which goods are received. By comparing these with the previous

agreement, it can be determined whether a perfect delivery has taken place or not. Also,

the areas of discrepancy can be identified so that improvements in delivery performance

can be made.

- Flexibility of delivery systems to meet particular customer needs: Nowadays, the delivery

systems are becoming more flexible towards customer needs. By being flexible, a

delivery system can positively influence the decision of customers to place orders, and

hence, this can be regarded as a metric for winning and retaining customers. According to

Novich (1990), customers can be grouped into different segments based on their needs.

Thus, they can be grouped critically based on their economic profitability and flexibility.

Supply chain finance and logistics cost

Determining the total logistics cost can assess the financial performance of a supply

chain. It is necessary to decide on a broad level of strategies and techniques that would

contribute to the smooth flow of information and materials in the supply chain environment.
 48

They are used to assess the financial performance of supply chain, such as assets cost, return on

investment, and total inventory cost.

Cost associated with assets and return on investment

Supply chain assets include accounts receivable, plant, property and equipment and

inventories (Stewart, 1995). With increasing inflation and decreased liquidity, pressure is on

firms to make the assets sweat, i.e. improve the productivity of their capital. In this regard, it is

essential to determine how the costs associated with each asset, combined with its turnover,

affects the “total cash flow time”. According to Stewart (1995), this can be measured as the

average number of days required transforming the cash invested in assets into the cash collected

from a customer.

Once the total cash flow time is determined, it can readily be combined with profit with

the objective of providing an insight into the rate of return on investment (ROI). This determines

the performance that the top management can achieve on the total capital invested in business.

As a corollary to this, the logistics management policies have a significant impact on ROI.

For example, superior customer service leads to improved sales and an increased profit,

and subsequently, a higher ROI. Likewise, other areas of organization can be explored. By

measuring ROI and the impact of the logistics policies on it, significant insights can be gained

about the financial health of the supply chain.

Total inventory cost

In a supply chain, inventories range from raw materials, subassemblies and assemblies to

finished products, as well as inventories held up in transit. What was traditionally perceived as a

buffer in production to cope with uncertainties actually emerged to be one of the reasons for the

increase in lead-time (Slack et al., 1995). As customer service requirements constantly increase,
 49

effective management of inventory in a supply chain becomes increasingly critical and

important. Hence, it is essential that costs associated with inventory should be evaluated, and

proper trade-offs, with suitable performance measures, should be implemented.

In a supply chain, the total costs associated with the inventory ([Christopher, 1992],

[Dobler and Burt, 1996], [Lee and Billington, 1992], [Levy, 1997], [Slack et al., 1995] and

[Stewart, 1995]) consists of the following:

o Opportunity cost consisting of warehousing, capital and storage,

o Cost associated with inventory as incoming stock level, work in progress,

o Service costs, consisting of costs associated with stock management and insurance,

o Cost held up as finished goods in transit,

o Risk costs, consisting of costs associated with pilferage, deterioration, damage.

o Cost associated with scrap and rework.

o Cost associated with shortage of inventory accounting for lost sales/lost production.

In dealing with these costs, consideration should also be given to part/material size. A

low cost part may have large size, and consequently, a large space requirement. Also, in deciding

which cost should be tackled first, Pareto analysis can be used to prioritize the options. In

addition, proper trade-offs should be considered in dealing with inventory at various levels in a

supply chain. An excellent discussion on this, based on pitfalls and opportunities, is provided by

Lee and Billington (1992). In particular, they point out that the cost of reworking stored

components due to engineering changes and the risk of obsolescence could inflate the inventory

holding costs by 40%. Clearly, not considering such factors may lead to inappropriate choices.

In dealing with inventory in transit, a trade-off is needed because changing the mode of

transportation can significantly affect inventory investment and service performance. A faster
 50

and more expensive shipping mode may save enough in inventory investment to justify increase

in shipping cost, but if inventory costs rates are appropriately chosen. According to Levy (1997),

care must also be taken for longer lead-time due to longer distance as it increases the “volatility”

of inventories, resulting in either too high or too low inventory levels. This, in turn, can lead to

higher administrative costs being incurred, and can be the cause of costs due to lost sales.

Another factor that needs to be measured and dealt with regarding inventory is the

accuracy of forecasting techniques. According to Fisher (1997), supply chain in many industries

suffers from inventory, owing to their inability to predict demand. A new demand forecasting

system that takes sales data from distributor’s computer and combines with on-hand inventory

could serve as a technique to deal with this problem. Harrington (1996) shows that using such

techniques, Microsoft has been able to keep production schedules open until one week, and make

what the market will accept.

Therefore, measuring inventory at supply, production, distribution and scrap levels as

well as accuracy of forecasting techniques, can provide an insight into the cost performance and

reduce the lead-time in a supply chain.

Relationship Between E-Business and E-Commerce

E-Commerce:

Web based business or E-commerce is "any exchange finished over a PC interceded

arrangement that includes the exchange of possession or rights to utilize merchandise and

ventures," characterizes the U.S. Evaluation Bureau. Exchanges aren't required to have a cost and

incorporate the two deals and things like free downloads. Web based business incorporates

exchanges made on the web, Intranet, Extranet, World Wide Web, by email and even by fax.
 51

E-Business

E-business is more extensive than internet business; including the exchange based web

based business organizations and the individuals who run generally however take into account

online exercises too. An e-business can run any bit of its inner procedures internet, including

stock administration, hazard administration, fund, HR. For a business to be web based business

and e-business, it must both offer items on the web and handle other organization exercises or

extra deals disconnected (Monteiro, J, 2013).

Summary

E-commerce and e-business includes "the production of new esteem chains between an

organization and its clients and providers, and inside the organization itself," reports Computer

World. The Internet and electronic systems are excessively critical, making it impossible to

disregard in the present economy, so every business ought to have some type of web based

business technique. As your business develops, work to actualize an e-business procedure as they

can be muddled to institute. After you pick up involvement and information in the field of online

business, you have a significantly more prominent possibility of accomplishment in the e-

business world.(Damanpour, F. & Damanpour, J.A., 2001)

How Marks & Spencer Can Benefit from the Recent Innovations in E-Commerce and E-

Business

In 2010 M&S set out to position itself as a global multichannel retailer. This required a

colossal computerized change methodology. M&S had three objectives:

 Move stages.

 Hire a totally new computerized centered group.

 Completely change its dispersion

 52

Before the current year's dispatch the M&S's site was facilitated on an Amazon stage.

M&S naturally needed to take control of its own online bequest. It did this by not just building

its own web based business webpage starting with no outside help yet in addition by putting

distributing and at its heart. Customers are 24% more prone to purchase from a site in the event

that they've seen publication first. Keeping in mind the end goal to re-stage the site, Marks and

Spencer did the greater part of the client testing and fragmenting you'd expect with its beta site,

nonetheless it additionally took a gander at the outside scene as well (Brewer, A.M, 2008).

There was minimal advanced ability inside the business. Keeping in mind the end goal to

accomplish change, it needed to begin at the best in the meeting room. It did this by procuring an

online business master and putting them on the board and ensuring there was an advanced

concentration in the non-official group. The group additionally took the main 100 individuals in

the business and put them during a time and a half drenching course in computerized. The

improvement of the new site likewise took knowledge from cutting edge staff keeping in mind

the end goal to influence it to work for them and it does clients. (Arvaniti, C., 2010)

M&S used to satisfy its requests from an assortment of stops around the nation. In this

manner it wasn't recently the front-end that required changing, M&S additionally needed to put

resources into a productive dissemination organize. In online business, coordination is one of the

single greatest expenses and giving an effective concentrated administration will give the most

ideal client benefit and decrease unit cost. In April 2013, M&S opened a stop in Castle

Donington and now 100% of its online business is satisfied from that point.(Zyman, S., 2000)

Best Practices Implemented by Marks And Spencer

The following are the three best practices implemented by Marks & Spencer, among

many, which are leaving a trail of futuristic advantages:

 53

Marks and Spencer says its maintainability vision is "SUPPLY CHAIN DEPENDENT".

It implies that being a reasonable accomplice is integral to the retailer's methodology, while

transformative moral and ecological models are viewed as fundamental to the fate of the

business. M&S needs to go past the desires of representatives, clients and partners by teaming up

with providers to make reasonable working environments and accomplish step changes in natural

execution. Activities cover a scope of difficulties in the worldwide store network, which M&S

figures to represents around 80% of its impression. The organization is, for instance, sourcing

maintainable bundling from Sweden and working with angle providers and preservationists on

marine stewardship (Bourne, M. et al, 2003).

M&S is spreading best practice in manufacturing plants keep running by its providers in

Morocco by supporting an instructive program for clothing laborers. The UK retailer's providers

set up the preparation themselves utilizing educators gave by the Moroccan government. In the

same way, as other different organizations thinking about the complexities of production

network checking, Marks and Spencer realizes that distributing moral implicit rules is really the

simple piece. Motivating providers to follow it requires huge duty in investment and exertion and

what is much more troublesome is empowering industrial facility proprietors and chiefs to go

that additional mile and present more extensive social projects in their work environments. The

tutoring is given by the Moroccan government's preparation board;however, the production lines

have reworked their work routines to enable representatives to take the three-hour classes on the

premises, or to give transport to neighborhood preparing focuses if no reasonable classroom is

accessible (Epstein, M.J. & Buhovac, A.R., 2014).

Most of the providers say that an educated workforce is less demanding to oversee.

Preparing writing can supplant tedious gatherings with bosses, while laborers who have finished
 54

the course more effectively comprehend wellbeing directions and wellbeing cautioning takes

note. From Marks and Spencer's perspective, the key quality of the program is that the

organization has not forced it from the middle. The providers set up the preparation themselves

and tailor it to their necessities. Imprints and Spencer's significant part has been as an

empowering agent (Bourne, M. et al, 2003).

As far as environmental betterment practices are concerned, M&S enables providers to

decrease reliance on non-renewable energy sources and defenseless biological communities,

ensuring biodiversity and the ecological privileges of nearby groups. It additionally has

approaches for the practical sourcing of cotton, wood, palm oil, soy, angle, calfskin, hamburger,

cocoa and espresso. This is upheld by quarterly up close and personal provider gatherings, a

yearly meeting and a committed site offering apparatuses, direction, motivators and the open

door for providers to share examples of overcoming adversity. Such stories incorporate

individual accomplishments like zero waste to landfill, half diminishment in water utilize, 290

tons of waste reserve funds, 30% less vitality utilize, 10% decreases in staff turnover, less

mishaps and compensation increments of up to half. (Jarrar, Y.F. & Zairi, M., 2001)
 55

Chapter 4: Data Analysis and Results

Content of the scorecards

All the three companies interviewed have four perspectives in their scorecards, mainly

those suggested by Kaplan and Norton. However, two of the companies expressed willingness to

add employee perspective to their scorecards in near future. The number of measures in the BSC

varies from 4 to maximum 15 among the companies interviewed.

Implementing the BSC has meant adopting new measures that were not used earlier in all

case companies. Most interviewees stated that BSC has forced them to select the most important

measures from the existing ones and helped them to focus their attention.

One of the key ideas suggested by the Kaplan and Norton (1996) in constructing

scorecards is to link the measures to the strategy and to each other following the assumed cause-

and-effect relationships. Case companies stated that they have derived their measures from

strategy, based on cause-and-effect reasoning. However, when asked to give an example of such

cause-and-effect chain, the claimed link between strategy and measures appeared weak in all the

cases.

The use of scorecards

In all the case companies we studied, BSCs are applied at business unit level, in contrast

to the top management level on the one hand and to department or individual level on the other.

Business unit refers to profit center. However two of the three case companies have agreed to

develop the BSCs at departmental and functional activity levels in near future.

BSCs are used for organizational performance measurement. Case companies set targets

for BSC measures. Managers and supervisory staff are held responsible for achieving the targets.

Non-financial measures and targets are used along with financial measures to provide more
 56

comprehensive accountabilities and to direct managerial emphasis to issues of strategic

relevance. BSCs are also viewed as information system in the organization as companies often

use the same as a tool to see what to improve? However, on investigating, how the managers and

supervisory staff are rewarded, case companies had some sort of bonus programs. But BSCs had

nothing to do with the bonus programs. Companies are not able to link their bonus programs

with the BSCs at this early stage of applications, but in further studies this would be one of the

key issues.

Practicalities of applications

In all the three cases data for BSCs are collected manually and systems are maintained on

spreadsheet programs. However one company expressed its willingness to acquire some special

purpose software in near future. BSCs results in companies we observed are usually reported as

chapter reports distributed to key functional managers and supervisors. The most common

reporting frequency appears to be once in a quarter year. Automation of data collection,

electronic processing of information and improvement in reporting techniques are seen as future

targets of improvement.

Difficulties in BSC deployment and the lessons learnt

The study from these cases suggests that several common errors must be avoided when

implementing BSC concept. Three of these errors are discussed below

 Failure to include specific long-term objectives;

 Failure to relate key measures to performance drivers by means of cause-and-effect

relationships; and

 Failure to communicate the contents of, and rationale for the balanced supply chain

management scorecard.
 57

The strategic performance objectives in the organizations we observed were sub-optimal

and rather modest, or else peripheral to improvements in the system performance. As a result, we

believe that including stretch goals that require significant improvements in key areas will

enhance the effectiveness of a BSC for supply chain management.

Each of the observed companies was only able to identify a few cause-and-effect

relationships and performance drivers during their development of a balanced supply chain

management scorecard. In one case, faultless deliveries, customer query response time, and

supplier rejection rate were agreed to be performance drivers for internal business perspective.

However, the management team neglected to specify how the performance in these three areas

would be improved.

We would suggest that such improvements are possible through different mechanisms,

including the better buyer–customer partnerships and coordination, the adoption of new

development tools, and delivery reliability. As a result, we propose that explicit cause-and-effect

relationships be identified before a balanced supply chain management scorecard is

implemented. It is critical not only to relate performance drivers to the performance measures in

each key area, but also to consider how each of the performance drivers will significantly

improve one or more key measures of performance.

We also observed a surprising lack of intraorganizational communication as the balanced

supply chain management scorecards were developed. For example in two of the three cases

observed, the draft version of the BSC was circulated only to two or three members of the top

management, and one or two key middle level managers and supervisory staff. All functional

mangers were not told about the scorecard’s content or rational. Not surprisingly, they had little

enthusiasm for a commitment to this concept. Individual performance objective and appraisal
 58

criteria for individual function were not linked directly to the BSC. As a result, we wish to stress

importance of broadly communicating both the purpose and intent of balanced scorecard and

firmly integrating it into the company’s performance management system. Scorecard templates

and results that are communicated to employees can motivate their efforts and reward them for

meeting targets. But a missing link is observed between the company’s bonus program and the

BSC. Our discussions and limited testing within the company also suggest that graphical rather

than tabular presentation formats be employed. Moreover, interorganization communications

were also found weak during the process of development of the BSC. Supply chain trading

partners such as customers and suppliers were not actively involved in the building process of

the balanced supply chain management scorecard.

The cases we studied reinforced a belief that while the specifics of balanced supply chain

management scorecard will differ from organization to organization; it is beneficial to build upon

a standard framework, such as the one presented here, rather than starting from the scratch. In

one case where a clean-sheet approach was employed, the learning and growth perspective

contained some measures that were clearly related to internal business operations, the customer

perspective was poorly developed, and the internal business operations perspective neglected the

measures, which are very crucial for day-to-day business operations.

Additional case studies are likely to reveal other barriers, obstacles and errors that can

hinder the success of balanced supply chain management scorecard.

 59

Chapter 5: Conclusion

Marks and Spencer organizational performance measurement is an essential element of

effective planning and control as well as decision-making. The measurement results reveal the

effects of strategies and potential opportunities in supply chain management (Chan, Qi, Chan,

Lau, & Ip, 2003). Although implementations of performance measures in companies are now

wide spread (Turner, Bititici, & Nudurupati, 2005), there is not a great deal of literature that

addresses the various issues faced by organizations during supply chain management

implementation in a balanced way. We have proposed application of the balanced supply chain

management scorecard to organizations with the objective to evaluate their day-to-day business

performance. This chapter has considered the use of a BSC framework to measure and evaluate

supply chain management. A concept initially proposed as a decision-making tool for senior

managers was examined in the day-to-day operations management domain by proposing and

detailing four supply chain management evaluation perspectives. We have also considered

specific metrics for each of the perspectives. While applying the BSC in supply chain

management, it is interesting to observe that some of the metrics in one category contradict other

metrics in another category. Even within a category one supply chain management metric

compromises others. For example, efforts to minimize metric ‘variations against budget’ often

result in problems related to other measures such as on-time delivery, inventory, lead-time, cash

flow and forecasting from other categories. By reducing flexibility of change in finance metric

‘variations against budget’, sudden high market demands could be compromised. Measure such

as ‘supplier rejection rate’ contradicts buyer–supplier partnership level in the finance

perspective. Similarly, ‘range of products and services’ compromise metrics such as flexibility to

meet particular customer needs, order lead time, responsiveness to urgent deliveries and
 60

effectiveness to distribution planning schedule in the same category of customer perspective. By

increasing more range in products and services offered by supply chains, their performance could

be compromised on other measures. Metric ‘responsiveness to urgent deliveries’ from customer

perspective category compromises with internal business metrics such as capacity utilization,

total inventory cost and planned process cycle time. Reasons are obvious as serving to an urgent

order could disturb routine production planning and planned delivery schedule. Hence, it also

contradicts metrics such as delivery reliability and delivery performance in the same customer

category. Within internal business perspective category, metric ‘capacity utilization’ contradicts

other measures such as range of products and services and responsiveness to urgent deliveries.

Maximum utilization of plant and machinery could affect delivery performance, delivery lead-

time and delivery reliability adversely. Supplier’s cost saving initiatives metric from innovation

and learning category also compromises with other metrics such as delivery performance and

delivery lead time of other categories. Managers using BSC should look into these contradicting

metrics carefully before applying it in the organizations.

The four perspectives and related metrics represent a template rather than definitive

strategic supply chain management measurement system. Future research is recommended in

order to determine whether the proposed perspectives and measures are a necessary and

sufficient set. Nevertheless, the framework does represent a strategic supply chain management

evaluation tool that can be used to monitor and guide specific projects and general performance

improvement efforts. The value of the balanced supply chain management scorecard rises if it is

used to evaluate supply chain management performance on daily routine basis to coordinate wide

range of business operations simultaneously. The management of companies are likely to benefit
 61

at all decision levels from a systematic framework based on goals and measures that are agreed

upon in advance.
 62

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