The nature and design of supply chain performance measurement systems: An empirical study

Despite the emphasis that supply chain management has received recently, inter-organizational supply chain performance measurement appears to be in its infancy. Little empirical data exists addressing the breadth and nature of inter-organizational supply chain measurement systems. To-date, the performance measurement system design processes used by and among firms within a supply chain has not been examined to any significant extent. This research addresses both of these key issues.; Case studies were performed examining the nature of the supply chain performance measurement systems and the development processes utilized for those systems among selected members (Customer, Focal Company, Supplier, and Transportation Company) of a representative supply chain operating in the United States. Two system design models were developed based on the existing literature and the researcher's perspectives. These models provided a comparative base for analyzing and understanding the actual design processes utilized by the case participants. Areas of collaboration (with respect to supply chain performance measurement and measurement system design) among the supply chain members were identified. The level of integration present in the individual member interfaces was assessed. The level of integration present in the “total” supply chain was also assessed.; The supply chain members differed in their boundary-spanning perspectives and in the formality of their system development processes. These differences were reflected in the supply chain performance measures that the individual firms used. Only the Focal Company utilized a formal and systematic supply chain measurement system design approach. Two additional members however had recently embarked on developing a more formal and systematic measurement system development approach. Collaboration in measurement system development was primarily limited to the Collaborative Planning, Forecasting, and Replenishment initiative undertaken jointly by the Focal Company and the Customer. Limited collaboration also occurred in relation to certain of the Key Performance Indicators implemented by the Focal Company.; This research marks a first step. It provides a “snap shot” of an operating supply chain and gives insight into the nature of evolving supply chain practice in relation to performance measurement. It also establishes a template for future research and investigation.