Supply chain is a system of networks and processes from the procurement, conversion to distribution. Supply chain scorecards can be utilized to assess the performance of the activities.
Supply chain scorecards are designed to help businesses measure the logistic aspect from the raw materials procurement to distribution of final goods in the market. The scorecard can be of great importance to businesses that belong in the logistics industry. However, for companies that integrate supply chain within their organizations to better reach out to their customers, supply chain scorecard should then be used for it as it is a great tool to measure the performance of the different activities involved in the supply chain.
Determining the performance of the supply chain would entail a great deal of processing. This is because a company must start from where the materials are obtained. There are deliveries involved in the process, from the purchase of raw materials to the work-in-process manufacturing and distribution of the final goods to the wholesale or retail markets or directly to the consumers. The supply chain is indeed a network of processes inherent in businesses.
To measure the performance in the supply chain, various metrics can be used. Using the KPI or key performance indicators can be useful in assessing the quantitative aspects of the supply network. These metrics can include a monthly inventory of supplies, inventories of raw materials, work-in-process goods and finished products in the warehouse, transit time, defects per million of opportunities, freight costs claim percentage and customer order.
The key performance indicators in supply chain can be integrated in the development of supply chain scorecards. The scorecard can be a great measure, not just on the quantitative aspect, but also the qualitative performance in the supply chain.
As a rule in developing the balanced scorecard, the elements found in the supply chain scorecards must be kept to a minimum. Normally, in summarizing the performance details to derive the total performance, say for instance a supply chain, four perspectives are used. However, a company can also include another general perspective. The general perspectives typical in balanced scorecards include financial, internal process, learning and growth, and customer perspectives.
In supply chain scorecards, perspectives found in the metric framework may include major activities and aspects, such as manufacturing, warehousing, and transportation. Customer satisfaction and financial performance are usually integrated as equivalent to the customer and financial perspectives, respectively.
Supply chain scorecards can be used as tools for management to come up with solutions for certain problems found within the supply chain. If the results found in the scorecard are beneath the satisfactory level set by the organization, the management can come up with decisions and possible actions. The framework of supply chain performance measurement can also be utilized in the creation of the plan for next business period.