TABLE OF CONTENTS The aim of this chapter is to introduce a number of key measures including financial and non-financial performance concepts. After studying the chapter you will be able to:
explain the concept of value in relation to managing the supply chain;
explain the importance of total acquisition cost in relation to supply chain management;
identify how value is created within the supply chain and the concept of value systems and value streams;
analyse and evaluate supply chain cost and value;
know and understand the relative importance of different types of supply chain metric (e.g. financial and non-financial);
be aware of and able to explain specific terms related to performance measurement including: best practice, world-class, benchmarking and balanced scorecard;
know and understand the importance of having key performance indicators (KPIs);
analyse and understand the importance of developing and using appropriate measures in relation to the supply chain, e.g. benchmarking and balanced scorecard approaches.
It is particularly important for organizations to know and understand in detail their cost and value structures in relation to managing their own supply chains. All organizations form part of a much larger value system that links with other suppliers and other customers locked in a single or multiple supply chain structure. For example, if your organization supplied just five customers and two of those customers accounted for a substantial proportion of business it would be very important to know cost drivers and value creators for the two major customers since...
