scm_ch13

scm_ch13 - Supply Chain Management: From Vision to...

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Supply Chain Management: From Vision to Implementation Chapter 13: Performance Measurement
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2 Chapter 13: Learning Objectives 1. Describe the role of measurement in shaping a company’s culture and achieving results. 1. Discuss the strengths and weaknesses of traditional measurement practices. 1. Explain how world-class SC measurement improves alignment, emphasizes customer orientation, promotes process integration, and facilitates collaboration.
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3 Chapter 13: Learning Objectives 1. Identify and implement appropriate measures to manage and monitor important processes and relationships. Create unique, tailored measures. 1. Benchmark performance measures and leading-edge SC practices.
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4 Role of Performance Measurement When performance is measured, performance improves. When performance is measured and reported, the rate of improvement accelerates. - Thomas Monson
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5 Measurement Creates Understanding Performance measurement systems provide insight into the nature and workings of value-added processes. A well defined performance measurement system provides feedback regarding: 1. Customer requirements 2. Company and supplier capabilities 3. Probable success of collaborative initiatives
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6 Measurement Drives Behavior Measurement is more critical than communication, training, or perhaps anything else when it comes to managing human behavior. Measurement’s influence on behavior is pervasive because people pay attention to how they are measured. Managers must adopt measures that truly promote collaborative behavior.
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7 Measurement Leads to Results Measurement is a prerequisite for high level execution and attainment of world-class results. Well-designed measurement systems must provide accurate and relevant information in a timely manner. Incorrect measurement systems lead to non- aligned strategies, poor understanding, and inconsistent if not counterproductive behavior.
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8 Traditional Measurement Areas that are essential to measure to accomplish customer service and profitability goals: 1. Asset Management 2. Cost 3. Customer Service 4. Productivity 5. Quality
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9 Measures of Asset Management Capital investments are made in facilities, equipment, technology, and inventory. Asset management measures give managers means to judge the efficient and effective use of capital. Recent advances have changed conventional wisdom with regard to asset management. JIT/Lean Theory of Constraints
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10 Measures of Asset Management Sourcing Operations Logistics Raw material inventory levels Raw material inventory turns Inventory obsolescence Return on Assets Economic value added Work in process inventory Inventory obsolescence Return on Assets Return of Investment Economic value added Inventory turns Inventory obsolescence Return on Assets Inventory days supply Economic value added
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11 Measures of Cost Cost performance is critical and tracked more carefully and comprehensively than any other
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scm_ch13 - Supply Chain Management: From Vision to...

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