separate the team from everyday operations to increase the chances of early success and minimize disruption of nonparticipants until the new approaches have been thoroughly validated. Customer and supplier personnel should be co-located at each other's sites, if possible, to facilitate process integration and communication.

METRICS

Participants in a supply chain are unlikely to achieve their collective goals unless their performance measures (metrics) and incentives are aligned. Hence, metrics and incentives must be clearly and carefully defined, mutually agreed-upon, and monitored by all participants. Participants should be held accountable for some of each others performance measures.

To date, very few companies have succeeded in assessing the performance of their supply chains as a whole. Nevertheless, performance should be measured both on a highly aggregated basis and within specific segments. Although specific metrics must be tailored to the circumstances, the following metrics can be used for high-level assessments:

  • profitability

  • total sales

  • decision response time (the time required to make and implement key decisions throughout the chain)

  • return on investment

  • return on assets

  • technology (the status of and ability to deploy value-enhancing technologies)

  • product development time (the elapsed time from concept through initial delivery)

  • shared risk (the extent of risk minimization and sharing throughout the chain)

  • market share

  • planning (the extent to which both strategic and short-range planning are performed in a coordinated and cooperative manner throughout the chain)

  • quality (effective planning for and delivery of quality products, including appropriate measurement of results by all participants)

  • customer satisfaction

  • waste (reductions in scrap, rework, waste, and pollutants from the supply chain and plans for further reductions and recycling)

  • transparency (the extent that participants are aware of activities throughout the supply chain)



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