A from raw materials to completed products, through each

Awell-functioning supply chain is vital to the success of any business,especially in the manufacturing industry. The supply chain is a continuoussystem, developing from raw materials to completed products, through eachspecific exercise including purchasing, manufacturing, distribution, sales andmarketing. { REF = G }Differences in competitor value chains are a key source of competitiveadvantage.

Aneffective supply chain is a direct method to add value to a business, andtechnologies such as Just-in-Time (JIT), Total Quality Management (TQM) andlean production have been utilised in order to achieve this. The growth anddevelopment of supply chain management has particularly increased in recentyears due to technological advances and increased international trade due toexternal factors including less obstacles to international trade, access toinformation, government regulations and the European Union {REF = B }. Businessesare establishing strategic- partnerships with suppliers allowing them tocollaborate in product development and inventory control. Supply chainintegration is crucial to obtain the target of cost, speed, quality anddependability. To achieve these goals, the supply chain must be controlled toboost performance and this can be achieved through measurement.

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{REF = B}Performancemeasurement is an essential part of any organisation as it is a vital componentof productive planning, control and in decision making. Generally, performanceassessment may be defined as the practice of quantifying the productiveness andproficiency of an action {REF= 2 FTS CHAN}. Performance evaluation enables businesses to improveperformance while pursuing supply chain excellence to maximise value.

It has avital role in business, as it is only through measuring performance that it canbe monitored and hence be used to increase motivation, establish effectivecommunication and identify problems. Despitethe importance of performance evaluation within the supply chain, traditionally,there have been few systems available for the measurement of supply chain managementperformance. {REF = P}.Present supply chain management measurement methods are insufficient as cost isthe main, if not only measurement tool. Often firm’s fail to optimise thepotential of the supply chain as they have not effectively created theperformance evaluation method required. Measurementmetrics for the supply chain must include and balance, both financial andnon-financial elements that can also be connected to the control of the supplychain. Financial performance measurements are valuable for planning andreporting, management and logistics may be analysed with non-financial metrics.

{REF = O}.Numerical performance measures may not always sufficiently represent theperformance. For example, though the supply chain may be running at a low cost,the product lead time may be much longer than competitors, or the quality maybe poor.

The metrics used should epitomize the goals of the business and parametervalues should remain constant {REF = B}. MichaelPorter’s value chain provides a framework to analyse and monitor supply chainactivities. The value chain focuses on examining value, rather than cost, inthe review of supply chain performance. The functions a firm carries out in thesupply chain can be divided into nine value activities, which are thefoundations of developing a valuable product for the customer. {REF = MP}. Valueactivities are separated into two distinct types, primary activities andsupport activities. Primary activities are directly connected to the physicalmanufacturing, sale, and maintenance of a product or service.

Secondaryactivities assist the primary activities, as the secondary activities have animpact on each primary activity. {REF = MP}. For example, Technology & Development supportsOperations in designing testing procedures or an assembly line, while alsosupporting Marketing & Sales in producing a Market Research system or orderinput programme for the sales force. The interactions of these activities willarbitrate the overall supply chain value. The performance of each activity willresult in whether a business is high or low cost in comparison to competitors,and it is the differences in the performance in each company’s supply chainthat produces the competitive advantage.

{REF = MP}