A from raw materials to completed products, through each

A
well-functioning supply chain is vital to the success of any business,
especially in the manufacturing industry. The supply chain is a continuous
system, developing from raw materials to completed products, through each
specific exercise including purchasing, manufacturing, distribution, sales and
marketing. { REF = G }
Differences in competitor value chains are a key source of competitive
advantage. An
effective supply chain is a direct method to add value to a business, and
technologies such as Just-in-Time (JIT), Total Quality Management (TQM) and
lean production have been utilised in order to achieve this. The growth and
development of supply chain management has particularly increased in recent
years due to technological advances and increased international trade due to
external factors including less obstacles to international trade, access to
information, government regulations and the European Union {REF = B }. Businesses
are establishing strategic- partnerships with suppliers allowing them to
collaborate in product development and inventory control. Supply chain
integration is crucial to obtain the target of cost, speed, quality and
dependability. To achieve these goals, the supply chain must be controlled to
boost performance and this can be achieved through measurement. {REF = B}Performance
measurement is an essential part of any organisation as it is a vital component
of productive planning, control and in decision making. Generally, performance
assessment may be defined as the practice of quantifying the productiveness and
proficiency of an action {REF
= 2 FTS CHAN}. Performance evaluation enables businesses to improve
performance while pursuing supply chain excellence to maximise value. It has a
vital role in business, as it is only through measuring performance that it can
be monitored and hence be used to increase motivation, establish effective
communication and identify problems. Despite
the importance of performance evaluation within the supply chain, traditionally,
there have been few systems available for the measurement of supply chain management
performance. {REF = P}.
Present supply chain management measurement methods are insufficient as cost is
the main, if not only measurement tool. Often firm’s fail to optimise the
potential of the supply chain as they have not effectively created the
performance evaluation method required. Measurement
metrics for the supply chain must include and balance, both financial and
non-financial elements that can also be connected to the control of the supply
chain. Financial performance measurements are valuable for planning and
reporting, management and logistics may be analysed with non-financial metrics.
{REF = O}.
Numerical performance measures may not always sufficiently represent the
performance. 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 may
be poor. The metrics used should epitomize the goals of the business and parameter
values should remain constant {REF = B}.

Michael
Porter’s value chain provides a framework to analyse and monitor supply chain
activities. The value chain focuses on examining value, rather than cost, in
the review of supply chain performance. The functions a firm carries out in the
supply chain can be divided into nine value activities, which are the
foundations of developing a valuable product for the customer. {REF = MP}. Value
activities are separated into two distinct types, primary activities and
support activities. Primary activities are directly connected to the physical
manufacturing, sale, and maintenance of a product or service. Secondary
activities assist the primary activities, as the secondary activities have an
impact on each primary activity. {REF = MP}. For example, Technology & Development supports
Operations in designing testing procedures or an assembly line, while also
supporting Marketing & Sales in producing a Market Research system or order
input programme for the sales force. The interactions of these activities will
arbitrate the overall supply chain value. The performance of each activity will
result 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 chain
that produces the competitive advantage. {REF = MP}

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