Performance done to show the performance of each department.

Performance measurements developed in
companies are often in a functional based measurement. It means the measurement
is done to show the performance of each department. That kind of measurement
method is felt to be less effective because it will cause the tendency of each
department is just trying to improve their own performance and not the
performance of the company as a whole, consequently it also will create an
opportunity for conflict between each department.

Performance measurement is a process to
measure effectiveness and efficiency of an activity. In modern business
management systems, performance measurement is not just a measurement system
and calculation only, but also can contribute to improved performance.

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The idea of ??performance measurement was
first initiated from the measurement of operation manufacturing done by F.W.
Taylor, father of scientific methods, at the beginning of 20th century. He
conducted research on motion studies and time. This research is done by
collecting the data to make the standard work from workers and make objective
criteria for measuring and determine the performance and efficiency of the
worker.

Over time, performance measurement views are
no longer focused on individual performance research, but rather lead to whole
company performance measurement and its behavior. Measuring Supply Chain
Performance is very important because impact on how a company can assess its
supply chain has increased or even decreased. Or can also determine the ways
towards the success of supply chain.

Performance measurement of Supply Chain must
contain some indicators. The indicators should be related to the questions such
as what aspects should be measured, how to measure these aspect, how to use the
measurement results to improve and control the quality of supply chain.

In answering those questions, it is not an
easy task. Many indicators need to be prepared and need to choose which
indicators suited the company’s condition. There are several characteristics
that must be met by the indicator, such as universal, measurable, and
consistent (Pires et al., 2001).

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