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Performance Metrics in Supply Chain Management

J. P. C. Kleijnen and M. T. Smits
The Journal of the Operational Research Society
Vol. 54, No. 5 (May, 2003), pp. 507-514
Stable URL: http://www.jstor.org/stable/4101738
Page Count: 8
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Performance Metrics in Supply Chain Management
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Abstract

This survey paper starts with a critical analysis of various performance metrics for supply chain management (SCM), used by a specific manufacturing company. Then it summarizes how economic theory treats multiple performance metrics. Actually, the paper proposes to deal with multiple metrics in SCM via the balanced scorecard - which measures customers, internal processes, innovations, and finance. To forecast how the values of these metrics will change - once a supply chain is redesigned - simulation may be used. This paper distinguishes four simulation types for SCM: (i) spreadsheet simulation, (ii) system dynamics, (iii) discrete-event simulation, and (iv) business games. These simulation types may explain the bullwhip effect, predict fill rate values, and educate and train users. Validation of simulation models requires sensitivity analysis; a statistical methodology is proposed. The paper concludes with suggestions for a possible research agenda in SCM. A list with 50 references for further study is included.

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