Performance Measurement in a Supply Chain

The supply chain is an important element in logistics development for all industries. It can improve efficiency and effectiveness of not only product transfer, but also information sharing between the complex hierarchy of all the tiers. There is no systematic grouping of the different performance measures in the existing literatures. This paper presents the formulisation of both quantitative and qualitative performance measurements for easy representation and understanding. Apart from the common criteria such as cost and quality, five other performance measurements are defined: resource utilisation; flexibility; visibility; trust; and innovativeness. In particular, new definitions are developed for visibility, trust, and innovativeness. Details of choices of these performance measurements are listed and suggested solutions are given, with the hope that a full picture of supply chain performance measurements is developed. In addition, a multi-attribute decision-making technique, an analytic hierarchy process (AHP), is used to make decisions based on the priority of performance measures. This paper outlines the application and particularly the pairwise comparison which helps to identify easily the importance of different performance measurements. An example from the electronic industry is used to demonstrate the AHP technique. ID="A1"Correspondance and offprint requests to: Dr F. T. S. Chan, Department of Industrial and Manufacturing Systems Engineering, University of Hong Kong, Pokfulam Road, Hong Kong. E-mail: ftschan@hkucc.hku.hk