Models for Characterizing and Measuring Supply Chain Efficiency and Achieving Best Practice

Abstract

An appropriate performance measurement system is the key to effective supply chain management. Two hurdles are present in measuring the performance of supply chain as a whole. One is the existence of multiple measures that characterize the performance of individual supply chain members. The other is the existence of conflicts between supply chain members with respect to specific measures. As a result, the efficiency of a supply chain cannot be characterized directly by the performance of supply chain members. The current study develops an approach for characterizing and measuring supply chain efficiency and achieving best practice. Models are provided to define the supply chain efficiency and to measure the performance of a supply chain as well as supply chain members. It is shown that a supply chain as a whole has potential to achieve more cost savings and a better performance through coordination and information sharing based upon our linear programming problems.