Designing supply chain performance system: a strategic study on Indian manufacturing sector

Abstract

Purpose A well-designed supply chain performance measurement system, should account for not only the capabilities and performance attributes of the focal firm but also its supply chain partners. The purpose of this paper is to help design a system that strikes a balance between the strategic objectives of the focal firm and its supply partners vis-à-vis the requirements of supply chain performance (cost, quality, speed and customer taste). Design/methodology/approach A theoretical framework on the strategic supply chain performance measurement system is developed based on existing literature and subsequently tested using a survey on 136 successful manufacturing organizations in India. The organizations were clustered into three strategy types and compared using analysis of variance on ranks to look for differences in preference for performance parameters. Findings The study examined the five dimensions of the supply chain practices, namely, strategic supply/distribution network, customer relationship, internal operations, information sharing and social and environmental responsiveness. The empirical results demonstrate the inclusion of business strategy orientation in designing today’s supply chain and hence its performance measurement system. Not supported hypotheses were addressed in the light of contextual factors. Research limitations/implications The study is confined to finding preferences of non-financial aspects of supply chain performance and tier-1 suppliers. The research helps better design and benchmark supply chain performance metrics, based on the strategic choice of the firm. Originality/value This paper highlights the shortcomings in the existing performance measurement and gaps in the existing literature in the supply chain context. Further, it gives a holistic view of strategic supply chain performance measurement design.