Balanced Scorecard and Performance Management in Supply Chains
The current rapid rates of change have shown the inadequacy of many operational executive systems within a large number of companies. Therefore, many supply chain and logistics managers have invested in solutions for integrated supply chain performance management from all aspects and linking them with the company’s strategic management.
Thus, there is a need for an integrated performance management vision and structure for supply chains, such as the need for a structured job framework with reports to measure operational and administrative deviations based on numbers to facilitate appropriate decision-making. In the traditional model, companies seek to analyze the results from executive aspects and their financial impact on profitability analysis, cost, revenue, customer, distribution channel, and product, but all these objectives may be achieved temporarily. However, sustaining these results requires a deep analysis of how executive performance is measured to sustain the performance of supply chains, so managers can improve and develop the factors that lead to sustainable development of supply chain performance, rather than temporary, by building an integrated supply chain. Improving performance depends on the accumulation of small improvements in the value chain.
Continuous performance analysis ensures operational flexibility, proactive decision-making, which is now an essential requirement for sustainability and business growth in highly competitive economic environments with a state of continuous planning and development, with realistic expectations of performance shape, which leads to proactive decisions that can be quickly and easily updated to ensure the sustainability of performance at the required level. This shows the need to expand performance management systems to effectively analyze the ongoing traditional gap between financial and operational data, with corrective actions as needed, which ultimately leads to the sustainability of supply chain performance. Therefore, the Balanced Scorecard is used to link technical performance with the company’s financial and non-financial targets.
Why is the Balanced Scorecard used?
It helps in setting integrated performance indicators to link supply chains and their performance indicators with other indicators related to:
- Improving financial performance.
- Increasing customer satisfaction.
- Enhancing internal operational efficiency.
- Encouraging continuous development.
- Improving decision-making processes.
What is Scoreboard?
It is a balanced performance system for supply chains provided by Sustain Chain to build sustainable and interconnected performance indicators for supply chains.
The goal of this model is to link supply chain management indicators with sustainable objectives for the company as a whole, not just supply chain management alone. The supply chain scoreboard is a project to change supply chain indicators from the executive side to sustainable holistic indicators that help decision-makers and managers analyze integrated performance, not just technical performance, to serve strategic goals and thus achieve sustainable positive results.
Sustain Chain regularly reviews and updates the scoreboard to align with continuous changes in goals, components, or capabilities.
How can the scoreboard develop supply chain performance?
- Link supply chain performance with the company’s overall strategy.
- Create a common language for goals between supply chains and all levels and departments of the company, improving overall performance.
- Focus on non-financial performance results: such as customer satisfaction, process efficiency, and cost performance.
- Encourage continuous development.
- Improve decision-making processes to help decision-makers make accurate decisions that contribute to achieving goals.