12-06-2013, 04:17 PM
SUPPLY CHAIN PERFORMANCE MEASUREMENT IN THE MANUFACTURING
INDUSTRY
SUPPLY CHAIN PERFORMANCE.pdf (Size: 2.09 MB / Downloads: 93)
Abstract
Supply chain performance measurement – the process of qualifying the efficiency and
effectiveness of the supply chain. The aim of this study is to create a supply chain measurement
framework for manufacturing industry, define what data should be measured and verify the
measurement framework in the case company's supply chain. The research approach is
hermeneutic and the research was a qualitative, constructive single case study research. The case
company operates in the steel industry and provides prefabricated products for customers. The
case supply chain was defined to be one supply chain in a plant where prefabricated products are
produced.
There is a review of the current understanding of supply chain management and literature
related to supply chain performance measurement and the study creates a framework for supply
chain measurement. This study presents the main theory framework of supply chain performance
measurement. The key elements for the measurement framework were defined as time,
profitability, order book analysis and managerial analysis. The measurement framework is tested
by measuring case supply chain performance. The measurement framework is a valid framework
for supply chain performance measurement in manufacturing industry.
Introduction
This chapter is an introduction to reviewing problems in the field of production.
The basis of the research, the research problem as well as the researcher’s rapport
with the study are being reviewed. In the chapter, the case aggregate studied is
described and defined. Furthermore, research goals are stated. Scientific
paradigms and research methods chosen are reviewed. Finally, the structure of the
dissertation is described.
Background
Niiniluoto defines science as the systematic pursuit of new knowledge, covering
general truths and regularities of nature, humans and society. Science can be
divided into basic sciences and applied sciences. Basic sciences include such
fields as physics, chemistry and biology. Such sciences as engineering sciences,
agricultural and forestry sciences are applied sciences. (Niiniluoto 1997)
Industrial Engineering and Management (IEM) is positioned as an applied science.
IEM is a science that combines economics and technical sciences. The goal is to
produce additional value for business as well as to develop production processes.
One major research subject of IEM is industrial economics. Research in industrial
economics focuses on planning, developing and managing production systems.
Supply chain management (SCM) and the subject of this study, measuring supply
chain management, are placed in the field of research in industrial economics.
Case description
With regards to the size and population of Finland, the steel and metal industry is
a significant field in Finnish society. The steel industry directly employs tens of
thousands of employees. Furthermore, the steel industry employs through its
networks a significant number of employees indirectly. In proportion to the size
of the country, revenue from the steel and metal industry is significant. The steel
industry has established itself in Finland very firmly with support from the state.
After the Second World War, during the era of reconstruction, the state established
the steel industry very systematically. Afterwards, stockholdings of the state in the
established companies has decreased and companies have been quoted on the
stock market.
Research problem
SCM has been studied a great deal in the industrial economics field of research.
Researchers of SCM as well as the public have been interested in the published
studies related to improving cost efficiency, optimizing the whole SC, production
control, stock management, agility, lean SCM and SC integration. There are only
a few studies of performance measurement in supply chain management in this
field of research.
In SC performance measurement the main purpose is to get information for
top management’s needs, but also several kinds of SC measures are needed at
every management and operational level. SC should be measured because of
management interest in measuring how efficient SC is. Usually there are several
kinds of interest and several management levels are interested in knowing about
SC performance. Measuring is also needed when SCM is going to be developed.
Van Hoek identifies the problem of measuring SCM in the research paper titled
as ”Measuring the Unmeasureable - Measuring and Improving Performance in the
Supply Chain Management”(Hoek 1998).
Scientific paradigms
Modern world view or all-round education does not include only knowing the
most significant output of science, but also an understanding of the processes and
methods of research with which this output has been achieved. This requirement
does not only apply to scientists but also to all of those who are to utilize the
results of the studies. It can be therefore defined that philosophy of science stands
for applying philosophical method to science, research and to its results.
(Niiniluoto 1997)
In philosophy, the aim is to raise problems in order to challenge or
problematize various models, established ways of thinking and premises that are
taken for granted. Another aim in philosophy is considered to be explication (a.k.a.
making clear) of incoherent, ambiguous or implicitly assimilated views. Thirdly,
argumentation is highlighted. In other words, views assimilated as a result of
explication are evaluated for validity by searching for justifications or
counterexamples for them. (Niiniluoto 1997)
Case study research
Case study research is one of the most widely used methods in industrial
economics. Although the method is commonly used in industrial economics, case
study research can be regarded as a highly challenging method of research. With
the help of the method it is possible to explain complex social events, like
organizational processes and problems of an industry. Case study research is used
widely in various sciences because the functionality of its methodology is not
restricted to only certain sciences. (Yin 2009) Orientation to practice, democracy,
striving towards change as well as subjects’ participation in the research process
are characteristics of functional research (Kuula 2001).
Research approach for this study
This study is conducted in a challenging environment by studying the measuring
of the SC in manufacturing industry. SC is an extremely challenging research
subject and the study creates new information by measuring performance of the
case SC. The hermeneutic view perceives knowledge as soft, often subjective and
experience-based as well as insights of a personal nature, whereas the positivist
perceives knowledge as hard and real, and considers it possible to transmit
knowledge in a tangible form (Burrell & Morgan 1979). The hermeneutic view is
approached in the study in the form of qualitative and quantitative research.
Research design of the study
Research design is the logic that links the data to be collected and conclusions.
After a relevant research problem was found, the first research process was the
literature research of the SCM and SC performance measurement. Literature
research was made in order to increase the knowledge regarding SC and
performance measurement. The research problem was formed from the real-life
challenges and based on this the research question as well as the tasks related to
the study were developed. Furthermore, the plan for answering the research
questions was made.
Structure of the thesis
The study consists of five chapters. In chapter one, background for the study, SC
frame of reference as well as necessity of measuring the SC, the challenges in
measuring it and research problems are discussed. The case is described and
delimited. Furthermore, how the case company and the case production plant are
linked to the steel and metal industries is discussed. The research problem and
research question as well as the tasks are presented. Research methods as well as
research paradigms are presented, selected and justified. Finally, structure of the
study is presented.
In chapter two, the primary approach for SC performance measurement is
presented. SCM is defined on the basis of published conclusions of various
researchers. The chapter also presents new movements of SCM: agility and lean
SCM. SC performance measurement approaches are presented by referring to
most central publications by leading researchers. Furthermore, challenges for SC
performance measurement are analyzed and, finally, conclusion of SC
performance measurement is made. In the chapter, the research task RT1 is
answered.