1 Lecture 6 Identifying Dimensions of SC Performance Evaluating Operating Initiatives pp & Discussion of your group project!

2 Agenda 1. Identifying Dimensions of SC performance 2. Evaluating Operating Initiatives (to p3) (to p7)

3 1. Strategic Dimensions: Identifying Dimensions of SC Performance Strategic dimensions are a firm’s strategic focuses in the long run. The ultimate aim is to achieve supply chain excellence. Planning, execution, business results, and social impact are adopted in the proposed supply chain overall performance model (see next slide). (to p4)

4 Dimensions of SC Performance Planning Execution Social Impact Business Results SC Overall Performance Further note (to p5)

5 Execution The literature review further identifies personal contact quality, product availability, information quality, ordering processing quality, and order discrepancy handling as supply chain management strategic dimensions in the area of execution (see next slide). See Appendix A for more information on Performance Measures in a supply chain environment (to p11) (to p6) (to p2)

6 Dimensions of SC Performance - Execution Planning Execution Process Q Measures Product Q Measures Customer-related Measures Social Impact Business Results Job-related Measures SC Overall Performance Personnel Contact Quality Product Availability Information Quality Ordering Processing Quality Order Discrepancy Handling (to p5)

7 2. Strategic Deployment: Evaluating Operating Initiatives Intelligent enterprise will proactively lay out a business strategy based on strategic focuses (or customer needs), and firm’s ability and operating initiatives. How do we evaluating their level of significance? (to p8)

8 Strategic Deployment: Evaluating Operating Initiatives What to do How to do it A deployment strategy can be set up with the Quality Function Deployment (QFD) technique to ensure that strategic dimensions (or “What to do”) are linked effectively with the potential operating initiatives (or “How to do it”) (see next slide). See Appendix B for more information on QFD (to p9) (to p15)

9 QFD Rate of Importance: 5=most Important; 1=least Important Relationships:Strong = 9 Medium = 3 Weak = 1 Total 31 Importance to customer ‘WHAT’ Customer Requirements ‘HOW’ Design Requirements Personal Contact Quality Product Availability Information Quality Order Processing Quality Order Discrepancy Handling Redesigning Fulfillment Process Sharing knowledge Adopting TQM Programs Making Use of OR Models Establishing Strategic Alliance Adopting the ERP System    How to read them? (to p10)

10 Strategic Deployment: Evaluating Operating Initiatives Cross –functional teams are normally used for this exercise. Based on the QFD exercise, it is observed that the single most important initiative or program in achieving supply chain excellence is the adoption of the ERP system. (to p2)

11 Appendix A: SC Performance Measures Planning (A.1) Execution (A.2) Business Results (A.3) (to p13) (to p14) (to p12) (to p5)

12 A.1 Dimensions of SC Performance - Planning Planning Execution Policy Development Policy Deployment Social Impact Business Results SC Overall Performance Long Term Medium Term Short Term Strategic Level Operational Level Tactical level Return on Investment Effectiveness of the Game Plan Outcomes against Industry Norm Degree of Endorsement by SC Members SC Climate Degree of Resistance to Change (to p11)

13 A.2 Dimensions of SC Performance - Execution Planning Execution Policy Development Policy Deployment Process Q Measures Product Q Measures Customer-related Measures Social Impact Social Cost Business Results Job-related Measures SC Overall Performance Design Conformance Customer Satisfaction Productivity Growth/Learning Design for Six sigma Sigma Level (to p11)

14 A.3 Dimensions of SC Performance – Business Results Planning Execution Social Impact Business Results SC Overall Performance Replenishment Production Fulfillment Total Replenishment Time Forecasting Accuracy Supplier Performance Total Production Time Inventory Level Capability Index Total Fulfillment Time Customer Responsiveness Reliability of Delivery (to p11)

15 Appendix B: QFD Quality Function Deployment (QFD) is a system for translating consumer requirements into appropriate company requirements at each stage from research and development to engineering and manufacturing to marketing/sales and distribution. Madu, C. N., House of Quality in a Minute, Chi Publishers, 2000, Fairfield, CT. (to p16)

16 Steps in QFD Development Step 1: Identify customer requirements Step 2: Identify design requirements Step 3: Position these requirements in a matrix with importance weights as well as target values Step 4: Develop a correlation matrix for tradeoffs Introduce competitive and technical evaluations. (to p8)