eThesis - School of Business electronic theses

The thesis investigates current challenges that supply chain practitioners face when they review and update their existing performance measurement system (PMS). In addition, it attempts to recommend practical solutions through examining the appropriateness of available solutions in the literature.

The literature review provides basic knowledge around PMS concepts and current best practices in operation and supply chain context. A case study is conducted where the researcher is actively involved in the process of reviewing and improving an existing supply chain PMS in a large organization. By connecting theoretical solutions and existing challenges, the thesis aims to provide practical insights to help current practitioners address their challenges.

The main challenges in contemporary organizations consist of creating effective approaches to engage the users, transform metrics to action, and keep current PMS up-to-date. To address these challenges, three theoretical solutions are proposed as most relevant. The Balanced Scorecard and the Hierarchy of Supply Chain metrics help design a relevant set of supply chain measures, which empowers the users' analysis capability. In addition, Tangen's progressive approach to review and update PMSs helps maintain the system's relevance overtime. The approach consists of 9 steps that help identify existing issues and improvement directions.

From a practitioner's perspective, Tangen's progressive approach is perceived as easy to apply. However, it only helps organizations to understand the issues in-depth but does not provide concrete solutions. Fortunately, solutions can be found by utilizing other frameworks such as the Hierarchy of Supply Chain metrics and the Balanced Scorecard. In the case study, utilizing two frameworks together has bought up a new PMS structure that is aligned vertically and horizontally. This comprehensive set of metrics is crucial to link strategic objectives to operational initiatives, engaging managers across hierarchical levels. In the end, it should be noted that a more comprehensive solution is needed in future research to address current challenges. In such a solution, performance improvement should be the center focus rather than performance measurement.