Impact of Supply Chain Performance on Organisational Growth

An effective and agile supply chain should deliver four benefits to the organization and they are sales revenue increase, profitability enhancement, improved customer satisfaction and customer retention. In a globalized economy, the role of Supply Chain has never been as critical as it is today. Supply Chain speed and flexibility have become two key levers for competitive differentiation and increased profitability.  The objective of supply chain management is to “lower the total amount of resources required to provide the necessary level of customer service to a specific segment” (Source: Houlihan 1993)

The key to success of any benchmarking activity lies in establishing performance measure that are competitive and at the same time attainable. Performance measures are the mile stones in a road map. If you are travelling from a location A to location B and the distance between location A and B is 100 KM. the first mile stone at 10 KM point indicates that 1/10 of the journey is completed and it give us an opportunity to measure our speed and understand whether we are on target or not and also indicates the task on hand that is 90 KM. to travel. Performance measures will not only allow us to measure the performance but also presents us an opportunity to reinforce and align the resources to achieve the business objectives.   These performance measures or key performance indicators are based on five factors and they are; Financial, Productivity, Utilization, Quality, and finally the Cycle time.

Stock market reactions on days when supply chain glitches are reported

• Delays in product development:

     by -10%

• Ramp-up/rollout problems:

     by -11%

• Production problems:

    by -10%

• Quality problems:

     by -9%

• Parts shortage in manufacturing:

    by –7.5%

Profitability impacts in the year after the disruption

Source: Prof. Vinod Singhal, DuPree College of Management, Georgia Institute of Technology

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