Supply chain performance under risk environment: an empirical study on Indian dairy industry.

AuthorMishra, Pramod Kr.
  1. INTRODUCTION

    "Supply chain performance measurement" has been one of the key issues for the organisations to identify their stand in the market place. Since the supply chain considers several stakeholders in the system, in order to measure the performance, it is essential to measure the performance of the individual stakeholder. The performance level of the organisation is greatly influenced by the performance of the individual stakeholder--may be positive or negative. If the performance of each of them is positive and optimal then, it adds to the overall performance of the chain. So in order to see the higher performance of the supply chain it is essential to have higher performance in case of individual stakeholders. In order to measure the performance of the supply chain it is necessary to have a proper measuring instrument with requisite parameters. All of these parameters or key performance indicators (KPIs) may or may not be applicable to each stakeholder in the system. Even though it is applicable still it is difficult to say, that it impacts every stakeholder in the same way. This is due to the conflicting objectives among supply chain partners, which often brings out sub-optimal results, may be detrimental to the overall performance of the chain (Aramyan, 2007) This conveys that a parameter, set by a component in his/her day to day operational activities without due consultations with others might not result in the same way what he/she has out of it.

  2. LITERATURE REVIEW & CONCEPTS

    Supply chain management practices are widely prevalent in today's business scenario irrespective of the nature of the firm. Since the supply chain work under a diversified working environment, most of the times, it is essential to measure the performance of the stakeholders including the customers' satisfaction. But the performance measurement of any entity is not an easy task to deal with. This requires a valid and reliable instrument, which requires an extensive background work and expertise. To make the study more precise and practical, some of the findings of the academicians, researchers and practitioners in this field have been cited hereunder.

    According to Neely et al. (1995), "performance measurement is the process of quantifying the effectiveness and efficiency of various actions". They have revealed that the efficiency is the measure of economic activities of the farm whereas the effectiveness is the extent to which customers' requirements are met. So clearly in order to measure the performance of the chain it is essential to measure both the performance of supply chain partners including the customers' satisfaction. They have also identified quite a good number of approaches to the measurement system viz. balanced score card method, performance measurement matrix and questionnaire etc. Short termism, lack of strategic focus, system not aligned with strategic goals and organisation culture etc. are some of the major limitations adhered to the measurement system, they have included thereto.

    Gunasekaran et al. (2004), in order to measure the supply chain performance have developed and sent a questionnaire to 150 industries in the UK with a response rate of 14 per cent. The questionnaire has got four basic sections namely; plan, source, produce and delivery at different levels of the organisations. The findings of the study say that 76 per cent of the industries get benefited out of the supply chain management practices by improving their return on investment. Around two third of the respondents agree, that their market share have gone up due to implementation of the various supply chain practices. But the success of the industries is not automatic unless due care has been given to the measurement of the supply chain in regular interval of time. They have revealed that, there should be a common goal for the entire chain irrespective of the stakeholders--the goals could be customer satisfaction and the enhanced competitiveness.

    Aramyan et al. (2007) have considered exhaustive list of indicators proposed by various authors combinely like; efficiency, responsiveness, flexibility, product quality and process quality in their study of "performance measurement in agri-food supply chains". They have carried out this study in case of Dutch-German tomato supply chain by considering one breeder, seven tomato grower, one wholesaler, one distributor and two retailers. The twelve stakeholders have been interviewed by them on the basis of a structured questionnaire with both open and closed ended questions under a five-point rating Likert scale. They have concluded that many indicators are used on the basis of objectives of the stakeholders which complicate the harmonisation of performance measures for the entire chain. At the end they have suggested a four dimensional performance measurement system for the agri-food supply chain. The dimension-wise indicators as per their study have been mentioned hereunder:

    * Efficiency: costs, profit, return on investment;

    * Flexibility: mix flexibility, volume flexibility;

    * Responsiveness: lead time, customer complaints; and

    * Food quality: appearance, product safety.

    The supply chain of any organisation has to come across various adverse situations in the form of risks and uncertainties. These risks and uncertainties often plunge to the supply chains by disrupting its flow and bring damage to it. In order to have a better performance in the chain it is highly imperative to consider the risks and uncertainties which are not usually mentioned in the set of indicators. The concept of risk and uncertainty is not being mentioned in the study made by Aramyan et al. The actual performance of the supply chain not only depends upon the set of operational indicators rather depend upon the risk factors too. Though it is difficult to generalise the contribution of each to the overall performance of the chain, still there is a need to concentrate on both of these dimensions. Chopra and Meindl (2003) have mentioned that, in order to achieve strategic fit in the supply chain, it is necessary to understand the customers and uncertainties. They have also cited that since the scope of strategic fit is to include all channel partners, it is essential to have a common framed goal irrespective of its members. Individual goals, though profitable for the concerned, do not much add value to the supply chain's performance.

    After coming across through a series of studies and research papers, three broad indicators have been considered in the study to make it more precise and appropriate. They are namely;

    * supply chain indicators

    * customer satisfaction index

    * risk coping efficiency of partners

  3. OBJECTIVES & SCOPE

    The paper aims to measure the supply...

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