Sustainable Solutions for SCM

SUSTAINABILITY IN PERFORMANCE MEASUREMENT

AND MANAGEMENT SYSTEMS FOR SUPPLY CHAINS

In the first chapters, new concepts in supply chain management with a focus on

sustainability – understood as the ability to manage economic, social and environmental

performance at the same time – were examined. The concern of this chapter is the

integration of sustainability in performance measurement and management systems

(PMMS) for supply chains to pave the path for the implementation of sustainable

supply chains [46] and to manage sustainably daily business activities. This is especially

important as sustainability adds less quantifiable aspects to supply chain management

[37] and is done on the basis of a literature analysis as well as on the project experience

of the author.

Therefore, in the first chapter, an overview of definitions and developments in

performance measurement and management systems and a structure for PMMS are

given. In the second chapter, guidelines for good and modern PMMS are discussed. In

the third chapter, existing approaches to supply chain management PMMS (e.g. KPIs,

TCO, value driver trees and balanced scorecards and maturity assessments) are presented

and the suitability for supply chain management as well as the possibility to integrate

aspects of sustainability are examined. In the summarising chapter, the fulfilment of the

requirements and the ability to cope with the challenges of the approaches are discussed.

3.1 PMMS – developments and definitions

3.1.1 Relevance and developments

The idea to measure the performance of companies or systems is not new. And

also the saying “only what can be measured can be managed” still holds true. Therefore,

the measurement of a company’s performance was already the focus in early approaches.

In the first place, the aim was to predict what the financial performance of a company

would be at the end of the year. Later, the goals of the most important stakeholders would

be taken into account by measuring the impact of business decisions on the shareholder

value. One instrument was a value driver tree. Another direction that has become more

important nowadays is to predict the successfulness of the implementation of strategies

by tracing cause-and-effect relationships with combining financial KPIs and driver KPIs

in balanced scorecards. In that sense, the aspect of influencing the performance directly

became more important in later contributions.

Today, the possibilities of new technologies have to be integrated into modern

PMMS. Analogies can be found in medicine where medical imaging became more

sophisticated and more detailed with better technology and better knowledge or in

navigation systems where GPS data were better integrated into the devices and

combined with location services. PMMS must become more detailed and more action

oriented along with better use of IT-systems and the possibilities of big data but also

along with higher competition and a higher degree of implementation of state-of-the-

art management instruments.