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whether the indicator can be influenced by the management. In practice, this claim
cannot be granted without ambiguity.
Performance elements that can be controlled relatively well are internally oriented
performance elements such as supply chain cost or time-to-market. When external
parties or influences are involved, the controllability is often reduced. This is the case for
performance elements such as lead time (influenced by delivery reliability of suppliers
and service providers), customer satisfaction (influenced by personal perception) or
delivery reliability of a supplier (cannot be influenced by the logistics department
and only indirectly by the purchasing department by means of supplier development
programs or phasing out of the supplier).
Another class of indicators that cannot be influenced comprises external factors
such as the behaviour of competitors or political developments. For those factors, it can
be stated that they do not represent an element of the companies’ performance. But they
could be used as an explaining or input factor for performance elements.
Especially for supply chain management, the controllability of relevant performance
elements is not clear but at the same time crucial as many external parties are involved.
Therefore, often the mere discussion on the controllability of a performance element with
the involved internal affected organisational units is adding value to a good PMMS. It is
also an advantageous preparation for the definition of cause-effect-relationships, which is
discussed in this contribution under the headline of the performance measurement system.
Control-span adherence
This guideline claims that the performance element should be so designed that
it adheres to the span of control of the individual that uses the indicator and gives
autonomy within this span of control [33]. This can be referred to as the “Highlander-
Principle”. The goal of this criterion is to avoid confusion over the responsibility of
managers concerning the indicator or even conflict between measures to improve
the focal performance element and to lead the way to an effective implementation of
improvement actions.
But especially for performance elements for supply chain management, this
guideline is difficult to achieve because supply chain processes often run across internal
units and involve external parties. For example, the performance element inventory
in a supply chain should involve all inventories across the whole supply chain. Even if
defined as an internal supply chain, it is difficult to assign this performance element to
only one specific manager whose responsibility it is to manage the inventories. Also,
this guideline is closely linked to the way the organisational structure is designed. In
divisional organisations, responsibilities are most likely spread along different customer
segments whereas in functional organisations along the functional units such as
purchasing, production and sales.
A possible solution could be to divide the responsibilities like a cascade over
several managers in different levels of the hierarchy. For example, the responsibility for
the inventory in a functional organisation can be assigned on a lower hierarchical level
to the managers of the processes source, make and deliver. And on a higher hierarchical
level it can be grouped under a manager who is responsible for the whole supply chain.