Performance Measurement ( Kpis )

Decent Essays

Performance Measurement (KPIs) is a critical part of the global supply chain management. Advantages include expertise and specialization. Therefore, developing effective methods to layout the operations of better supplier performance measurement (KPIs) can significantly reduce supply costs, improve quality, and optimize service levels so that a business can run their logistics operations more efficiently. The disadvantage to this is the risk of streamlining the business when there is an unexpected problem such as, when a supplier has a technical problem and the buyer may have to negotiate on short notice with a replacement supplier.

I. Introduction
Delivery performance, quality performance and cost …show more content…

A contract manufacturing method is feasible to add capacity and flexibility without investing in new facilities. For instance, Mercedes appointed AM General, to produce 12,000 of their R-class vehicles destined for export to China. The purpose of this outsourcing is clear: “Mercedes will manage the logistics and supply chain, while keeping their supplier network in place. All parts of the R-class vehicles will be assembled and painted on AM General’s production line in Mishawaka, Indiana” (The missing link in automotive contract manufacturing, n.d.).
Despite the strong ties that still exist between the auto company and its suppliers, recently, the relationship has been changing in response to the need for more globalized supply chains. For instance, Nissan has already taken many steps to remove itself from the traditional keiretsu style supply chain after aligning with its parent company, Renault in France. Honda has also been changing its supply chain and is working with suppliers including foreign suppliers outside of their keiretsu supply chain.
So, what is key to maintaining quality performance of suppliers outside of their keiretsu in order to continue to be successful?
These Japanese automobile companies use supplier evaluation scorecards to improve supply chain performance. The three supplier performance categories that

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