Sustainable Solutions for SCM

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.

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