Sustainable Solutions for SCM

3.2.2 Guidelines for performance measurement instruments Further guidelines focus on the performance measurement system or, if applicable, the instrument as a whole. This set of criteria focuses especially on the set of elements and on the relationships between the elements within the system respectively the design and the functioning of the instrument. Multidimensionality Whereas past performance measurement approaches and performance measurement systems mainly focused on the simulation or prediction of the financial outcome of the focal organisation by using financial measures, later contributions claimed that this was not enough to support management. In order to do better, it was proposed that non-financial measures should be integrated in a multidimensional performance management system [2]. Those dimensions could be grouped into different categories. Among the most used categories are [4], [16], [26], [48]: The idea of this claim is when managers consider different areas and dimensions of performance and aim to keep them in balance.The result should be amore comprehensive picture of how the business is functioning and thus make better decisions [40]. For supply chain management, this is a very important guideline as supply chains are very complex organisational structures. At the same time, this criterion is easy to fulfil as it is seen today as common sense to observe the performance from different points of view. Understandable and evidence-based cause-effect-relationships In order to support management to better understand how the business is functioning not only is a mix of different dimensions important. It is also necessary to close the gap between the often financial outcome indicators and at the very basis of management’s work the actions taken. Therefore, it is argued that cause-and-effect- relationships which firstly are understandable and secondly are based on empirical evidence should be modelled in the PMMS [42], [51]. But even though modern performance measurement systems such as the Balanced Scorecard take into account also cause-and-effect-relationships between financial KPIs and its driver-KPIs there is still a gap between the driver KPIs and the actions and improvement measures that have to be taken (see Figure 3.6). This aspect is often neglected by PMMS. Therefore, a crucial issue for modern performance management systems is how effect-mechanisms could be modelled in order to induce precise management actions based on the analysis of financial and driver KPIs. • Financial vs. non-financial indicators. • Internal vs. external oriented indicators. • Past vs. future oriented indicators. • Leading indicators vs. outcomes.

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