PERFORMANCE ANALYSIS IN THE SUPPLY CHAIN: CASE STUDY OF GRAIN SUPPLY

1
PERFORMANCE ANALYSIS IN THE SUPPLY CHAIN CASE
STUDY OF GRAIN SUPPLY

• Dr. Lidia Norina
• Lecturer, Agribusiness
• Dr. William C. Bailey
• Professor of Agribusiness
• Palmerston North, New Zealand

2
Background

• No single school for supply chain performance
  measurement systems
• Unique structure of the agri-food chain and the
  requirements of the chains performance
• Customer-supplier relationships are often based
  on contractual agreements

3
Background

• The supply chain has been described as a series
  of material, informational and financial flows
  between chain participants.
• Performances of these three flows are
  interdependent.

4
Research Objectives

• To develop a methodology to assess supply chain
  performance.
• The methodology should evaluate the
  interdependent performance of three supply chain
  flows material, financial, and informational.
• The methodology should be applicable to the
  strategic planning and control process of each
  chain participant, as well as the total supply
  network.
• To apply the methodology to a grain supply case.

5
Normalisation

• Each flow has different content ?
• normalisation is required.
• Normalised performance values are calculated as
• f(quality, delivery)
• where delivery is defined through time and volume
  utilities.

6
Material Flow Quality Measurement(Quality
Characteristics Expected vs Actual Values)

• Expected values for quality characteristic
• EVi (i 1n)
• are compared with
• Actual values (available after inspection)
• AVi (i 1n)
• where n number of inspected quality
  characteristics

7
Material Flow Quality Measurement (Quality
Characteristics Normalised Acceptance Values)

• Normalised Acceptance Values
• NAVi , (i 1n)
• are defined through the deviation of the actual
  values AVi from the expected values EVi, so
  thatNAVi 1, expected acceptance
• 0lt NAVi lt1 acceptance with discounts
• 1ltNAVi lt2, acceptance with premiums
• NAVi 0, not accepted.

8
Material Flow Quality Measurement(The Total
Normalised Quality Acceptance Value)

• Weights are assigned to each quality
  characteristic.
• The total Normalised Quality Acceptance Value
  (p1) is calculated as the weighted average of
  normalised acceptance value of the quality
  characteristics
• when all quality characteristics are
• accepted, and
• if at least one quality characteristic is not
• accepted

0
9
The Total Normalised Acceptance Value of
Delivery(p2)

• Delivery is defined in terms of the volume
  ordered by the customer and its delivery time.
• Expected volume and delivery time arespecified
  in the contract.
• Actual delivered volume and actual time of
  delivery are compared with expecteddelivery
  time and volume.

10
Normalised Material Flow Performance Function

• Normalised Material Flow Performance Function f
  is defined as
• average (p1, p2) if p1 p2gt 0
  (product is accepted)
• fm
• 0 if p1 p2 0 (product is not
  accepted)

11
Normalised Performance Measurement for Financial
Flow

• where
• j number of customer payments
• I 1j
• ETi - expected payment time
• Ti - actual payment time
• APi - amount of payment, and
• r - discounting factor

12
Information Flow Performance Measurement (Three
Dimensions Categories of Information Quality
Characteristics)
13
Normalised Performance Measurement for
Information Flow (Evaluation of the Actual
Delivery Time for Information Flow)
14
Balanced Performance

• Balanced Performance is defined as the sum of all
  incoming normalised performance measures minus
  all out-going normalised performance measures for
  each party.

15
Balanced Performance (Example 1)
1.0087 1.2116
Agent The balanced performance 0.0268
Company The balanced performance 0.3798
Consignee The balanced performance 0.4066
0.9819 0.8050
Material flow Financial flow
16
Case Evaluation
17
Case Evaluation (Continued)
M1 normalised performance value for material
flow between the Agent and the Company M2
normalised performance value for material flow
between the Company and the Consignee F1
normalised performance value for financial flow
between the Consignee and the Company F2
normalised performance value for financial flow
between the Company and the Agent.
18
Supply Chain Wave Effect

• Supply Chain Wave Effect occurs when the
  performance of one supply chain member affects
  the balance of performance for one or more chain
  members.
• Why is it important to analyse the wave
  effect?
• How to identify the party that initiates the
  wave effect?
• Is the wave effect diminished or reinforced
  along the chain?

19
Conclusions

• Suggested performance measurement methodology
  may be used to
• Analyse supply chain performance (material and
  financial flows)
• Quantify balanced performance
• Detect and analyse supply chain wave effect.

20
Further Research

• Information flow normalised performance
  measurement (quality categories)
• Applications to operational, tactical and
  strategic planning
• Applications for benchmarking.