Supply chain/Supplier KPI identify and design

Supply chain performance is a concrete manifestation of the supply chain capabilities of an enterprise. This capability is not only the ability to compete with peers, but also the driving force and motive force for the internal growth of an enterprise. The research of scholars and the experience of practitioners further confirm that the performance of the supply chain will not only affect the economic and financial performance of the enterprise's "profit and loss statement", "balance sheet" and "cash flow statement", but also have positive or negative impacts on the environment and society.


Peter Drucker, a modern management guru, believes that one of the tasks of executives and operating managers of an enterprise is performance evaluation. "Managers are responsible for setting goals and evaluation criteria, ensuring that everyone can be evaluated in their job responsibilities or tasks, ensuring that personal goals are consistent with the overall goals of the company. Managers need to ensure that everyone in the company understands these evaluation indicators and has the tools to achieve these indicators." Peter Drucker believes that "the management and improvement of an enterprise should be measurable and evaluable"; and the supply chain key performance indicator KPI is the main tool used to measure and evaluate supply chain performance. In general speaking, the overall performance of an enterprise is better when using specific KPI indicators for evaluation, because the evaluation results are often more objective and easier to measure and compare than other methods. KPI is usually divided into: qualitative indicators and quantitative indicators. In a supply chain ecosystem, excellent supply chain managers can identify improvement points and deficiencies through the KPI of supply chain performance evaluation, improve financial and non-financial performance indicators by adjusting business processes, changing business activities and work tasks, so as to enhance the core competitiveness of the company's future sustainable development.


Xintong Company provides customized supply chain performance evaluation systems for enterprises of different industries, different scales, different development stages, different business models and different organizational structures through the self-developed "VSGAI" methodology.


"VSGAI" is the abbreviation of the first letters of the English Vision-Strategy-Goal-Activity-Indicator. The "VSGAI" indicator design method starts from top-level design and system planning, from vision, mission, strategy to goals, from goals to enabling task activities, breaking down large goals into small goals, and then breaking them down into measurable digital monitoring indicators in difference organizational hierarchy, setting targets, templates and processes, step by step, through detailed design, definition and selection of digital supply chain performance indicators in organization hierarchy so as to build a supply chain KPI indicator system. The design idea of ​​


the "VSGAI" method is shown in Figure 1 below:


Figure 1: Xintong “VSGAI” KPI methodology

In specific enterprise management practices, enterprises will design and manage KPI performance evaluation indicators in a hierarchical manner. Figure 2 below is an architecture diagram designed using the "VSGAI" method from the enterprise's vision, strategy and goals to tasks and then to KPI indicators:


Figure 2: The example with “VSGAI” methodology

Figure 3 below is an example of a KPI indicator system designed by Xintong for an enterprise using the "VSGAI" methodology, which includes the steps from goals to specific task activities to daily monitoring indicators, and KPI is assigned to relevant business units.


Figure 3: A company KPI example to apply VSGAI methodology
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