TermiKnowledge - Supply Chain, Procurement and Inventory Terminologies
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Many companies view the supply chain as a black box - as though it were merely an objective, mechanized system to move inventory from point A to point B without regard to whether or not the process was maximized. The inherent problem with this approach is that the "black box" mentality leads companies to make choices that do not accurately reflect the real world and its interactions, resulting in decisions that are more about expedience than what actually brings value to the organization. One of the most common mistakes made by company executives is that they treat supply chain management as a purely mechanical process without considering the inherent relationships among stakeholders and how those relationships may impact upon the ultimate goals of the organization. Fortunately, there are several tools that can be used to ensure that supply chain management is more closely aligned with strategic objectives.

One important factor that must be considered when evaluating a warehouse's performance is the relationship between its operators, its suppliers, its customers, its vendors, and the rest of the stakeholders. In this regards, one of the most effective tools for improving performance is a tool known as a vendor-specific scoring system (VOS) - which is a collaboration of stakeholders and operators that aims to identify and improve existing vendor-specific performance. VOS is based on a number of basic assumptions about the supply chain: that there is a single and straightforward relationship between operators and suppliers, that all stakeholders are actively involved in the decision making process, and that there is a strong and consistent association between the operation's key drivers (suppliers and customers). This article will discuss methods that can be used to evaluate VOS, including defining the nature of the vendors and how to integrate the performance measurement tool with other metrics and quality frameworks.

Although some organizations are able to effectively and efficiently manage their supply chains on their own, other organizations need the assistance of a scorecard program to effectively align their vendors and stakeholders with their strategic objectives. Weightings are an excellent way for companies to compare and contrast their vendors to identify progress opportunities. There are several factors that should be considered when choosing weights. First, the weightings should be relative to each organization's level of involvement in the vendor and stakeholder processes. Second, the weights should be comparable among the organizations so that a company is doing a great job in one area (for example, generating low-carbon projects) would not automatically receive a poor score in another area (such as shipping).

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