Advances in Business-Related Scientific Research Journal (ABSRJ) 
Volume 3 (2012), Number 1 
 
 
 
A CONCEPTUAL MODEL FOR SUPPLY CHAIN PERFORMANCE 
MANAGEMENT AND IMPROVEMENT 
Biljana Cvetic* 
University of Belgrade, Faculty of Organizational Sciences 
Serbia 
biljana.cvetic@fon.bg.ac.rs
 
Dragan Vasiljevic 
University of Belgrade, Faculty of Organizational Sciences 
Serbia 
dragan.vasiljevic@fon.bg.ac.rs
Abstract 
Over the past decades, the concepts, models, and tools of supply chain management (SCM) 
have been getting increasing attention of businessmen and academics. The purpose of this 
paper is to give a model for supply chain performance management and improvement and to 
support supply chain members in efforts to achieve a competitive advantage compared to 
other supply chains. Initiative for the implementation of this model can take focal company, 
and all the others companies that directly or indirectly doing business with the focal company 
can struggle to become its key business partners. The proposed model comprises the 
following phases: selection of key supply chain members; establishing the vision, mission, 
strategy, and objectives of supply chain; identification of key supply chain processes; 
development and implementation of the Supply Chain Performance Measurement System 
(SCPMS); analysis and selection of supply chain process; improvement of process; 
implementation; and return to the required phase. 
Key Words: supply chain, performance measurement, supply chain performance 
improvement 
Topic Groups: production and operations management, business strategy 
INTRODUCTION 
Within the contemporary business environment, companies are forced to establish new 
forms of competitive relations. The survival and development of companies is even more 
dependent on their business partners. Every company is a participant of at least one supply 
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chain (SC), and every company “fights” to become a participant of a successful supply chain. 
The competition between the participants of the supply chain that was prevalent everything 
until recently now turned into a competition between the supply chains for end customers 
(e.g., Christopher, 1992; Mentzer et al., 2001). A new form of competition – a supply chain 
versus supply chain - led to the shift in focus, namely, the shift from management and 
improvement of individual performances of a company to management and improvement of 
the supply chain performances. 
A necessary precondition for successfulness of management and improvement of the supply 
chain performances is performance measurement. Performance measurement is actually the 
assessment of the “health” condition of the SC through right measures, metrics, and 
indicators, while management and performance improvement implies the application of those 
measures, metrics and indicators in order to support the vision, mission, strategy, and 
objectives of the supply chain. Performance measurement can be defined as the process of 
quantifying the efficiency and effectiveness of an action, according to Gunasekaran and Kobu 
(2007). SC performance measurement thus becomes one of the key factors of success of its 
participants. The aim of this paper is to give an answer to the main research question: “How 
to recognize and best use the opportunities for supply chain performance improvement?” In 
order to develop a conceptual model for supply chain performance management and 
improvement two types of desk research – literature review and theorizing has been 
conducted. These types of desk research are explained by Halldorsson and Arlbjorn (2005). 
MODEL FOR SUPPLY CHAIN PERFORMANCE MANAGEMENT AND IMPROVEMENT 
Model for supply chain performance management and improvement (MSCPMI) was 
developed for the needs of focal company and its key suppliers, suppliers’ suppliers, 
customers, and customers’ customers, so that they could accomplish competitive advantage 
through joint operations against other SCs on the market. Only the company that has “the 
largest (financial) power, the best know-how of products and processes, or has the greatest 
share of values created during order fulfilment”, Stadtler and Kilger, (2005), p. 16, i.e. focal 
company, could launch an initiative for the application of this model. All other companies 
that do direct or indirect business with focal company are trying to become its key business 
partners. Also, all key SC members must accept the supply chain orientation (see Mentzer, 
2001) and be willing to trust, commitment, interdependence, organizational compatibility, 
vision, mission, strategy and objectives of SC, and key SC processes. They must recognize 
“systemic, strategic implications of the tactical activities involved in managing the various 
flows in a supply chain” (Mentzer, 2001, p.11). 
Model for supply chain performance management and improvement (figure 1) comprises the 
following phases: 
1. Selection of key supply chain members; 
2. Establishing the vision, mission, strategy, and objectives of supply chain; 
3. Identification of key supply chain processes; 
4. Development and implementation of the Supply Chain Performance Measurement 
System; 
5. Analysis and selection of supply chain process for improvement; 
6. Improvement of process; 
7. Implementation; and 
8. Return to the required phase of this model. 
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Selection of key supply chain members 
During this phase, the focal company identifies the members of the supply chain including 
the end customers, and determines and conducts the procedure of the selection of key SC 
participants. Supply chain participants are as follows: focal company, its suppliers, suppliers’ 
suppliers, direct customers, customers’ customers, as well as end customers. The end 
customers represent individuals and companies that buy end products and/or services of the 
supply chains. It is important to identify the end customers since they provide money inflow 
for the SC by buying products and/or services. Focal company could perform a selection of 
key participants of the SC based on the analysis of links between SC participants. Four basic 
types of links between supply chain participants have been proposed (Lambert, 2005): 
managed process links, monitored process links, not-managed process links, and non-
member process links. Managed process links are those links believed to be critical by the 
focal company, and therefore, the focal company wishes to integrate them and manage 
them. Monitored process links are the links for which focal company believes they should be 
adequately integrated and managed on behalf of other chain members, and thus wishes to 
monitore them. Not-managed process links are the links for which focal company believes 
they should be relinquished to other members of the SC to manage them. Non-member 
process links are the links for which the focal company believes they could affect its 
performances and also the performances of the SC. Focal company identifies key members 
of the SC based on identification of links that are of crucial importance for the success of the 
supply chain. One of the tools that could prove to be helpful while choosing the key SC 
members is the chart of the supply chain (see Lambert, 2005). 
Figure 1: Model for supply chain performance management and improvement 
 
 
 
Establishing the vision, mission, strategy, and objectives of supply chain 
Key members of the supply chain should create a team that will be engaged in establishing 
the vision, mission, strategy, and objectives of supply chain. The vision of the supply chain 
refers to the position the SC wants to accomplish in the future. The mission of the supply 
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chain implies to the purpose of the existence of the SC, and refers to its long-term operating 
direction. The mission of the supply chain should also provide some answers on important 
questions such as: “Which products and/or services does the supply chain realize and why?”, 
“For whom does the supply chain realize products and/or services?”, and “How does the 
supply chain realize products and/or services?”. The strategy of the supply chain refers to 
the attempts of the SC to use its own strengths and chances from the environment, and to 
eliminate its weaknesses as well as the threats coming from business environment. The 
strategy of the supply chain could be defined as a true combination of following 
components: operations strategy, outsourcing strategy, channel strategy, customer service 
strategy, and asset network (see Cohen and Roussel, 2005). Based on the strategy of the 
SC, the team deducts goals the SC wishes to accomplish. After that, the key supply chain 
members should harmonize their business visions, missions, strategies, and objectives with 
the vision, mission, strategy, and objectives of the supply chain. 
We should probably stress that the terms vision and mission of the supply chain have been 
rarely used until now. Only two examples from the practice have been found so far for 
determining the vision of the supply chain, given by authors Gattorna and Tang (2003). 
Inversely, numerous authors dealt with strategic orientation and goals of the supply chain. 
Here we conclude that the business strategy and the goals of the SC are deducted based on 
the vision and mission of the SC, regardless of whether they are identified formally or 
informally. 
Identification of key supply chain processes 
Key members of the supply chain should create a team that will be engaged in the 
identification of key supply chain processes, i.e. processes that are of key importance for the 
existence of the supply chains. One of the forms of support could be recognized in key 
processes of the SC identified on behalf of Global Supply Chain Forum (GSCF) and Supply 
Chain Council (SCC) organizations. The Global Supply Chain Forum has identified the 
following key SC processes: customer relationship management, customer service 
management, demand management, order fulfillment, manufacturing flow management, 
supplier relationship managment, product development and commercialization, and returns 
management (see for example Lambert, 2005). While the Supply Chain Council proposed a 
division into five key processes: plan, source, make, deliver, and return (see e.g., Bolstorff 
and Rosenbaum, 2003). In addition, we must not neglect the fact that every supply chain is 
quite unique, and the abovementioned key processes of the SC could be taken only as a 
starting point while searching for the answer to the following question: „Which are the key 
processes within the supply chain?“. Since these processes are best identified through flows 
(Stadtler and Kilger, 2005, p. 39), this stage needs to identify the flows of products, services, 
information, money, and knowledge. Flow of products and services refers to the movement 
of goods and services from the initial procurement of raw materials, through their 
transformation into final products and services, to delivery to end customers, and providing 
post-sales support, including returns and recycling. Flow of information refers to the 
exchange of information between SC participants. Flow of money refers to the movement of 
money between participants in the SC. Flow of knowledge refers to the sharing of knowledge 
between SC participants. In the end, the team should create a model of the supply chain 
process that will be connected with SCPMS in the following stage. 
Development and implementation of the SCPMS 
Key members of the supply chain should create a team that will be engaged in the 
development and implementation of the Supply Chain Performance Measurement System 
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(SCPMS). This team should then reach the decision on which of the developed concepts, 
models, tools (Balanced Scorecard (BSC), Economic Value Added (EVA), Logistics & Supply 
Chain Scoreboard (LSCS), Supply Chain Operations Reference model (SCOR), Global Supply 
Chain Forum (GSCF), Value Reference Model (VRM), and Hierarchy of Supply Chain Metrics 
(HSCM)) or some of their combination should adjust to the supply chain needs and 
implement them, or maybe to create a completely new solution. 
SCPMS could be defined as a set of elements that is being used for quantification of 
effectiveness and efficiency of actions (Jovanovic, 2009). The effectiveness refers to the 
measure of accomplishing the defined goals of the supply chain as a whole (to do right 
things), while the efficiency refers to the measure of economic use of resources in the supply 
chain as a whole (to do things in the right way). Usually, the elements of SCPMS are: 
performance measures, metrics, and performance indicators. 
Performance measure is the measure of object’s property (e.g., products, services, 
processes, systems). Determining the performance measure include defining the object of 
observation, property of object, and the procedure of determining the measure of object’s 
property. More precise determination of the performance measure could be given by means 
of metrics. 
Metrics could be used for more precise determination of object’s property. The development 
of metrics includes the designation of the object of observation, object’s property, procedure 
of metrics determination (most often expressed in verbal and analytical form), necessary 
data sources based on which to determine metrics, the frequency of metrics calculation 
(e.g., daily, weekly, etc), benchmark metrics, and the executor (or executors) in charge of 
the process of metrics measurement and metrics comparison. The priority of metrics could 
be determined additionally, and the example of metrics determination could be given. 
According to Merriam-Webster Dictionary, metrics is defined as a „basis or standard of 
comparison“ (Cohen and Roussel, 2005, p.186). In this way, it is implied that certain number 
or value becomes metrics only after it is compared to another appropriate number or value. 
Performance metrics may be defined as the „tools in the performance measurement process 
that take measurements, display results, and determine subsequent action“, according to the 
Kenneth (1995), p. 64. Metrics are a powerful tool that allow for the follow-up of 
advancement, stagnation, or regression over time, and making management decisions 
accordingly. While determining the metrics of the SC, one has to respect the inter-functional 
process-oriented nature of the supply chain (Stadtler and Kilger, 2005). Therefore, the 
development of the SC metrics is not easy, but their measurement is even harder. 
The performance indicator is the elementary pointer of the change in object condition (e.g., 
products, services, processes, systems). Indicators may be defined as pointers that »inform 
about relevant criteria in a clearly defined way«, based on Stadtler and Kilger (2005). Supply 
chain key performance indicator is a pointer of the change in object condition of the strategic 
importance for a supply chain. 
Taking into account the suggestions of authors Cohen and Roussel (2005); Takle and 
Gabrielsen (2006) given in Fauske, et al. (2007); and Hieber (2002) given in Horvath and 
Moller (2004), herein are given the following recommendations for the development and 
design SCPMS: 
1. System orientation. The SCPMS should be one integrated system. All the elements of 
SCPMS (e.g., performance measures, metrics, performance indicators) must be 
interrelated. 
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2. Network orientation. All key supply chain participants and links that exist between 
them must be identified prior to the development of SCPMS. The SCPMS should 
provide support for the business of all key SC participants. 
3. Strategic orientation. SCPMS must follow a strategic orientation and goals of the SC. 
4. Process orientation. The key supply chain processes must be identified prior to the 
development and design SCPMS. The SCPMS should indicate the results of key SC 
processes, not to summarize the results of individual participants in that SC. 
5. Managing orientation. The SCPMS should provide support for managerial decision 
making. The SCPMS should be a simple tool, with the smaller number of elements, 
which give managers quick insight into the results and allow them SC performance 
management and improvement. This tool should enable supply chain managers to 
manage proactively. 
6. Orientation to business partners. The SCPMS needs to be a useful tool for all supply 
chain participants. It should contribute to realize the benefits of establishing 
collaborative relationships by the key supply chain participants.  
7. Balanced orientation. The SCPMS need to balance financial and non-financial 
performance measures. 
8. Dynamic orientation. For every element of SCPMS appropriate dynamics of its 
monitoring must be established. The elements of SCPMS can be monitored 
continuously or in intervals (e.g., daily, weekly, monthly, etc). 
9. Developmental orientation. It is necessary to ensure continuous consideration and 
development of SCPMS. Based on the assessment, the useful elements of SCPMS 
should be added and unnecessary removed. 
10. Hierarchical orientation. The SCPMS should have a hierarchical structure. It is 
desirable to determine its elements on strategic, tactical, and operational level. 
Different concepts, models, and tools are developed for the needs of supply chain 
performance measurement. Making a decision on which of these concepts, models, tools, or 
their combination should be applied or adjusted to the needs of certain SC, or perhaps one 
should develop an entirely new solution, is made harder by the fact that each and every 
supply chain is basically unique, and SCPMS must be separately developed and designed for 
each of them. Making this very important decision was supported by comparison of 
concepts, models, and tools developed so far, which allows supply chain performance 
measurement. The comparison of Balanced Scorecard (BSC) (see e.g., Kaplan and Norton, 
1992; Brewer and Speh, 2000; Park et al., 2005), Economic Value Added (EVA) (see e.g., 
Stern Stewart & Co; Pohlen and Goldsby, 2003; Lambert, 2005; Presutti and Mawhinney, 
2007), Logistics & Supply Chain Scoreboard (LSCS) (see e.g., Logistics Resources 
International, Inc; Frazelle, 2002) Supply Chain Operations Reference model (SCOR) (see 
e.g., Supply Chain Council; Bolstorff and Rosenbaum, 2003), Global Supply Chain Forum 
(GSCF) (see e.g., Lambert, 2005), Value Reference Model (VRM) (see Value Chain Group), 
and Hierarchy of Supply Chain Metrics (HSCM) (see AMR Research, 2004) is made on the 
basis of previously established recommendations for the development and design SCPMS 
(table 1). 
When it comes to application of these concepts, models and tools for the supply chain 
performance measurement within the business environment, following conclusions may be 
drawn. The application of BSC concept on the supply chain performance measurement is still 
at the level of theoretical considerations (Brewer and Speh, 2000; Park et al., 2005). It is 
believed that the connection of BSC with EVA and Activity Based Costing (ABC) is possible in 
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practice. The independent use of EVA for the needs of the supply chain performance 
measurement is not enough, and therefore, it is necessary to consider putting EVA in the 
frames of a wider concept. LSCS was developed for the needs of company performance 
measurement, and it is now adapted for the supply chain performance measurement. A few 
company has applied LSCS. SCOR is a concept frequently applied for the needs of the supply 
chain performance measurement (see e.g., Bolstorff and Rosenbaum, 2003). The application 
of SCOR allows for quick lowering of costs and more efficient use of resources. In the 
upcoming years, the integration of independently developed referent models of the 
processes SCOR, Customer Chain Operations Reference model (CCOR), Design Chain 
Operations Reference model (DCOR), and Marketing Chain Operations Reference model 
(MCOR) is expected (Francis, 2005), which will allow for strategic orientation, process 
orientation, and business partners orientation to be completely supported. GSCF is also 
frequently applied concept within the business environment. In difference to the SCOR, the 
GSCF concept “is more strategic and focuses on increasing long-term shareholder value 
through closer cross-functional relationships with key members of supply chain«, according 
to the Lambert (2005), p. 221. VRM is better conceived than SCOR, but the number of 
companies that applied this concept so far is lower than the number of companies that 
applied SCOR. There were no data found in available literature in relation to practical 
application of HSCM model. 
Table 1: The comparison of concepts, models, and tools which allows supply chain 
performance measurement 
 
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Analysis and selection of supply chain process for improvement 
Key participants of the SC have to authorize a team that will be engaged in the analysis of 
the present state within the supply chain, and identifying the location at which to accomplish 
additional values. In this stage, team members that were previously engaged in identifying 
key processes within the SC are now hired again. The goal of this team is to determine 
criteria for the selection of the supply chain for development, and to select a process that is 
most likely to contribute to the accomplishment of additional values for the total SC. 
Improvement of process 
A team previously authorized on behalf of key members of the supply chain is now supposed 
to find the best solutions for developing the previously selected process, and composes a 
formal plan of conducting these developments. Therefore, it is necessary to consider the 
introduction and development of the forms of cooperation between key participants of the 
supply chain. The SCM concepts that allow the improvement of business relations between 
the participants in the supply chain are: Quick Response (QR) (see e.g., McMichael et al., 
2000; Perry and Sohal, 2000; Hayes and Jones, 2006), Vendor Managed Inventory (VMI) 
(see e.g., Simchi-Levi et al., 2000; Pohlen and Goldsby, 2003; Jespersen and Skjott-Larsen, 
2006; Elvander et al., 2007), Supplier Managed Inventory (SMI) (see e.g., Pohlen and 
Goldsby, 2003), Continuous Replenishment (CRP) (see e.g., Clark and Lee, 2000), Efficient 
Consumer Response (ECR) (see e.g., Harris et al., 1999; Kotzab, 1999; Hoffman and Mehra, 
2000; Seifert, 2003; Reyes and Bhutta, 2005), Collaborative Planning, Forecasting and 
Replenishment (CPFR) (see e.g., Seifert, 2003; Ireland and Crum, 2005; Jovanovic, 2008), 
and Flowcasting (see Martin et al., 2006). 
Simchi-Levi, et al. (2000) have performed the comparison of QR, CRP, advanced CRP, and 
VMI concepts based on responsibility for decision making with regard to generating orders, 
ownership over inventories, and new skills that are necessary for vendors. In 2003, Tyana, J. 
and Wee, H-M. gave a recommendation for the selection of SCM concept depending on the 
structure of power in relations between retailers and suppliers. 
QR, VMI, SMI, CRP, ECR, CPFR, and Flowcasting concepts were presented on behalf of 
Jovanovic (2009).The comparison of these concepts (table 2 and table 3) is done according 
to the application; the form of relationship between supply chain participants; the financial 
results of business operations of the supply chain participants; the process of decision-
making; the process of meeting the needs of the end customers; the results of 
communication within the supply chain, the possibilities of occurrence of the bullwhip effect 
and risks. 
Table 2: The comparison of SCM concepts (part 1) 
Characteristic 
 
Concept 
Application Form of 
relationship 
between SC 
participants 
Financial results of 
business 
operations of the 
SC participants 
Process of 
decision-making 
QR Textile and 
clothing industry 
Coordination Profit for the 
manufacturer and 
retailer 
Cooperation 
between 
manufacturer and 
retailer 
VMI In many industrial 
and service sectors 
Coordination Profit for the 
manufacturer and 
retailer 
Cooperation 
between 
manufacturer and 
retailer 
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SMI In many industrial 
and service sectors 
Coordination Profit for the 
supplier and 
manufacturer 
Cooperation 
between supplier 
and manufacturer 
CRP In many industrial 
sectors 
Cooperation Profit for the 
manufacturer and 
retailer 
Cooperation 
between 
manufacturer and 
retailer 
ECR Commerce Cooperation Profit for the 
manufacturer and 
retailer 
(wholesaler) 
Cooperation 
between 
manufacturer and 
retailer 
(wholesaler) 
CPFR In many industrial 
and service sectors 
Collaboration Profit for all 
participants of SC 
involved in the 
CPFR 
Cooperation 
between two or 
more participants 
in SC 
Flowcasting Commerce Collaboration Profit for all 
participants of SC 
involved in the 
Flowcasting 
Cooperation of all 
the primary 
participants in the 
SC 
We could note that the application of SCM concepts requires positive intensification of 
relations between the participants of the supply chain on a long-run. The “competition”, as a 
traditional form of business strategy between the participants of the SC is being surpassed 
by new forms of cooperation within the SC – coordination, cooperation, and collaboration. 
The negotiations held with the goal of increasing own profit on the one hand, and increasing 
the loss of a business partner on the other hand, are being replaced with joint processes of 
decision-making, so that all business partners could achieve profit. The process of meeting 
the needs of an end customer doesn’t stop being a key process only for the intermediate 
predecessor to the end customer within the SC, but it also refers to all participants of the 
supply chain. There’s a need for right information, in right time, at the right place between 
the participants of the SC. Frequent possibilities of occurrence of the bullwhip effect are 
supposed to be eliminated, and risks are to be shared between the participants of the SC. 
Table 3: The comparison of SCM concepts (part 2) 
Characteristic 
 
Concept 
Process of 
meeting the 
needs of the end 
customers 
Results of 
communication 
within the SC 
Possibilities of 
occurrence of the 
bullwhip effect 
Risk 
QR Key process for 
the manufacturer 
and retailer 
Right information, 
at the right time, 
at the right place 
between the 
manufacturer and 
retailer 
Minimal Shared risk 
between 
manufacturer and 
retailer 
VMI Key process for 
the manufacturer 
and retailer 
Right information, 
at the right time, 
at the right place 
between the 
manufacturer and 
retailer 
Minimal Shared risk 
between 
manufacturer and 
retailer 
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SMI Key process for 
the manufacturer 
Right information, 
at the right time, 
at the right place 
between the 
manu-facturer and 
its supplier 
Major Shared risk 
between 
manufacturer and 
its supplier 
CRP Key process for 
the manufacturer 
and retailer 
Right information, 
at the right time, 
at the right place 
between the 
manufacturer and 
retailer 
Minimal Shared risk 
between 
manufacturer and 
retailer 
ECR Key process for 
the manufacturer 
and retailer 
(wholesaler) 
Right information, 
at the right time, 
at the right place 
between the 
manufacturer and 
retailer 
(wholesaler) 
Minimal Shared risk 
between 
manufacturer and 
retailer 
(wholesaler) 
CPFR Key process for all 
participants of SC 
involved into CPFR 
Right information, 
at the right time, 
at the right place 
between all 
participants of SC 
involved into CPFR
Minimal/Eliminated 
- depending on the 
participants 
involved in the 
CPFR 
Shared risk 
between 
participants of SC 
involved into CPFR
Flowcasting Key process for all 
primary 
participants in the 
SC 
Right information, 
at the right time, 
at the right place 
between all 
primary 
participants in the 
SC 
Eliminated Shared risk 
between primary 
participants in the 
SC 
Implementation 
In this phase, the team authorized by the key members in the supply chain, implements the 
planned improvement of process and monitors the results achieved by this change. The 
monitoring over all processes of the supply chain is provided, as well as the response in 
cases of unplanned deviations. 
Return to the required phase of this model 
This indicates a return to a previous phase of this model. 
DISCUSSION 
Informal supply chains exist in many countries, especially in developing countries (Reyes and 
Bhutta, 2005), where great number of companies is still trying to establish internal 
integration of processes and then to focus on external integration (Waters, 2007). 
Companies come to a conclusion that they can’t respond to changes within the contemporary 
business environment as independent entities, and they become aware of the importance of 
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establishing and developing better business relations with the exchange partners. Every 
company has participated in at least one supply chain, whether formal or informal, and every 
company strives to become participant of successful SC. Everything until recently, the 
competition between participants in the SCs was predominant, but now it evolves into the 
competition between the supply chains for customers. The survival and success of 
participants in the supply chain will be guaranteed in the environment everything until the 
supply chain manages to satisfy the customers by right products and/or services according 
to the right conditions, to the right place, and at the right time. Therefore, participants of the 
supply chain are trying to recognize and utilize opportunities of supply chain performance 
improvement. 
Numerous researchers have been engaged in the supply chain performance measurement. 
Most number of them pointed out to the fact that the supply chain performance 
measurement is actually in the function of management and development of the supply 
chains. For example, Horvath and Moeller (2004) stressed that SCPMS is the central part of 
the supply chain control system. According to them, the basic function of SCPMS is not the 
supply chain performance measurement, but giving support to management and 
improvement the supply chain performances. However, in spite of this, the development of 
the comprehensive model for supply chain performance management and improvement, in 
which SCPMS would be included in, didn’t get enough attention in the relevant literature. The 
exception is the attempt of Marien (2000) which showed nine-step supply chain 
management process improvement model developed by University of Wisconsin in 
conjunction with industry practioners. In spite of the fact that this model hasn’t been 
represented in details, the development of the tools for supply chain performance 
measurement could be anticipated within its frames. This paper suggests a conceptual model 
for supply chain performance management and improvement (MSCPMI) for supporting SC 
members in efforts to achieve competitive advantage over other supply chains. This model 
may be viewed as a guide that allows the key SC members to improve SC performance and 
achieve better business results in the market. Initiative for the implementation of this model 
can take focal company. All the others companies that directly or indirectly doing business 
with the focal company can struggle to become its key business partners. 
Four specific contributions were accomplished during the engagement in the development of 
MSCPMI. First, the differentiation between the terms “performance measure”, “metric”, and 
“performance indicator” in business context is carried out. Second, a set of the ten 
recommendations for the development and design SCPMS (system orientation, network 
orientation, strategic orientation, process orientation, managing orientation, orientation to 
business partners, balanced orientation, dynamic orientation, hierarchical orientation, and 
developmental orientation) is determined. Third, the comparison concepts, models, and tools 
which allows supply chain performance measurement (BSC, EVA, LSCS, SCOR, GSCF, VRM, 
and HSCM) is made according to the established recommendations for the development and 
design SCPMS. Fourth, the comparison of SCM concepts (QR, VMI, SMI, CRP, ECR, CPFR, 
and Flowcasting) is done according to the application, the form of relationship between 
supply chain participants, the financial results of business operations of the supply chain 
participants, the process of decision-making; the process of meeting the needs of the end 
customers, the results of communication within the supply chain, the possibilities of 
occurrence of the bullwhip effect and risks. 
There are some limitations that need to be addressed regarding the present study. First, the 
differentiation between the terms “performance measure”, “metric”, and “performance 
indicator” is not extensive enough. Definitely, these terms are not synonyms and they have 
different meanings. In future studies the meanings of these terms from other fields (e.g., 
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mathematical science) should be surveyed, and after that linked and applied with a business 
context. Second, only one way is suggested for a selection of key supply chain members 
based on Lambert, 2005. Further development of useful tools for a selection of key SC 
members is needed. Then, in the third phase of the MSCPMI it is supposed a creation of 
model of the SC process. In addition, no tools were recommended for use. Thus, suitability 
of some tools for modelling SC processes (e.g. ARIS) needs further discussion. Fourth, the 
model MSCPMI is primarily the result of theoretical considerations and is not applied and 
evaluated in practice. Such practical research work would require, among other things, a lot 
of time and money. 
CONCLUSION 
Changes within the modern business environment have made SCM getting to the center of 
attention of both the business and academic community. These changes refer to the shift 
from local and national to global focus, from stable to unstable markets, from the 
competition between the supply chain member companies to the competition between the 
supply chain for winning end customers of products and/or services, from management and 
improvement of individual performances of a company to management and improvement of 
the supply chain performances, etc. The research for new forms of establishing, maintaining, 
and improving of business relations between the supply chain member companies becomes 
even more actual. 
This paper suggests a conceptual model for supply chain performance management and 
improvement (MSCPMI) for supporting supply chain members in efforts to achieve 
competitive advantage over other supply chains. This model may be viewed as a guide that 
allows the key SC members to improve supply chain performance and achieve better 
business results in the market. The proposed MSCPMI comprises the following phases: 
selection of key SC members; establishing the vision, mission, strategy, and objectives of 
supply chain; identification of key SC processes; development and implementation of the 
Supply Chain Performance Measurement System (SCPMS); analysis and selection of SC 
process; improvement of process; implementation; and return to the required phase. 
Initiative for the implementation of this model can take focal company. Also, in order to 
create conditions for the application of the MSCPMI it is necessary that all key SC members 
accept the supply chain orientation (see Mentzer, 2001). Key SC members must be willing to 
trust, commitment, interdependence, organizational compatibility, vision, mission, strategy, 
and objectives of SC, and key SC processes. The specific contributions of this paper are 
related with differentiation of terms “performance measure”, “metric”, and “performance 
indicator” in a business context, determination of a set of recommendations for the 
development and design Supply Chain Performance Measurement System (SCPMS), 
comparison of concepts, models, and tools developed so far, which allows supply chain 
performance measurement, as well as comparison of SCM concepts. The future directions of 
this research should be focused on development of suitable tools for a selection of key SC 
members, consideration of the possibility of using some tools for modelling SC processes, 
cost-benefit analysis of the application of the concepts, models, and tools which allows SC 
performance measurement, as well as practical application of the developed model for 
supply chain performance management and improvement. 
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