Management Accounting and Control Systems - Assessing Performance Over The Entire Value Chain

Abstract

The main purpose of the review is to see the elements impacting the performance of a company at the value chain level.

In this article I have first tried to review some aspects of the value chain concept, to define the key terms and some important aspects that must be considered and I merged from the existing literature relating practice the most common performance measurement systems being used by companies in real life. Then I have separated the major components of secondary value chain activity and reviewed for each one some performance measurement methods that companies have turned on to when the market place was not so relaxed.

The research area is performance measurement, management and reporting relating to the value chain and components of the value chain.

Introduction

Performance measurement is an important tool for organizations that want to know whether they are on a path to achieve their goals. Performance measurement in a tool in the decision making process, it helps managers make right decisions regarding work performance, product quality and quality improvement. Interest in performance measurement has increased in the latest 20 years because companies are starting to see that in this continuous changing market it is crucial to monitor firm performances.

The first motivation of the paper is to make a research study that will evaluate elements impacting the performance within one entity and make an overview of the limitations and strengths of the available guidance of value chain performance measurement systems.

The article will respond to the question whether performance measurement systems are important for the company goals and how dos this happen in real life. The article will also reveal key success factors and grounds for failure of the value chain performance measurement and some of the actual performance measurement systems being used nowadays. In the second part of the article, I will review the major components of the value chain and real companies that have used new and improved performance measures in order to help improve the company strategy at cross point in the company evolution.

Methodology

In the literature reviewed I found very little references on the practical guidance selection and enforcement of supply chain performance measurement systems.

The reviewed articles in the domain are classified in two categories: conceptual articles and empirical studies. The conceptual works are related to performance definition, theoretical evaluation criteria, models and issues with measures. The empirical works are more about the performance content and methods.

Research

Value chain definition and characteristics

A value chain is a set of activities performed within a company as sub activities, each with own input: money, labour, materials, equipment, buildings, land, administration and management. The management of the value chain activities affects the profit through the costs involved.

The value chain main activities are inbound logistics, operations, outbound logistics, marketing and sales and service and the secondary activities include procurement, human resource management, technological development and infrastructure.