Supply Chain and Network Performance: Metrics for Profitability, Productivity, and Efficiency

The architecture of the firm involves determination of a boundary that encompasses the functions managed by thefirm. The past decade has seen substantial reorganization of firms where vertical or horizontal integration has beenunbundled into weaker forms of collaborations including value chains and networks. This observation has forced are‐conceptualization of the boundaries of the firm to incorporate such collaborations. These collaborations arevirtual and highly dynamic. They emerge and persist when two conditions are met. First, they must enablegeneration of greater value than might be attained through independent operation and anonymous transactionsthrough markets. Second, the resulting growth must be shared with members in a way that retains theirparticipation. Each of these conditions can be verified only if performance of the collaboration can be established.This paper recognizes the need for “metrics of performance” that are by necessity operationally feasible tomeasure. While conceptual approaches have been studied in the management literature, this paper considers fromtheoretic perspectives these issues and derives measures of the performance of the overall collaboration as well asof the participating enterprises. The paper presents a framework that can be applied to both vertical and horizontalcollaborations as found in supply chains and networks. The paper offers suggestions on empirical methods forestimation of measures derived.