Alignment of performance metrics in a multi‐enterprise agribusiness

Abstract

Purpose -To examine the disconnect that can develop between corporate goals and those of individual intra-organisational business units arranged as an internal supply chain within a large vertically integrated agribusiness. To explore and discuss the development of a holistic performance metrics system that facilitates internal supply chain coordination and cohesion while allowing synergies to develop across the company.Design/methodology/approach -A case study approach involving a participative action research component was used to examine the disconnect between internal business unit (operational) goals and overall corporate (strategic) goals and to develop a conceptual performance assessment model addressing both operational and strategic contexts.Findings -The findings show that appropriate performance indicators and measures can be created that relate directly to logical operational outcomes thus encouraging a more tightly integrated internal supply chain, a stronger coherence among the components and a better aligned set of operational and corporate goals.Research limitations/implications -Only financial information and data obtained from a participative managerial decision making simulation were used to explore performance goal incongruence between operational and corporate managers, compared to the need for multiple contextual performance measurement metrics that the literature suggest provides a best practice system.Originality/value -The rapidly developing corporate agribusiness sector provides a unique operating environment in that these companies deal primarily in self regenerating assets such as livestock. Additionally we explore for the first time the development of performance metrics for 2 improving the coordinated integration of autonomous business units and suggest the concept of "Integrated Autonomy" as a way to describe the resulting situation.Keywords: Case study; Agribusiness; Internal Supply Chain; Performance Measurement; Goal Alignment, Integrated Autonomy. 3 BackgroundPerformance measurement is the process of developing measurable indicators that can be systematically tracked to assess progress made in achieving predetermined goals (GAO). Measures are a quantifiable metric of results (i.e. number of dollars saved, number of days saved in a business process, or recorded improvement in customer satisfaction) and have traditionally centred on the main performance areas of a company -financial, operational, or functional efficiency (Otley, 1999, Hongren, Foster andDatar, 1999). Such metrics have been used for many years in business (Govindarajan and Gupta, 1985;Scott and Tiessen, 1999;Abernethy, Bouwens and van Lent, 2003;Davis and Albright, 2004;Simons, 2005), and tend to be derived from operational accounting and information systems.From a supply chain perspective, given that such chains are recognised as multiagent complex systems which require a large number of performance measures to accurately characterise the system (Swaminithan et al., 1998, Beamon, 1999 functional metrics...

The impact of multi-criteria performance measurement on business performance improvement

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Supply Chain Systems Architecture and Engineering Design: Green-field Supply Chain Integration

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