Performance information catalyses learning and performance

In our recent study we asked: How does the utilisation of a new performance measurement system (PMS) influence supply chain management and what kind of impacts the new system has on the performance of the supply chain?

Our empirical examination confirmed the propositions derived from the earlier literature. The PMS had a positive impact on the antecedents of inter-organisational knowledge transfer and improved managers’ awareness of shared targets and the status of networked operations by diminishing the ambiguity of the knowledge.

PMS and learning

The implementation of a PMS led to a more systematic and explicit presentation of performance information at the level of individual actors and the whole supply chain. This helped the studied supply chain to overcome difficulties in sharing performance information between network partners.

The PMS reduced ambiguity in communication and improved operational transparency.

Through performance dialogue, the partners started to understand how performance information could be used to improve their personal understanding as well as shared learning. The better they understood the value and potential of this information, the more willing they were to share it.

PMS enhances financial and non-financial performance indirectly by improving cooperation and socialisation (i.e. trust and commitment) within the network. A systematic presentation and regular discussions about performance improved the absorptive capacity of the supply chain partners. This was supported by the shared context and business objectives, which reduce communication ambiguity.

PMS serves as a valuable tool for improving inter-organisational discussion and shared learning.

The interviewed managers reported increased openness, transparency and engagement, all of which provided support for an open discussion culture and created trust amongst partners.

Power asymmetries were reduced by open discussion and with a clear definition of roles. Major steps were taken towards performance-driven and knowledge-based management culture, and this was significantly supported by the PMS. By affecting the antecedents of inter-organisational knowledge transfer, the new PMS created a basis for inter-organisational discussion and learning, and led to performance improvements.

Performance information helps consolidate and implement the network strategy

Network partners reported a notable improvement in some financial figures, and several qualitative improvements were detected due to better information flow: increased communication and participation, shared understanding of the status of operations, inter-organisational learning and goal commitment.

The PMS raised network management to a new level. Best practices were shared, and a completely new management culture was established. Individual partners were also better motivated to participate in shared activities when they realised the value of cooperation. Thus, the results of the study encourage organisations to increasingly share their performance information.

Read the whole study from:

Laihonen, H. and Pekkola, S. (2016) “Improving supply chain performance by sharing of performance information – a case study”, International Journal of Production Research. DOI:10.1080/00207543.2016.1181810.

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