Background

In recent years the development and implementation of performance measurement system has been on the agenda of most industrial companies. At the same time the trend of increasing vertical disintegration and outsourcing in many industries made supply chain management a priority for many organisations. This has shifted the focus from a pure intra-organisational towards a more holistic inter-organisational view of the overall value system.

The result has been an increasing awareness of the importance of inter-organisational management control. Many organisations therefore try to expand the use of intra-organisational management control tools like performance measurement towards their suppliers. Since most organisations have a portfolio of very diverse supplier relationships and inter-organisational procedures normally differ from intra-organisational procedures, the related issues in management control form new sets of challenges. Current management literature offers little guidance for these issues.

The research analyses the practice of performance measurement in the context of other management control mechanisms at Ford Motor Company and its European suppliers. It maps the decision making and communication processes in four departments (R&D, purchasing, logistics, and manufacturing) at the interface between Ford and its suppliers. These processes are analysed considering the hierarchical levels in the organisation and focussing on the actual use of performance measurement. For each area a comprehensive catalogue of performance measures will be produced.

Following the internal analysis of Ford's processes, selected suppliers will then be analysed as to how they react and adapt to performance measurement by Ford, to what extent decisions at suppliers are influenced by measurement, and the degree to which Ford's performance measures are integrated in their own management control systems.

A conceptual framework will be developed based on the comparison of the use of performance measurement along three dimensions:

1. functional levels in Ford's organisation (R&D, purchasing, logistics, manufacturing),
2. hierarchical levels in Ford's organisation (clerk, supervisor, manager),
3. portfolio of supplier relationships.

Aims and Objectives

The research aims are:

1. To study the use of performance measurement at the interface between OEM and suppliers.
2. To identify functions of performance measurement for intra-organisational use and compare them with the functions at the inter-organisational use.
3. To develop a conceptual framework for the inter-organisational use of performance measurement.

Duration

Three Years (1999-2002)

Sponsor

• Ford Motor Company
• Studienstiftung des Deutschen Volkes
• Cambridge European Trust

Researcher

• Johannes Schmitz
• supervised by Ken Platts