12 th International Research/Expert Conference ”Trends in the Development of Machinery and Associated Technology” TMT 2008, Istanbul, Turkey, 26-30 August, 2008 DETERMINATION OF SUPPLY CHAIN PERFORMANCE CRITERIA FOR CHEMICAL INDUSTRY: A CONCEPTUAL FRAMEWORK Alev Taskin Gumus Ali Fuat Guneri Department of Industrial Engineering, Yildiz Technical University, Besiktas-Istanbul, TURKEY ABSTRACT A manufacturing supply chain is a network of suppliers, factories, subcontractors, warehouses, distribution centers and retailers, through which raw materials are acquired, transformed, produced and delivered to the end customers. Many methods have been suggested over the years for supply chain evaluation of any organization. This study discusses the supply chain performance criteria for efficient supply chain performance evaluation in chemical industry on the basis of Balanced Scorecard’s (BSC) four perspectives: finance, customer, internal business process, and learning and growth. The balanced scorecard developed in this paper provides a useful guidance in evaluation and measuring of SCM in a balanced way. Keywords: Supply chain management, performance measurement, balanced scorecard, 1. INTRODUCTION The key to achieve a state of continuous improvement is dependent on the ability to measure consistently and constantly the performance of key processes within an enterprise [1]. Many organizations have realized the importance of constant and consistent measurement and have adopted a variety of performance measurement systems over the last few years [2]. Due to the volatile nature of today’s globalized businesses it is becoming imperative that organizations monitor their process performance, the performance of their supply chains and then align their processes to the strategic goal of the company [3]. According to Chan [4], performance measurement describes the feedback or information on activities with respect to meeting customer expectations and strategic objectives. It reflects the need for improvement in areas with unsatisfactory performance. Thus efficiency and quality can be improved [5]. In recent years, both practitioners and researchers have emphasized the need to move beyond financial measures of operations and to incorporate a much wider variety of non-financial metrics in an organization’s performance reporting and reward systems [6]. In today’s complex competitive environment, firms need to be agile and flexible. As a result, availability of the right information at the right time for both decision making and performance evaluation has become critical [7]. For any business activity, such as supply chain (SC) management, which has strategic implications for any company, identifying the required performance measures on most of the criteria is essential and it should be an integral part of any business strategy. A supply chain is defined as a network of facilities that performs the functions of procurement of materials, transformation of these materials into intermediate and finished products, and distribution of these products to customers [8,9]. Many methods have been suggested over the years for SC evaluation of any organization. However, a balanced approach to evaluate SCs is a source of increasing cost and concern to management as traditional methods focus only on well-known financial measures, which are best, suited to measure the value of simple SCM applications [5]. 457