Cost, profits, and financial ratios can provide useful insights into the overall efficiency and
effectiveness of any business. However, they do not always tell the full story. A sudden spike in
the price of oil, a flood that destroys a low-cost supplier, an increase in interest rates, the closing
of a large plant in a small town, or a national banking crisis are all external factors that can
cripple the financial viability of any business. These external factors lie beyond the control of
even the best management team. Sometimes we need to be very careful about what we measure
and how we should measure. Although it adds a layer of complexity to a basic accounting
system, measurements that are useful for evaluating processes that serve customers can be
When evaluating the supply chain of a business, there is a great need to carefully consider what
metrics should be employed. Such a consideration should include at least some of the following
• Total supply chain cost. All the operational expenditures of a cost associated with the requisite
• Cash-to-cash cycle time. The time between when an organization purchases raw materials and when
they are paid by the customer.
• Delivery. The percentage of orders delivered on or before customer due dates.
• Flexibility. The amount of time required to handle a significant ramp up in production. 
For those who are seriously committed to maximizing the benefits from successful supply chain
management, study the supply chain operations reference (SCOR) model. This model enables
businesses to benchmark their supply chain management systems. Developed in 1996 by the
Supply Chain Council in conjunction with AMR Research and Pittiglio Rabin Todd and
Rath,  the purpose of the SCOR model is to provide methods to measure and benchmark the
performance of the supply chain management system of a business. Currently, one thousand
firms, universities, and government agencies participate in the continuing evolution of the
SCOR model. It is predicated on three major components: process modeling, performance
measurement, and the determination of best practices.