Supply Chain Performance Management Based On Theory Of Constraints

Supply Chain Performance Management provides some profits for members especially in Supply Chain Collaboration amongst independent firms. However, conflicts exist between the whole supply chain performance goals and measures and supply chain members' performance goals and measures because the whole supply chain profit is different from supply chain members' profit. This situation affects the whole supply chain performance, and decrease the collaboration. This paper attempts to apply the theory of constraints approach to solve this problem. Specially, it shows how the theory of constraints approach can be used to expose an inherent dilemma of performance management, and establish collaborative performance metrics based on TOC so that the chain members can integrate the members' profit with the whole profit to advance the whole supply chain profitability, strengthen the competitiveness and collaboration performance.