Ali Anjomshoae, Adnan Hassan, Kuan Yew Wong (2019). An Integrated AHP-based Scheme for Performance Measurement in Humanitarian Supply Chain. International Journal of Productivity and Performance Management. Vol. 68 No. 5, pp. 938-957, DOI:10.1108/IJPPM-04-2018-0132
Purpose – In recent years, several performance indicators have been proposed in humanitarian supply chains (HSCs). Selecting the most relevant key performance indicators (KPIs) is challenging for some humanitarian organizations (HOs) because it involves a considerable amount of complexity and information overload which could lead to judgment biases in the decision-making process. Existing performance measurement studies lack critical analysis for prioritization of performance indicators. Since the process of KPIs selection and categorization is a complex, domain based and subjective process, a systematic guideline is needed. To address this gap, the purpose of this paper is to propose an integrated performance measurement scheme that can consolidate KPIs into an overall performance score based on the weighting of the performance indicators in HSCs. Design/methodology/approach – Data collection was based on questionnaire surveys and direct interviews with practitioners from international HOs.
Findings – This paper proposes an integrated scheme based on balanced scorecard and analytic hierarchy process for performance evaluation of HOs.
Research limitations/implications – The respondents were limited to the humanitarian logistics experts from Malaysian-based international HOs.
Practical implications – The scheme enables the benchmarking of HOs’ performance that could be useful for decision makers in HSCs.
Originality/value – This paper provides the ranking and prioritization of KPIs in HSCs. The approach presented in this paper enables an effective and integrated performance measurement in HSCs.
Keywords Performance measurement, Balanced scorecard, Analytical hierarchy process, Humanitarian supply chain
In recent years, performance measurement in humanitarian supply chain (HSC) has become increasingly important due to a higher demand for transparency, accountability and improvement of disaster-relief operations (D’Haene et al., 2015; Beamon and Balcik, 2008). Productivity and performance management in disaster-relief operations is essential to respond to an ever-increasing pressure from authorities and donors on humanitarian organizations (HOs) for delivering aid in a cost-effective way. This has motivated researchers to develop theoretical and empirical frameworks for HSC performance measurement (Beamon and Balcik, 2008; Haavisto and Goentzel, 2015; Anjomshoae et al., 2017). Some researchers have taken steps to adopt performance measurement systems from the business domain such as the Supply Chain Operations Reference (SCOR) Model and balanced scorecard (BSC) to the HSC domain (Anjomshoae et al., 2017; Schiffling and Piecyk, 2014; De Leeuw, 2010; Lu et al., 2016).
BSC is a widely recognized performance measurement system that emphasizes on incorporating financial and non-financial performance indicators (Kaplan and Norton, 1992). It helps to evaluate organizations’ performance across four distinct perspectives: customer, internal processes, financial, and learning and innovation. Besides its broad applications in the performance measurement of supply chains, BSC has been criticized for its structural shortcomings. While BSC offers a comprehensive view of organizational performance, it involves complexity and information overload in its development phase. Decision makers are exposed to uncertainty regarding the selection and prioritization of the performance indicators (Nørreklit, 2000; Lord et al., 2005; Bukh and Malmi, 2005). Developing performance measurement schemes without having adequate information about the priorities and categorization of the key performance indicators (KPIs) may lead to ineffective implementation (Cuthbertson and Piotrowicz, 2011). Thus, it is necessary to determine the weights and relative importance of individual KPI. Since the process of KPIs selection among several alternatives is a complex and subjective process, a systematic approach is necessary (Beamon, 1999; Chae, 2009).
Several techniques for KPIs selection and prioritization have been reported in the literature. In particular, analytic hierarchy process (AHP) has been commonly used for prioritizing decision alternatives based on practitioners’ judgments (Lima-Junior and Carpinetti, 2017; Ho and Ma, 2018). AHP breaks down the problem into categories and subcategories and helps to make decisions based on experience, intuition and heuristics. AHP has been largely applied in several performance measurement studies in business supply chains for prioritizing performance indicators (Mathivathanan et al., 2017; Dey and Cheffi, 2012; Govindan et al., 2017; Ho and Ma, 2018).
In HSC, while scholars have proposed several performance indicators, there has been limited attention on prioritizing and synthesizing indicators into an integrated performance measurement scheme. For instance, Davidson (2006) made an early contribution to the performance measurement literature by developing a framework based on four performance indicators including: appeal coverage, donation-to-delivery time, financial efficiency and assessment accuracy. De Leeuw (2010) proposed a BSC strategy map for HOs. These studies did not provide information about performance measurement priorities. Similarly, Beamon and Balcik (2008) developed a performance measurement framework that relies on three categories of performance measures including resource, output and flexibility. Likewise, Santarelli et al. (2015) and Nath et al. (2017) who proposed performance indicators for HOs’ performance evaluation did not provide ranking analysis of KPIs.
While the above studies emphasized on both financial and non-financial performance indicators, the procedure on how they were selected is unclear. Existing performance measurement systems focused on the classification of performance indicators and mainly addressed on what to measure in HSC. Most researchers have not adequately addressed questions related to how to select, prioritize and integrate performance indicators into an overall performance score. This limitation introduces judgment biases into the organization’s performance appraisal and decision-making process. Further research is needed to provide a systematic approach that can consolidate KPIs into an overall performance score. To address the above-mentioned issues, in this paper we aim to demonstrate a ranking analysis of KPIs clustered into the BSC’s perspectives. We propose an integrated AHP-based scheme for performance measurement in HSC. The selection of KPIs was derived from practitioners’ feedback.
The rest of this paper is organized as follows: Section 2 presents an overview of performance measurement studies in HSC together with a summary of the existing methods for KPIs selection and prioritization. Section 3 presents the methodology of KPIs ranking. Section 4 discusses the case study data and questionnaire used in this paper. Section 5 presents the results. In Section 6, we present the discussion and Section 7 concludes this paper.
2. Performance measurement in humanitarian supply chains
2.1 Existing performance measurement frameworks and models
2.2 Existing balanced scorecards in humanitarian supply chains
3. Methodology of KPIs ranking using AHP
4. Structure of the decision hierarchy
5. An integrated AHP-based performance measurement scheme
5.1 Ranking of KPIs based on BSC perspectives
5.2 An integrated AHP-based scheme
5.3 An example of the application of the proposed scheme
This paper has demonstrated a ranking analysis of hierarchically organized KPIs in HSC using AHP analysis. It has briefly discussed the recent literature in HSC performance measurement and highlighted the importance of performance measurement priorities in relief supply chains. This research developed a scheme based on selected KPIs clustered into the four BSC’s perspectives. The selection and weights of the KPIs were derived from practitioners. The AHP was used to formulate the integrated performance measurement scheme. The proposed scheme identifies areas for practitioners to invest resources for improvement strategies. The ranking analysis reveals that the beneficiaries’ and donors’ perspective should be the primary focus of BSC. The quality and availability of relief items together with the speed of delivery are the most important KPIs for this perspective. The financial perspective ranked as the second most important perspective. This enabling perspective confirms earlier findings in the literature that HOs’ survival depends on the sufficient and timely fund received. The proposed integrated performance measurement scheme facilitates benchmarking among HOs.
This research has incorporated exact values of information regarding the KPIs’ priorities. A valuable future research avenue is to implement fuzzy decision making on the KPIs’ priorities and scores given by practitioners. Such research endeavor is a possible solution to scenarios in humanitarian logistics performance evaluation that involve a high degree of uncertain data. Fuzzy decision making has been proven to be a rigorous method to tackle the complexity associated with information uncertainty.