Improving Inventory Management Performance Using a Process-Oriented Measurement Framework

Enterprise Resource Planning systems have been introduced to support the efficient and effective execution of business processes. In practice, this may not fully succeed. This also holds for inventory management (IM), part of the sub-field within logistics termed supply chain management. By analyzing the IM business process, eleven potential benefits are indicated. Next, by using a Business Intelligence approach, key performance indicators (KPIs) are selected to measure the performance of sub-processes. Putting this together yields an IM framework that is used to obtain a generic, coherent picture of IM processes in different organizations. The proposed framework is tested using experts’ opinions and two case studies. The experts’ comments yielded a list of top-10 KPIs. The case study results show that some of the potential benefits are also observed in practice. Future research may reveal that comparable performance improvements are possible in other ERP domains based on similar measurement frameworks.