Strategic Performance Measurement Systems Analysis: Supermarket Chain

This report provides an in-depth analysis of Strategic Performance Measurement Systems (SPMS) and its application within supermarket supply chains. The report begins with an executive summary outlining the benefits and challenges of SPMS, followed by a literature review that explores the historical context and evolution of SPMS. It delves into the core components of SPMS, including Balanced Scorecards and the integration of financial and non-financial performance measures. The analysis then focuses on the strategic performance measurement specific to supermarket chains, examining objectives, results, and various performance measurement tools, including qualitative, quantitative, and alternative algorithms. The report concludes with practical recommendations for implementing an effective SPMS, aiming to facilitate a smooth transition from older systems to newer ones within the supermarket context.

Running head: ADVANCED MANAGEMENT ACCOUNTING
Advanced management accounting
Name of the student
Name of the University
Author note

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Executive summary:
The report has analyzed the information, regarding the SPMS. It has portrayed the literature review
for the SPMS and has found that has effectively enhanced the performance of the supply chain for a
long time. However, due to lack of proper improvisation and mismanagement it has failed to give a
boost to the crippled management system of the supply chain. The report has further focused on the
factors like BSC system and financial, non-financial system for making the SPMS an ideal solution
for the supply chain management. Moving forward, the report has analyzed various tools to measure
the performance of the firm and it has portrayed the objective and result of the SPMS. To conclude,
the report has provided some practical recommendations that will beneficial for the firm to lead to
have a smooth transition from older system to the newer one.

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Table of Contents
Introduction:...............................................................................................................................3
Literature review:.......................................................................................................................3
Strategic Performance Measurement Systems:......................................................................3
Balanced Score Cards:...........................................................................................................4
Financial and non-financial performance measures:..............................................................6
Strategic performance measurement for supermarket:..............................................................6
Objective and result:..............................................................................................................6
Performance measurement:....................................................................................................7
Qualitative:.........................................................................................................................7
Quantitative:.......................................................................................................................7
Alternative algorithm:........................................................................................................8
Recommendation for developing ideal SPM for super market:.................................................8
Conclusion:................................................................................................................................9
Reference:................................................................................................................................10

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Introduction:
With ever-rising demand of customized goods from the producers and higher rate of financial
inclusion along with better connectivity, supplier recently has been facing sudden rise in their
activities (Wagner & Fearne, 2015). It is the fact that though they have well established management
system, however in front of the demand of their service, an urge to introduce an advanced and New
Strategic Performance Measurement Systems (SPMS) for the supply chain is consistently growing
(Searcy, 2016). SPMS is not only meant to provide a strong holding on the ever-increasing customer
demand, moreover it is meant to provide a strong ground to the supply chain from the accounting
perspective. This report is going to analyse the various aspects of the SPMS and in addition, it will
portray a Strategic performance measurement for supermarket chain. The report will also provide
feasible recommendation to implement the new strategic management system with a aim to a smooth
transition of the supply chain
Literature review:
This section of the report is meant to analyze the previous researches on the strategic
management system. It has considered previous researches for the strategic management for the
supply chain and portrayed what other researches argue about this.
Strategic Performance Measurement Systems:
SPMS or Strategic Performance Management Systems is a tool that helps in driving execution
of strategies and performance improvements. It is a tool that vividly shows the strategic goals for any
company to the line of executives and also monitors the progress towards this goals through
performance measures which are simple and intuitive (Bhattacharya et al., 2014). It creates a common
language among the leaders of an organization, which paves ways for effective working
communication. This tool can be divided in to five elements like (Coe & Letza, 2014):
Aligning strategic operational goals into the day to day objectives
A scorecard development for reporting
Creating techniques which makes the reporting system easier
Remaining more focused on the characteristics that really matters
Checking both the operational and the strategic decisions so that to make them more
validating
This tool plays a specific role in alienation and application of the strategies but few metrics should
be kept in mind for implementation of the tool. The matrices should be chosen in such a way that they
could be blended with the objectives of the strategies and can be used as the business goals for any
unit (Cooper, Ezzamel & Qu, 2017). They should pave the way for comparison across different
segments of clients, products and the various organizational divisions. Many discussions are made
regarding the acting style of SPM. Gibbons & Kaplan, (2015) portrays that, they not only creates a

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strong background for the application of this tool but also has modified its uses in the various
segments like the segment of assessing strategies. Development of implementation of strategies can
be considered as the basic tool of any organizational success and especially in the prevailing market
environment, strategy-building ways are the area of dominance. The basic structures can be
interpreted in ways like: Along with implementing any strategy, the tool can be used in strategic
reformation. The SPMS can be considered as a subset of the PMS, which actually include four main
points:
Summation of operation related goals and the implementation of the strategies generated for a
long-term marker
Existence of indicators, which are multi perspective
Existence of a linkage between the costs
Effects and the existence of a plan, which clearly indicated goals, targets and actions
Hoque, (2014) argues that strategic PMs can be used in the strategy reformulation and hence
creating a use of the SPMs. Extensive, studies are made regarding the roles of SPM. There are other
roles of SPMS such as they can be used to encourage certain attitude at organizational level that are
really effective in the organizational flow, encouraging the day to day behavioral attributes and
regulations. Besides this, encouraging better responsibility sense between organizations and within
organizations, as well as maintain proper communication with the stakeholders are the key benefits of
SPMS. There are certain disadvantages for the process as well. It encourages measurement systems,
which can be an effective way of communication among the headquarters and the subsidiaries, the
business ladders and all but they should not tempt in focusing on the financial aspects only especially
in time when faced with negative financial circumstances. Again, it majorly focuses on the strategic
development but focal responsibilities should also be promoted at the manager’s levels.
Balanced Score Cards:
The Balanced Sore Card (BSC) can be considered as a performance measure in a company,
both financial performances and non-financial performances. As the name says, it is kind of gives a
score. It depicts a clear picture of the business aims through its strategy review, and aids to assess how
well the business is achieving its aim (Johnson, 2014). Among all, the concept of the BSC being
developed by Kaplan and Norton has gained much popularity. The concept clearly says about the
perspectives of scorecard and the contributions that a balanced score card can have in a business
(Keyes, 2016). The aim of a scorecard is to find a small number of measures that circulates around a
few perspectives as portrayed in figure 1:
Financial - Company behavior with the shareholders
Customer - Company behavior with the customers
Internal Process - Company’s development of its internal process for performances
regarding the shareholders and customers

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Learning and Growth - Company’s capacity for development in the future
Figure 1: Balanced Score Card Framework
Source: (Duarte & Cruz-Machado, 2015)
The basic point is that a measurement is a process that should be connected with business
strategies through action and reaction relationship (Knies et al., 2017). An example can be sited like:
firms will make profits if do the customers will buy products at a fair margin and price. The targeted
customers can buy a product if does the value added by it is more than its price. Again, value of the
product can be delivered if the company has efficient internal processes (Lee et al., 2016).
Competitors attempt should be survived for any king of copying of the product advantages through
innovation. The theory- Z scorecard example can be sited for this purpose.
Figure 2: Theory of Z scorecard
Source: (Rocca et al., 2016)
It gives a clear-cut flow chart of the company strategies. Communication of strategic views is
facilitated through this. However, the card has certain disadvantages as well (Pollanen et al., 2017).
This consists of an overwhelming framework. Many researches are being made on these perspectives
as well as many researches materials are also available which makes the application quite confusing.

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Again, the process can be copied from examples. Quantity of study materials are bogged with
examples, which facilitates the process as well (Van Dooren, Bouckaert & Halligan, 2015). Strong
leadership support is mandatory for the success and difficulties may arise in keeping each and
everyone under the same roof.
Financial and non-financial performance measures:
According to the research of Polese et al., (2016) there has been various researches on behalf
of the financial and non-financial performance measures of SPMS . Most of the researches have
considered the financial indicators as the superior one compared to non-financial indicators in the case
of headquarters and subsidiaries. However, recent researches also portray that non-financial indicators
are also associated with the profitability o the subsidiary, participation of subsidiary and in the case of
design of SPMS too. On the contrary empirical researches showcase that headquarters prefers the
financial indicators t construct their strategic management making the situation turn around for the
subsidiaries too. If the biasness of the mangers towards the financial indicators for SPMS can be
omitted, then non-financial attributes are the superior one that can effectively influence the SPMS
(Abdel-Maksoud et al., 2015). If the measurement system needs to be effective measure of
communication between the subsidiaries and headquarter, then organisation need to resist their
temptation of financial attributes with negative fondness towards the non-financial performance
measures; because non-financial attributes are superior compared to the financial measures, in the
case of chalking out SPMS for the firm.
Strategic performance measurement for supermarket:
During last decade, there have been various changes in the case of the supply chain. With the
ever-rising effect of customer, demand has jeopardised the smooth operation of the supply chain
leading to a crippled management system and reduced efficiency as well as profit margin. Observing
the trend, it can be envisaged that the suburban supply chain has been facing the wrath of
mismanagement to the great extent compared to their urban counterparts (Juma, Minja & Mageto,
2016). One of the main reasons for this change is financial inclusion, which has reduced
unemployment and raised the disposable income to the customers. With greater amount of disposable
income, customers now demand for customized goods often and this has blown the whole system of
the supply chain management.
Objective and result:
During last decade, seeing the failure of existing supply chain management system, mangers
have come up with various strategic plans, which were mainly, focused on the customer satisfaction.
However, most of them omitted the development part and change in scenario as the factor, thus in
present day most of those supply chain management has gone into dust. Aim of this study is to
provide a better and advanced supply chain management that can lead the firm to a better

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sustainability. Besides this, it will provide an outline t develop performance measurement system for
the firm in order to let it have a smooth transition.
Performance measurement:
SPMS is one of the best tools that aid the firm to set out their strategic management plan for
sustainable goal. Besides this, main aim of this tool is to aid provide guides for performance
measurement to make it competitive and have a better internal controls. This captures the Black Art or
the traditional process of improving the growth of the firm with the help of effective management and
improved employee code (Pryshlakivsky & Searcy, 2017). A firm can use any of the three types of
performance measurement, which are:
Qualitative measurement
Quantitative measurement
Alternative measurement
Qualitative:
Qualitative measurement does not include any numerical value and this is done base on the rank and
preference of the key managers of the firm. Key aspects for the process of qualitative performance
measurement are as follows (Teh et al., 2015):
Segregation business in different families
Analysis of stakeholders and competitors in order to assess the risk and opportunity in front of
the firm
Perform a gap analysis to point out what is desired and what is yet to be achieved
Identifying the present competences and ability compared to the other firms of the industry
Cascading the lower level with the top-level measures in order to trace out the drivers of
performance and point out the key factors for the growth of the firm
Once the firm is done with these steps, then a situation analysis will also be beneficial for the
firm in order to assess how much improvement it requires.
Quantitative:
Quantities form of performance measurement is nothing but numerical analysis of the qualitative
measurement. It describes the measurement process with the help of numbers. Key parameters for the
quantities measurements are as follows (Asare & Conger, 2018):
One of the most widely used objectives of the quantities performance measurement is cost
minimisation that aids the supply chain to gain much higher
Sales maximisation is another way to lead to better performance of the firm. With higher sales
figure, a firm can enhance its revenue
Investing in inventory is another good option to enhance the scope of profitability of the fir

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Firm need to gain increasing returns to scale, where it enjoys input credit due to its market
share and scale of operation
Based on the customer measures, quantitative performance measure argues in favour of the
fill rate maximization that will allow the trader to fill in most number of orders in one time
and resulting in higher profit for both the supplier and producer
Customer response is another important factor that alters the quantities performance
measures. With reduced customer response, time firm can have better performance score.
Alternative algorithm:
Besides this firm can use another alternative way of performance measurement, which is the latest
trend. It includes perspective of both parties who are involved in the business. For a suburban supply
chain it would be ideal choice because it has capability to alter itself depending upon the situation of
the market. Key parameters for this measurement are as follows (Silvi et al., 2015):
From the viewpoint of the customers, it aims to minimise the time of delivery and response
It includes customer’s feedback as the tool of performance measurement
From the suppliers perspective it aims to include delivery time, rating of the supplier
It includes profit maximisation through higher sales to reduce the cost incurred by the end
customer leading to better performance score
Recommendation for developing ideal SPM for super market:
The firm has an existing management framework that has been persistent in the system for a
long time. Thus, the firm need to follow these recommendations in order makes a smooth transition
from older management framework to the newer one:
Senior management of the firm need to set out clear vision for the implementation. It would
be idle to set objectives for different teams and deadlines to meet the desired target within
minimal time and least amount of miscommunication.
Mangers need to bring in a training session for the workers of the firm to let them aware of
the new management system.
Firm need to implement an effective appraisal management with immediate effect in order to
assess the performance of the workers and judge how much firm is benefitting from his
actions.
There should be a review and monitoring team, which will watch the functioning of the new
management system.
It would be better to set out benchmark for each employee in the new management system,
which will enhance the performance of the workers.
Board of directors need to direct the managers of the firm to bring in such employee code that
will fulfil the personal goal with organisational goal.

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Conclusion:
Above analysis has been done concerning the SPMS and it has tried to portrays how the new
strategic management system can be implemented in a supply chain management system. The report
has discussed the previous researches regarding the SPMS and found that it is quite popular among
the supply chain mangers. It helps them to create a strong bond with the customers and supplier and it
provides a scope to accommodate itself according to the demand of the market. The report has also
provided details regarding how BSC can be beneficial for the firm to let their crippling situation go
away and bring in new management system. To conclude recommendation are provided in order to
make the transition of supply chain management system smooth and beneficial for both the employers
and employee.

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