Abstract

Supply chain management (SCM) has emerged as a strategic tool to gain competitive advantage through cooperative, collaborative and partnership arrangements between the firms. The large number of interdependent activities in the supply chain needs effective management of its performance. We argue that an effective performance measurement system (PMS) can help to manage, control and improve supply chain management practices (SCMP). Limited literature is available to explore the innovative way to develop effective PMS and its impact on organizational performance. The data were collected from manufacturing firms in Australia. The theoretical research framework was tested using the partial least square (PLS) method by using 'SmartPLS'. Structural equation modelling was used to develop a structural model to reliably measure the relationships between the constructs of supply chain management practices (SCMP), supply chain performance measurement system (SCPMS), and organization performance (OP). The findings suggest that supply chain management practices positively influence the development of the performance measurement system of the firm. It also confirms that supply chain management practices significantly affect organization performance directly. Regarding the mediating effect of the performance measurement system on firm performance, this study identified that the performance measurement system has a significant positive influence on financial performance but a negative on market performance. This study provides useful information and guidance to practitioners for designing an innovative process-based supply chain management framework. The innovative process-based supply chain management practices provide the structure that can help develop an effective performance measurement system to gain competitive advantage and, ultimately, organizational performance.