Requirements to establish balanced scorecard to measure purchasing and supply performance. Balance Scorecard: It is a performance measurement system which helps to evaluate various internal factors of a business along with their respective external factors which helps to improve the internal functions depending on the changes in the external environment.

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Chapter 19, Problem 15DQ

Summary Introduction

To determine: Requirements to establish balanced scorecard to measure purchasing and supply performance.

Balance Scorecard:

It is a performance measurement system which helps to evaluate various internal factors of a business along with their respective external factors which helps to improve the internal functions depending on the changes in the external environment.

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A purchasing and supply chain performance measurement and management system should directly support corporate goals and objectives. A measurement system that directs behavior and activity away from those goals and objectives is counterproductive and can cause greater harm than good. Effective performance measurement systems have certain characteristics. Select three characteristics and discuss why a measure should possess that characteristic. Why is it sometimes advantageous to benchmark performance against a non-competitor?

Discuss the manner in which the balanced scorecard framework enhances return on investment (ROI)?

Consider the following financial data from the past year for Midwest Outdoor Equipment Corporation. Annual sales $24,324,000 Net income 2,975,000 Cost of goods sold 12,600,000 Total assets 10,550,000 Inventory 2,875,000 Receivables 3,445,000 The Midwest Outdoor Equipment Corporation has entered into a new contract with a major supplier of raw materials used in the manufacturing process. Under the new arrangement, called vendor managed inventory, the supplier manages its raw material inventory inside the manufacturer’s plant and bills only the manufacturer when the manufacturer consumes the raw material. This is expected to reduce total assets by $2 million. What is the expected change in return on assets? Note: Round your answer to 2 decimal places.