Recently, Folan and Browne (2005a) have introduced an EE PM system concept which at- tempts to tackle the legislative problem by the introduction of what is termed an EE host.
The EE host is the member of the EE with responsibilities for formulating, detailing and distributing information concerning the EE direction and requirements to the other nodes of the EE; and for controlling the aggregated EE-perspective of the EE balanced scorecard.
The recommended EE host was a first-tier supplier of the EE (not an original equipment manufacturer)—a choice dictated by the need to avoid coercive practices in the EE from the introduction of a large-scale PM system that crosses a number of company boundaries.
By introducing the EE host, the concept of integrating the disparate factors associated with interorganisational PM is centralised in one node leader. The integrative core of the EE PM part of the solution lies in the development of a structural EE balanced scorecard with four perspectives (see Figure 2): supplier, internal, customer, and EE.
The EE balanced scorecard framework depicted in Figure 2 is, as Zimmermann (2001) sug- gests, “balanced” by external perspectives and internal perspectives; the external interface perspectives of supplier-, customer- and EE-perspective against the internal perspective.
When the EE Balanced Scorecard in Figure 2 is extended and depicted at each node of the supply chain, a situation as shown in Figure 3 is obtainable; the Figure presents a lin- ear representation of the supply chain for simplicities’ sake. Note the overlapping of the customer- and supplier- perspectives between succeeding supply chain nodes in Figure 3.
This represents the fact that the supplier-perspective of a company in the nth tier and the customer-perspective of a supplier in the (n+1)th tier may be virtually equivalent in make-up in a one-to-one relationship.
The relationship difference comes more as a matter of viewpoint than anything else. To the company of the nth tier, the supplier in the (n+1)th tier is a supplier, which requires certain supplier-orientated measures to be held between them. The situation is reversed from the Figure 2. The extended enterprise balanced scorecard framework
Figure 3. The extended enterprise balanced scorecard framework in the supply chain
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(n+1)th supplier’s perspective: The nth tier company is a customer and therefore certain cus- tomer-oriented measures have to be agreed. Thus, a performance measure such as “delivery time” is a business-integrated measure between the supply chain nodes: It is held in common, and measures virtually the same thing from both companies’ perspectives (see Figure 4).
In reality, of course, an EE usually holds more than one-to-one relationships between suppli- ers. Thus, as in the many-to-many relationship shown in Figure 5, the supplier-perspective of the company in the nth tier is comprised of all of the measures held between the group of suppliers in the (n+1)th tier and itself; similarly with its customer measures in the (n-1)th tier. Thus, while succeeding supply chain nodes may overlap in their respective interface measures, it is unlikely that they will succeed in being exactly integrated. This mismatch is usually caused by many-to-many relationships within and without the EE; the presence of outside influences on the framework should not be totally neglected as it may introduce other, foreign measures to the EE node.
The main points of the EE balanced scorecard have been advocated from a supply chain viewpoint in the paragraphs above. The key to turning this framework into an EE PM framework lies in the systems thinking concept proposed by Holmberg (2000). The EE- perspective should consist of local (that is node-level) performance measures that must be aggregated up into EE-level measures. The methodology requires the integration of the EE perspective of each EE node’s EE balanced scorecard; this allows for the development of an EE-wide PM system, as in Figure 6.
Figure 4. One-to-one supply chain relationship with extended enterprise balanced scorecard framework: Integrated measures
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Figure 5. Many-to-many relationship in the supply chain with extended enterprise balanced scorecard framework
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Figure 6. Extended enterprise wide performance measurement system
Integration of the EE perspectives
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This section will finish with some elucidatory notes on each of the four perspectives:
• Internal.perspective:.The internal-perspective of the EE balanced scorecard repre- sents, at each node of the EE, the intra-organisational PM system used by that node.
Performance measures are chosen from a list of measures that is a standard in the EE; however, internally EE nodes are free to use and display performance measures as they see fit. This standardisation proviso allows individual nodes to express their independence at the intra-organisational level, while still ensuring that the measures selected are taken from the standard measure list; thus participation in the EE of the internal-perspective still remains despite the fact that at various nodes of the EE, dif- ferent PM frameworks may be used to develop intra-organisational PM systems.
• Supplier.perspective:.The supplier-perspective of the EE balanced scorecard rep- resents, at each node of the EE, the integrated supplier interface PM system used by that node. The supplier interface performance measures are the sum of the measures between the respective node and all of its suppliers in the EE; measures are drawn
Figure 7. Supplier interface performance measurement system
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from the standard EE performance measure list. The supplier interface PM system may be seen as a small system of performance measures that are held jointly between the node and each of its suppliers; the more suppliers a node has, the more supplier interface PM systems it has (this is depicted in Figure 7). Much of the raw data for the shared measures is found in the documentation that passes back and forth in the supplier-customer relationship (e.g., request for quotations, orders, etc.).
• Customer.perspective:.The customer-perspective of the EE balanced scorecard rep- resents, at each node of the EE, the integrated customer interface PM system used by that node. The customer interface performance measures are the sum of the measures between the respective node and all of its customers in the EE; measures are drawn from the standard EE performance measure list. The customer interface PM system may be seen as a small system of performance measures that are held jointly between the node and each of its customers; the more customers a node has, the more customer interface PM systems it has (this is depicted in Figure 8). Much of the raw data for the shared measures is found in the documentation that passes back and forth in the supplier-customer relationship (e.g., request for quotations, orders, etc.).
Figure 8. Customer interface performance measurement system
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• Extended.enterprise.perspective:.The EE-perspective of the EE balanced scorecard represents, at each node of the EE, the EE PM system used by that node. The EE per- formance measures represent measures held by a particular node that will ultimately be aggregated on an EE level; performance measures are drawn from the standard EE performance measure list. The EE PM system may therefore be seen as a series of node systems of measures that are combined to form the EE PM system; the more nodes an EE has, the larger the EE PM system may become, depending on how many nodes wish to participate in the EE PM system.
Figure 9. Summary of the EE balanced scorecard in the EE
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Summary of Extended Enterprise Balanced Scorecard Perspectives
The above notes may be summarised by Figure 9, which demonstrates that each node is expected to organise its own internal PM system, while integrating supplier and customer PM systems that consist of shared performance measures, and providing information for the aggregation of performance measures at the EE perspective.
Summary
Clearly, there is a requirement for further business integration of such a complex EE PM structure; as it stands, it is attempting to cross company boundaries, and trying to introduce specific initiatives across a range of firms that may be geographically, as well as cultur- ally, diverse. This situation, if not managed properly, may give rise to a number of specific problems; Lohman, Fortuin, and Wouters (2004), for example, specify:
• Decentralised reporting leading to inconsistencies
• Deficient insight in cohesion between measures
• Uncertainty about what to measure
• Poor communication between reporters and users
• Dispersed information technology infrastructure
There is a need for a set of standardised administrative policies to regulate the EE at the high EE-level, and at the local, node level. These issues will be addressed here with the development of a standard rulebook, questionnaire, and checklist. Here, this document can only be developed in generic form; for an actual EE, specific rules may be drawn up using this generic format as a basis for rule development.