Traditionally, supply chain management was mainly seen as a means to contain costs. The success of supply chain management was linked to how efficiently companies managed their costs. However, supply chain should not only focus on cutting costs. Even when it comes to cost, it is difficult to identify which costs will best indicate supply chain effectiveness. In this article, the author gives an overview of the Supply-Chain Council's Supply Chain Operations Reference (SCOR) model as a method of benchmarking and measuring improvements in supply chain performance.

In their efforts to improve profitability or just to sustain the businesses, most companies face a dichotomy in satisfying each customer's needs and in keeping costs under control. In this context supply chain management is mainly seen as a means to contain costs. Thus, the traditional key measure many managers apply to effective supply chain management is the cost of their supply chain operations-the lower the cost, the better the supply chain looks to them.

However, even the most hard-nosed manager will acknowledge that it is virtually impossible to do this on a sustained basis-cutting "fat" too deeply can lead you to cutting muscle-similarly profitability, market positioning, competitive advantage can be whittled away if supply chain management only focuses on cutting costs.

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