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As cleaning and structuring data become top priorities for a growing number of companies, applications that support data quality control are becoming more popular. At many companies, data maintenance is a part of ongoing management processes; data administration positions even have been created specifically to maintain data quality. A key driver behind this push for data quality is a growing awareness of the costs associated with poor data in transactions such as ordering and invoicing. A study of the electronics industry by the U.S.-based National Electrical Manufacturers Association (NEMA) revealed that product and pricing inaccuracies were costing manufacturers and distributors 1 and 0.75 percent of sales, respectively.9 These percentages may not sound particularly alarming, but for a $200 million manufacturing company, that s an added cost of $2 million. New industry initiatives to address data quality continue to emerge. In the retail industry, for instance, the Uniform Code Council started an organization called UCCnet to provide item data synchronization, standards validation, and a global item registry for retailers and their suppliers. By creating a single set of data usable by all, UCCnet plans to drive out the costs associated with invoice and order errors and the time spent on data quality. NEMA has created the Industry Data Exchange Association (IDEA) to do the same for its industry. When a supply chain architecture meets the test for integrity
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Required integration between applications is defined in the supply chain process architecture, and the impact of application integration issues on business performance is measured. Processes are documented at each level of the supply chain architecture, with clear descriptions of the data required to execute each process. Data quality is measured and managed, with clear ownership for data creation and maintenance.
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Just as a blueprint describes the construct of a building and how each element fits together, your supply chain architecture should describe the construct of your processes and how they interact. In order to be effective, this needs to be done using clear, unambiguous terms. Just agreeing on a definition of what the supply chain is, though, can be a major challenge. This task has been complicated by the use of many similar-sounding and
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CHAPTER 2 Core Discipline 2: Develop an End-to-End Process Architecture
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interrelated terms supply chain, demand chain, supply network, demand/supply network, value chain many of which sound as though they could mean the same thing but in fact do not. It is difficult to say exactly when the Your supply chain term supply chain came into vogue and even more difficult to find a universally accept- architecture should able definition for exactly what a supply describe the chain is. In our work with client companies in the past, we found that many were unable construct of your to reach agreement on a supply chain definprocesses and how ition. And even when there was agreement inside the enterprise, customers and suppli- they interact. ers might have a very different interpretation. This lack of common understanding led to inconsistencies in how processes were executed and frequent miscommunication about what was expected by one organization of another. This problem clearly was evident in the 1990s, as issues associated with operational planning and execution beyond the boundaries of a specific organization became a major focus for executive management teams. In the past, most operational process-improvement efforts had focused primarily on improving the performance of internal processes. But new technologies, outsourcing, and the increasing customization of supply chains to meet the needs of key customers meant that supply chain development increasingly looked outside the four walls. It became clear that a set of standard definitions for each supply chain planning, execution, and enabling activity was needed. In the mid1990s, PRTM developed a framework, or process reference model, that included descriptions of supply chain processes and key performance indicators to help our clients benefit from the emerging science of supply chain management.10 We were well aware of the value of process reference models, having earlier created PACE (Product And Cycle-time Excellence ), which has been adopted widely by companies worldwide to get better products to market faster.11 In our supply chain framework, we defined the supply chain as consisting of four processes: plan, source, make, and deliver. For target setting and performance management, we defined metrics for each of these processes and for overall supply chain performance. We defined the scope of the supply chain as all interactions from the supplier s supplier to the customer s customer a network of organizations linked together by
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