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Strategic Supply Chain Management
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physical, informational, and financial flows designed to satisfy end-customer requirements. Our goal was to ensure that supply chains could be described unambiguously, communicated consistently, redesigned to achieve competitive advantage, and measured, managed, controlled, and refined to meet a specific purpose. Recognizing the need for a true cross-industry standard, in 1995 PRTM joined forces with AMR Research, an independent research firm committed to providing unbiased analysis of the enterprise software sector. Together, PRTM and AMR founded the Supply-Chain Council (SCC), which initially included 69 member companies. Over the course of a year, the three organizations further developed and refined this standard, called the Supply-Chain Operations Reference-model (SCOR) that defined best practices, performance metrics, and software functionality requirements for each core supply chain process, subprocess, and activity.12 The SCOR model provides a framework and standardized terminology to help organizations integrate a number of management tools, such as business process reengineering, benchmarking, and best-practice analysis. The SCOR toolbox enables organizations to develop and manage effective supply chain architectures. Using the SCOR model s top-down design method, an organization can quickly gain an understanding of its current supply chain performance and architecture. It also can compare its own architecture with that of other organizations, identify improvements based on best practices, and design its future supply chain architecture. Since its release in 1996, more than 700 companies have adopted the SCOR model. In 1996, the Supply Chain Council became an independent, not-forprofit professional association, and the SCOR model was entrusted to it. Since launch of the SCC, the council has grown, establishing international chapters in Europe, Japan, Australia/New Zealand, Southeast Asia, and southern Africa, in addition to North America. Members have continued to advance the SCOR model, adding the return process in 2001 and periodically updating recommended practices and metrics. We expect that the model will continue to evolve as the science of supply chain management advances (see Figure 2-6 for the top two levels of the SCOR model and Appendix C for a complete listing of metrics in levels 2 and 3). While the SCOR model is the only framework of its kind for developing a supply chain architecture, other complementary initiatives have emerged that focus on industry-specific practices and implementationlevel detail, such as data standards. Two such initiatives that have been adopted widely in recent years are Collaborative Planning, Forecasting, and Replenishment (CPFR) and RosettaNet.
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CHAPTER 2 Core Discipline 2: Develop an End-to-End Process Architecture
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SCOR version 6.0 level 2 toolbox.
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Plan P1 Plan Supply Chain P2 Plan Source P3 Plan Make P4 Plan Deliver P5 Plan Return
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Suppliers Source S1 Source Stocked Product S2 Source Make-toOrder Product S3 Source Engineerto-Order Product Make M1 Make-to-Stock M2 Make-to-Order M3 Engineer-toOrder Deliver D1 Deliver Stocked Product D2 Deliver Maketo-Order Product D3 Deliver Engineerto-Order Product D4 Deliver Retail Product
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Customers
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Source Return SR1 Return Defective Product SR2 Return MRO Product SR3 Return Excess Product
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Deliver Return DR1 Return Defective Product DR2 Return MRO Product DR3 Return Excess Product
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Enable 1. Establish and Manage Rules 2. Assess Performance 3. Manage Data 4. Manage Inventory 5. Manage Capital Assets 6. Manage Transportation 7. Manage Supply Chain Configuration 8. Manage Regulatory Compliance 9. Process Specific Elements
Plan
Source
Make
Deliver
Return
Align SC/ Financials
Supplier Agreements
CPFR focuses on the packaged goods and retail sectors. It was created in 1997 through a collaborative effort involving over 30 companies and is managed by the Collaborative Commerce Standards Institute. The CPFR standard is made up of detailed process definitions, required data elements, and metrics for the customer-supplier interface. CPFR s objective is to
Strategic Supply Chain Management
improve the partnership between retailers and vendor merchants through shared information.13 Formed in 1998, the RosettaNet consortium is composed mainly of companies in the electronics and telecommunications industries and is managed by the Uniform Code Council, a leading commerce standards organization. RosettaNet develops Internet-based business standards to align processes through standard data definitions called partner-interface processes (PIPs). Widely adopted by the technology sector, PIPs support automated real-time information exchange between companies and cover a broad range of transactions, including inventory management, order management, and ship from stock.14 We will be focusing on the SCOR model in this chapter because, to our knowledge, it is the most widely accepted supply chain reference model in use. In fact, it is being adopted by the largest supply chain organization in the world, the U.S. Department of Defense (see Department of Defense profile). Through its structure and method, the SCOR model makes what might be a monumental undertaking creating a supply chain architecture a manageable task. As in a construction project, the SCOR model provides a set of tools to be used in developing the supply chain blueprint.
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