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THE TOP THREE LEVELS OF THE SCOR MODEL
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The SCOR model has four levels of detail, the first three of which processes, subprocesses, and activities are described in the model. Operable processes, or level 4, are detailed workflow-level tasks and are always customized to an organization s specific strategy and requirements. As such, they are not included in the published version of the model. Starting with level 1 and ending with level 3, the content of the SCOR model can be used to translate business strategy into a supply chain architecture designed to achieve your specific business objectives. The exact order in which you use the different levels of the SCOR model will depend on your specific business needs and starting point. We will be describing the operational and business benefits that result from configuring supply chains using the SCOR model in this chapter.
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SCOR Level 1
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At level 1, you confirm how business processes will align with your highlevel business structure (business units, regions, etc.) and supply chain
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CHAPTER 2 Core Discipline 2: Develop an End-to-End Process Architecture
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partners and refine your supply chain s strategic objectives the business priorities that your supply chain must support. Level 1 focuses on the five major supply chain processes (plan, source, make, deliver, and return). Using these processes, the alignment between process and organizational domains can be established to describe where processes must be standardized across entities. Choices at level 1 drive information systems costs because different processes across business units typically involve multiple applications and the associated implementation and maintenance costs. In addition, level 1 decisions also will determine whether an organization will be able to implement certain business practices. For example, does the source process need to be standardized between two business units or are differences justified If the goal is to consolidate volume across multiple business units to gain leverage with suppliers, standardization of a good part of the source process will be needed. Once business processes and organizational domains are aligned, setting performance targets for these key process areas is an important next step. The SCOR model provides a supply chain scorecard for setting and managing supply chain performance targets across the organization. The specific metrics are described in 5. This step is one of the most critical and difficult activities in supply chain design because of the need to gain internal consensus on targets and priorities. It is driven by your supply chain strategy, as discussed in 1. As an example, one of our clients, a leader in the consumer electronics industry, was losing market share to competitors with The SCOR model a strong focus on specific market segments. provides a supply The company had long been organized as a single, centralized business structure and chain scorecard for recognized the need to transform to multi- setting and ple, market-facing business units in order to managing supply compete effectively. Once the new business units had been chain performance established, executive management reviewed both the strategic vision and the related sup- targets across the ply chain requirements for each. Prior to the organization. reorganization, all supply chain processes (plan, source, make, deliver, and return), supporting information systems, and assets had been shared. The company also had outsourcing policies that limited contract manufacturing to end-oflife products, as well as other rules that limited product customization to
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Strategic Supply Chain Management
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control unit costs and maximize inventory flexibility. Deciding which of these policies to keep and which to change was critical to establishing the new strategic boundaries for supply chain design. In order to establish these boundaries, each business unit developed its own business strategy and performance objectives and then summarized the resulting implications for its supply chain. Given the critical importance of materials costs (up to 85 percent of product cost), product quality, and time to market, it was decided to maintain the shared plan, source, make, deliver, and return processes and assets while changes were made to inventory policies for each business unit to meet the specific service requirements of the different end markets.
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