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At level 2, you refine your choice of supply chain processes and confirm how supply chain processes align with your infrastructure (physical locations and information technology). Also called the configuration level, level 2 involves developing and evaluating high-level options for the supply chain process architecture by choosing the flavors of plan, source, make, deliver, and return. This is done by selecting the relevant subprocesses or process categories based on your supply chain strategy, The selection of process categories will drive level 3 design because each category requires very different detailed activities. For example, manufacturing companies have a number of options for how they will produce their products. They can build in anticipation of customer orders (make to stock), build only after a firm customer order is in hand (make to order), build to a semifinished level and complete the build after an order is received (configure to order), or build the product based on specifications that are unique to the customer and therefore require detailed engagement in advance of starting any work (engineer to order). Once the process categories are chosen, they are used to describe existing supply chain configurations. This typically takes the form of a geographic map showing where your customers, suppliers, warehouses, factories, and order desks are and using the process categories to describe the major physical and informational flows. In essence, this is like taking an inventory of the processes in use today and where they occur. Once you understand the current configurations, you can develop and test to be options. Be aware, however, that the SCOR level 2 analysis may show you that you cannot optimize what you want because of existing limitations, such as excessive transportation costs. In other words, you
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CHAPTER 2 Core Discipline 2: Develop an End-to-End Process Architecture
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may not be able to execute all your to be requirements in the near term and will need to develop a roadmap to move progressively toward your target configuration (see 6). One of our clients, an international aerospace company, was struggling to manage a complex web of relationships among its own sales, logistics, and manufacturing operations; several key subcontractors; and a major customer, an aircraft manufacturer. The company was a prime contractor in a commercial aircraft program. Ensuring on-time delivery of its subsystem to the customer s final assembly and testing facility required coordinating material, information, and financial flows with subcontractors located on three continents. Supplier deliveries for the commercial jet program were increasingly late. And when the aircraft manufacturer asked to reschedule orders, the company had to contact its suppliers before providing a confirmation date a process that took several weeks. Because of these problems, the company was struggling to maintain its credibility with a key account. It used the SCOR model to gain a greater understanding of the underlying problems. The project team used the SCOR model to map order management, procurement, physical distribution, supply chain planning, and financial flows at the company, as well as all key interfaces with subcontractors. Each activity was associated with a SCOR level 2 process category. For the first time, the company had clear visibility of the subsystem s supply chain as a whole and was able to see which activities were performed by the company, the customer, and subcontractors. In addition, the use of standard process category definitions meant that each constituent was using the same definition for the processes for the first time. Opportunities to simplify the supply chain were quickly apparent. For example, major subassemblies moved through multiple internal warehouses before being made available for final assembly. This caused significant delay yet added no additional value to the product. The level 2 process map showed the reason for this. All products were routed to a regional consolidation platform. Once they entered the platform, there was an official transfer of ownership from internal manufacturing to the aircraft program. The team realized that a change in process and supporting information systems would allow some product to be shipped directly to the final preparation point near the customer s assembly line, eliminating several weeks in the delivery cycle. Interestingly, the visibility created by the SCOR process map also forced the company to rethink some long-held beliefs about what was
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