Supply Chain Management - Essay Example

? Table of Contents 0 Background 2.0 SCOR – Overview and Utility to Business Operations 3.0 Hierarchy of SCOR 4.0 Benefits of SCOR 5.0 Scope of SCOR 6.0 Conclusion 7.0 References 1.0 BACKGROUND An unbelievable shift in Industrial Operations Management has been witnessed during the past one decade, which enhanced manifold the capacity of the industries to respond efficiently to growing demand. This happened mainly due to the intense competition to improve the quality and value of service to the Customer, (Stalk and Hout, 1990). Supply Chain Management had a critical role to play in this value enhancement effort, (Ganeshan, and Harrison, 2002). The creation of a Product and its delivery to the consumer involves the art and technology of Supply Chain Management (SCM) working to streamline the operational functions and styles of doing work, (Chopra and Maendil, 1999). Experts defined SCM as a blend of a variety of procedures that begin from the preliminary stage of the product till the completed utilization of the same creation by the customer. It is a procedure which entail the development, execution, of these plans, and scheming of the product construct with the purpose of providing absolute fulfillment to the customer with regards to the quality of the product, (Wixon, Jim 2000). No innovation retains the fancy of the industry for long. SCM also, like many other new techniques before it, has gone out of fashion with many of the industries, (Davis,1993). This is evident from their inability to verify data pertaining to disruptions or irregularities in supply chains, Failure of Executives to pin point unfavorable actions and reasonably predict their consequences to the business push them into hasty decisions with undesirable consequences, (Gosling, 2003). Needless to say, such actions can be disastrous to the company operating in a competitive environment, (Lee, and Billington, 1992). Manufacturing and product delivery costs can mount, inventory may pile up, further adding to the cost, and actual delivery to the consumer get delayed, each of these individually and together can burden the company, (Christy, 1994). Non-availability of relevant SCM data may deny to the organization the ability to respond promptly and successfully to emerging opportunities. 2.0 SCOR – OVERVIEW AND UTILITY TO BUSINESS OPERATIONS Supply Chain Operations reference (SCOR) model has been evolved, tested and certified by the Supply Chain Council, a Non-Profit Organization. The industry has received it well and adopted extensively as a reliable tool for analyzing Supply Chain operations and managing them, (SCC, 1999). It enables its users to compare the various SCM activities and evaluate their performance and relevance to the management objectives. It is hierarchical and structural in nature. As end result it provides the optimal processes and solutions for the organization’s SCM requirements, (Brocke, 2007). SCOR analyses all the elements on the Product Development and Delivery network and keeping the focus on optimum satisfaction of the customer, identifies and brings to light complicated as well as simple supply chains which have specific impacts on the over all outcome of the operations, (Supply-Chain Council, 2005). This ease of analysis helps in interconnecting and showing as sequels the chain of events/operations that hinder production or delivery, and their over-all impact, (VRM 3.0, 2004). Thus it serves as a foundation on which Supply chains can be developed for simple local operations as much as it can serve to build large scale world-wide Projects, (Fox, Chionglo, and Barbuceanu, 1993). SCOR has become handy for enhancing the flexibility of interaction among trading partners and customers, which, in turn has radically impacted the operational economics of the entire Industry. The combination of the advanced capabilities of I.T. with SCOR has produced very good results, (BEA,2003). Far from the mere connectivity of Supply Chain events, SCOR has now achieved a system of extracting real time data at various levels, enabling informed and timely decisions and executive action plans that contribute to the end goals. 3.0 HIERARCHY OF SCOR It is divided into a four-stage hierarchical set up assisting in enhancing the operational efficiency of activities along the Supply chain. LEVEL 1 Identification of the capacity of the various elements of the supply chain process constitutes the first level. Here the five management functions, viz., Planning, Procurement, Production and Delivery of the product and handling of returns are examined in terms of their sub-segments, in order to confirm capacity to meet the goals and identify limitations, if any, (ProScor, 2003). LEVEL 2 The Configuration level constitutes the second level in SCOR. The focus here is on evaluation and appraisal of the deployment of resources within the Supply Chain. The purpose is for the Executive Committee to be able to re-order the methods and other actions in order to obtain the best possible results, in keeping with the policy approach and solution requirements of the Company, (Metric, 2003). LEVEL 3 The third level of the SCOR process model covers elemental information sharing and work process of the supply chain as a whole. Major inputs and outputs, major dealings of the company, targets, performance tables, optimized supply routes, systems infrastructure and supporting facilities, in short every significant activity and method of the Organization, is factored into this level. This level validates the plans of the organization for IT and computer based enhancements in the Supply Chain activities, (Huang, Sheoran, Keskar, 2005). LEVEL 4 Level 4 covers Supply Chain analyses and control activities. These activities are business-specific and favour executive action. Apart from Business design and Process, the activities here keep co-ordination and personnel also in focus. Current model of SCOR excludes this level, since the operations are unique to individual business/ organization. Figure 1: Levels of SCOR Source:[SCOR Vesrion 8.0, 2001] 4.0 BENEFITS OF SCOR As with every innovative tool, SCOR also has its unique strengths and benefits that can be utilized for optimizing business operations. Some of these are discussed here. SCOR, by design, follows the top down approach in evaluation of business processes. This facilitates the organization to get a holistic picture of its Supply Chain and allied activities. SCOR helps in smooth integration of Strategic planning techniques into the Supply Chain for getting optimum benefit. This model of Process reference aids the Organization to investigate and pin point both positive and negative elements in the process, and thus facilitates optimization of financial results of the business. One of the positive traits of SCOR is its ability to clearly link the results of assessment with the associated policy and thus guide corrective action to eliminate adverse results and promote positive outcomes. Another important benefit from SCOR is its ability to provide an authenticity test of competitiveness of the company’s operations based on independent exterior benchmarks. By tracing the root causes of various faults and deficiencies and thus enabling the Company to curb them, SCOR enhances the credibility of the company in the market. Ensures that Project elements are placed in the right order of precedence in order to achieve the desired final results and performance expectations. SCOR adopts standard metrics for evaluating the operations and sequences and thus facilitate improvements in the supply Chain to achieve customer satisfaction, (Perf, 2003). Use of SCOR facilitates the standardization of terminology used for management throughout the organization. Enables sustainability of gains achieved and standardization of measuring competitiveness. SCOR facilitates the companies to evaluate their Supply Chain management practices and tools, and take necessary action. 5.0 SCOPE OF SCOR Beyond the production stage, the SCOR is of utility in examining dealings of the Company at the consumer end, or market level. From billing for the goods sold to actual delivery to the consumer, relations at the market place, marketing and promotional strategies, policy on returns, and customer experience in this regard, there are a host of activities which need to be monitored and analyzed, and responses formulated on the basis of findings. SCOR comes in handy here. Development of new products based on customer feed back is another critical area where the SCOR process helps. In short, irrespective of whether a business is operating in a technical environment or a non-technical one SCOR has a very beneficial role to play. The paper covers above the four levels of SCOR applications. The manner in which Supply Chain Management activities are carried out is optimized by SCOR. The Fourth level, which is organization specific assists in enhancing the quality of administration and leads to maximizing profitability of the Organization. With increasing focus on Customer satisfaction, many companies with global operations are finding Supply Chain problems impacting customer experience. Stockpiling inventories is being resorted to for avoiding delay in meeting customer demands, but this adds to cost and reduces profitability of operations. SCOR process modeling helps in finding the optimum way to manage the Supply Chain so as to minimize wastage and maximize customer satisfaction. It leads to enhancing savings and financial results. Product Development involves the stages of Scheduling, forecasting and re-sourcing, besides assembling of deliveries. If the products are returned by the customers, the returns will need to be investigated for quality issues and fine-tuning of production. SCOR process, developed from experience of the industry as a whole, has built in features which address these needs. Capacity limitations, operational strengths and weaknesses and other factors that impact product development are examined vis-a-vis best practices in the industry. Re-engineering, which is necessitated at times, is also done in accordance with best practices across the industry, thus optimizing costs and operations. Demand and Supply functions at the Market Place dictate the pattern of the Supply Chain activities of Planning, sourcing, manufacturing, and delivery of goods. If there is a shortfall in supply, it might affect future demand. If there is excess inventory, costs will increase. There is a need to determine the ideal stock cushion which can meet demand and yet will not burden the costs side. SCOR, from its industry-wide experience of best practices, shows the ideal stocking pattern. It is interesting to note Chinese manufacturers have adopted SCOR process model with this objective in mind, and the trend is catching up across many industries. 6.0 CONCLUSION The emergence of Supply Chain Operations Review (SCOR) has provided the Organizations with numerous methods for gaining competitive leads over their peers. Quick Response Theory, improved communications among trading partners, mutual scheduling and forecasting constitute the initial levels at which Supply Chain synchronization takes place. SCOR is also useful in identifying anomalies and providing intelligent solutions ahead of probable crises. It further facilitates assimilation and integration of new units into the organization. It is a hierarchical form that improves on the hitherto prevailing SCM in order to achieve higher efficiency through the linking of performance metrics with operational process elements and best practices. Relevant elements from Business Process Re-engineering (BPR), Benchmarking and other major practices hitherto used as Management tools have been integrated into SCOR, making it a single tool. 7.0 REFERENCS 1. [SCOR 2001] “Supply Chain Operations Reference Model Overview”, version 5.0, www.supply-chain.org, Supply-Chain Council, Inc., 303 Freeport Road, Pittsburgh, PA 15215. 2. [ProScor 2003] “ProSCOR: ProVision Suply-Chain Operations Reference Models”, whitepaper, web-site: www.proformacorp.com, Proforma Corporation, 26261 Evergreen Road, Suite 200, Southfield, MI 48076. 3. [Metric 2003] “SCOR Model Metric Interdependencies v2.2”, SCOR Model 5.0, web-site: HP-IT Business Process Modelling Group. 4. [BEA 2003] “Aligning IT with Business Goals”, BEA Business White Paper, BEA Systems Inc., http://www.bea.com 5. [Perf 2003] “Supply Chain Performance Score Card Data Table for Electronic Equipement”, Performance Measurement Group, 1050 Winter Street, Waltham, MA 02451, http://www.pmgbenchmarking.com/. 6. Christy D.P, (1994), Safeguarding Supply chain Networks, Journal of International Economics, Vol. – 2, pg 33,44 7. Chopra S, and Maendil P, (1999) Supply Chain Management Strategy and Planning, Prentice hall, NJ. 8. SCC (1999), Supply chain reference model: Overview of SCOR, Supply chain council, Pittsburg, PA. 9. Wixon, Jim 2000. Available online at: http://www.npd-solutions.com/qfd.html 10. [VRM 3.0, 2004, VCG], Available online at: http://www.value-chain.org/en/cms/?2996 11. Huang, S.H. and Sheoran, S.K. and Keskar, H. (2005). Computer-assisted supply chain configuration based on supply chain operations reference (SCOR) model. Computers & Industrial Engineering 48 (2005), 377–394. 12. Dom Brocke, J. 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