Supply Chain Operations Reference Model Analysis - Essay Example

The SCOR model offers a cross functional framework that centers on process definition and enhancement. SCOR can abridge the complications of the supply chain and allows for supply chain representation in a very simple manner. It also combines the conception of metrics, benchmarking, process improvement and finest practices into a single approach that can be employed to appraise a supply chain, and other objective areas for improvement. Also discussed are the strengths and limitations of SCOR and other process reference models. BACKGROUND The last decade has seen an enormous shift in the nature of operational management of the industry standards. The development has been beyond belief and the progress is visible as the capability, skill set and capacity of every industry to serve the increasing demands has augmented by many folds. The reforms have occurred due to the amplified market competition to deliver better value to their customers. A new system had definitely succeeded in delivering higher values to the clients - thanks to Supply Chain Management. Supply Chain Management or SCM is a blend of art combined with technology which works to improve the business ways, functions, processes that are a part of a product formation and its delivery. Supply Chain Management is clearly defined as "A combination of various processes that start from the initial phase of the product till the finished consumption of the same product by the consumer. It is a process which involves the planning, implementation of these plans, and controlling of the product manufacture with the intention of providing complete satisfaction to the customer." (Kim, 2006). The basic activities that are encompassed within a supply chain are resource collection, procurement, warehousing, transport management activities, co-ordination with partners, suppliers and most importantly - the customers. The fundamental nature of Supply Chain Management combines the complete supply and demand management related to a product. However, like every other discovered technology that fades away with time and gets replaced by a new one, supply chain management, has also lost the interest of the organizations. The practice of managing the supply chain has been employed by companies around the globe, which engage in critical activities. Furthermore, the intensifying international financial system and the world-wide set up of e-commerce also whetted the intended importance of supply chain management and have distorted the old techniques so that they obtain benefit by promoting the supply chain approach and planning, as an aggressive tool. By incorporating supply chains with customer affiliation plans and an effectual financial organization, it has turned out to be far easier for any company to stay in positive control of its business actions and produce the results that are intended for (Chopra and Maendil, 1999). Though, as per the study conducted, there has been a noteworthy documentation on the subject of the optimal output that could have been achieved as compared to what the companies are getting at present. Most of the companies are now not able to check the real time data involved with a supply chain disruptions, and irregularities. The executives are not able to identify the scope of unfavorable actions, and as a result they are forced into intricate and hasty situations. These effects can bring about disaster for a company existing in the present competitive world, by escalating their manufacturing and delivery operating costs, increasing inventory and delaying their products into the market. At the same time the lack of well-timed data also thwarts the organizations from making use of opportunities. The entry of SCOR into the scene has offered a number of methods to companies in order to gain more competitive advantage. Quick response theory, better communication between trading partners, mutual scheduling, forecasting, and replacement are the initial levels of Supply chain synchronization, (Choudhary, & Tiwari, 2006). Also, SCOR helps to identify the anomalies and offer intelligent solutions beforehand. It also offers easier assimilation and expansion to the company. This paper intends to study a new technique developed under the Supply chain management system - SCOR (Supply Chain Operations Reference) - a hierarchical form that associates the process elements involved, performance metrics, and best practices that can be applied. Evolution of SCOR The Supply Chain Operations Reference model (SCOR) is the first of its kind for assessing and enhancing the business supply-chain performance and supervision. This new process reference model concept is the logical extension of business process re-engineering and similar activities related to enhancement efforts. "Process reference models integrate the well-known concepts of business process reengineering, benchmarking, and process measurement into a cross-functional framework". [SCOR 2001] An Overview of SCOR Developed and certified by the Supply Chain Council, an independent nonprofit organization, Supply-Chain Operations Reference-model (SCOR) is defined as a process reference model which has been put extensively in use by the industry as a customary analytical tool for effective supply-chain management purposes. SCOR allows its user to deal with, develop and correspond to the various existing supply-chain management methods within and between all concerned parties.SCOR is a hierarchical structural model that interconnects the different process essentials, performance ratings, metrics, and the optimal solutions and procedures that can be followed. The SCOR process reference model is employed in the form of a prototype or support structure for the design of processes involved within a business supply chain activity. With a membership of over 700 companies, the Supply Chain Council has initiated the use of SCOR modeling techniques in collaboration with other business process optimization techniques to offer a robust setting for administering supply-chain information in the interested companies. However the registration is free for all companies who possess interest in following and inventing novel state of the art practices to efficiently manage supply chain systems [SCOR 2001]. The SCOR process reference model retains the Council's consensus upon the topic of supply chain management. The basic fundamentals lying underneath the SCOR model have been extensively used by the industry practitioners since a number of years, the SCOR-model supplies an exceptional structure that relates the business processes to technology in order to sustain communication between the various supply chain actors and to progress the usefulness of supply chain management and other interrelated supply chain development activities [Perf 2003]. SCOR as a management tool identifies and finally develops all the interrelated business activities coupled with all stages of satisfying a client's demand. With the analysis of supply chains as the process building blocks of a product, the SCOR model can be easily used to illustrate both complex and uncomplicated supply chains through a universal set of definitions. As a consequence, contrasting industrial sectors can be easily interconnected to explain the profundity and wideness of almost any supply chain. The SCOR Model has productively been able to explain and offer a foundation for supply chain development for worldwide projects as well as projects that are explicitly defined by site specifications, [Perf 2003]. The availability of SCOR techniques provides for increasing flexibility between trading partners and customers thus bringing about a radical change in the economics of the industry as a whole. The integration of SCOR with modern IT techniques has resulted in a better approach. The focus has shifted to the extraction of data at various levels and its proper assimilation to provide a strong execution plan, instead of only end to end supply chain connectivity. Hierarchy of SCOR SCOR merges the fundamentals elements of business process reengineering, benchmarking, and major practices into a single structural framework [SCOR 2001]. The SCOR process reference model framework is separated into a four staged hierarchical configuration which corresponds to a map that is used for enhancing the performances of the supply chain activities [Perf 2003]. The SCOR process reference model arrangement relates to three separate stages of involved activities which gradually result in procedural elements, capacity and specificity. The last level - Level 4, transacts with the managerial, functional and organizational jobs instead of the supply chain process activities. Level four is the level where the organization implements the supply chain alterations that are founded on the basis of the design that was developed with the help of SCOR reference model [Metric 2003]. Level 1 The first level identifies the capacity, extent along with the elements of the SCOR process reference model which will be applied to the existing supply chain in order to enhance the performance levels. This level is further defined by the 5 management procedures that include - plan, source, make, deliver, and return. All the five management procedures further plan the capacity and limitations of the other smaller activities that are involved within the existing business supply chain. Plan - The first management procedure of the SCOR is the fundamental process of demand and supply scheduling and planning that extends across the complete chain of supply chain activities. Fundamentally, all the companies ascertain and communicate strategies for the complete supply chain, as per the analysis made by the SCOR process reference model study, [SCOR 2001]. The solution lies in harmonizing the present resources with the demands. An organization evaluates the cumulative supply assets and demand necessities to expand a map which coordinates and enhances the production capacity, inventory, allocation, and preliminary facility scheduling. This process phase involves the identification of cost, nature, schedule of every minute activity involved in the entire project along with their risks, limitations and assumptions. The planning activities can be called as the 'progressive detailing phase' for the project development [Metric 2003]. The planning process is affected by the project boundaries, cost, project environment and limitations. These activities are Scope Planning, Cost Estimation and Budgeting, Time Scheduling / Activity, Resource Estimation Planning, Inter Team Communication Handling, Human Resource Management, Plan Purchase, Risk and Response Analysis / Activity, Quality Standard Development, Work Break down Structure Activity, Activity Listing, and Final Process Management Plan. These activities assist in making a plan that is able to deal with all requirements of the supply chain. Source - This phase is concerned with the procurement of resources. Raw materials, services, sourcing activities, are considered at this stage and analyzed to meet the customer demands. Retailer and contractor official recognition, discussed retailer agreements, product quality control, and supplies proof of payment are incorporated in this procedure, [SCOR 2001]. This phase engages the project team co-ordination on the site along with the resources to implement the desired plan. At times, the Execution processes also include some re-planning due to the unanticipated risks that emerge in the project on-site working conditions. This phase of activities includes the direct execution of activities on the Project site, performing quality analysis of the end results obtained in accordance with the requirements. Make - This phase of processes involves a complete in depth analysis of the execution phase so as to determine the probable issues and the possible corrective measures that can be taken to solve them. This helps to direct the path of the project in the right manner and the result is measured regularly to spot any result-deviations which can be corrected with the help of precautionary actions. This phase of make works simultaneously with the execution group to check the progress and provide feedback, [SCOR 2001].This group of activities consists of the following; Monitoring and controlling, Required Amendment, Scope determination and management, Cost / quality control and scheduling, and output reporting to the senior management. Under this level, a company is concerned about the infrastructure of the administration, manufacturing capability, position and quality, and temporary delivery capacity. Deliver - This phase engages the project team co-ordination on the site along with the resources to implement the desired plan. At times, the deliver processes also include some re-planning due to the unanticipated risks that emerge in the project on-site working conditions. This phase of activities includes the direct execution of activities on the Project site, performing quality analysis of the end results obtained in accordance with the requirements, acquiring and developing the human resource management to efficiently administer the project work schedule, along with maintaining timely correspondence with the stake holders and finally delivering the product, [Metric 2003]. This course of action is basically centered on offering the final products and other customer oriented services that intend to meet the premeditated and predicted customer demands. Return - Returning raw materials and in-receipt of delivery of completed products consist of recognizing the final product situation, disposition of the product to the source. This stage also concerns the maintenance, improvements, and repair. These activities may in addition consist of the final closure of the project or the termination of the entire project on site activities after completion. The Execution and the Process teams confirm that the finished activities and project outcome is according to the desired results and as per the signed contract between the client and the company and thus finally establish that the work is over. This is also known as contract closure phase [Metric 2003]. Figure 2: SCOR - Management processes Level 2 The second step is the configuration level which assists the organization to evaluate and appraise the flow of resources at every input point within the existing supply chain. At this level, the executive committee tries to filter and align their methods and other course of action along with the set up managerial infrastructure supported on the company's approach. For example, which category / form of final goods a company produces and the way it sells them to the end customer has an influence on how the supply chains have been configured, (Perf, 2003). Level 2 of the SCOR process reference model classifies the core processes that help the company to configure for its own operations. With each process step, there exists a possibility of further improvement in the supply chain activities, by breaking down each step and analyzing the influence of different routes of action that could better the results. Level 3 This level of the SCOR process reference model is related to the processes at the elemental level. Level 3 concerns the elementary level of information sharing and work process within the entire supply chain. It centers on major dealings, which includes the inputs and outputs, and targets, performance tables, optimized routes, the systems infrastructure and facilities to sustain them. Level 3 authenticates the influence of the enhancement plans that are carried along the organization's supply chain activities. Level 4 All the concerned supply chain analyses, improvement and supervision activities are executed at the Level 4. These activities at level 4 are explicit to a particular business and are alert on executing actions. These activities consist of centering on the business design, process, coordination, and persons within the company. These are exterior to the present capability of the SCOR model since execution is unique to each organization,[BEA 2003]. SCOR - Strengths and Limitations SCOR has its own share of strengths and limitations, some of which are stated below. Strengths: Some-of-the-strengths-of-SCOR-are:- 1. SCOR has been designed keeping in mind the top down evaluation technique which offers the business a holistic observation of the complete supply chain and its related activities. 2. SCOR is also used to effortlessly include the strategic planning techniques within the supply chain for further enhancement. 3. This process reference model also offers assistance to the company management in performing a competitive investigation and point out the beneficial and detrimental activities that influence the financial performance of the business. 4. SCOR also successfully associates the assessment results to the implied organizational strategies with the help of business and customer metrics and can therefore easily segregate the good and bad strategies. 5. SCOR also makes available an information based authenticity test of operational competitiveness using exterior benchmarking methods; 6. It further helps a company trade to get connected with its original root causes which as a result greatly increases the market credibility with enumerated performance gaps; 7. Coerce project assortment precedence which is based on the conclusion phase idea making sure its configuration according to the performance development concerns; 8. Guaranteeing the significance and configuration of process metrics, programs and main concerns through out the supply chain by executing multilevel internal and external metrics; 9. SCOR homogenizes a procedure development language and measurement method across the business; 10. Constructs sustainable operational competitive benefit with long term constant utilization of the evaluation process. 11. SCOR also allows the companies to assess their existing supply chain practices and consequently chart out their ideal practices which will lead them to their set goals. Limitations: Some of the limitations of SCOR are: 1. The SCOR model is not concerned with activities that tend to affect the supply chain performance to a considerable level. Such activities include - customer oriented activities like advertising & sale, IT, research and design of product, etc... 2. SCOR is able to define only a single supply chain in a business, whereas in reality, there may exist more than one supply chains in a business product. 3. Incompatibility with its corresponding models and decreased level of suppleness and flexibility towards the real business practices make SCOR a limited business reference model. 4. SCOR is further able to distinctly define the other business process activities of collaborative design and client relationships management. 5. For some cases, SCOR defines the model in too complex a manner, which is not easily understood or at times too precise which may not be able to address every concern involved. Improvements On SCOR It is suggested to incorporate Customer Relationship Management techniques and other marketing concepts into the SCOR process reference model so that it can completely identify the whole supply chain from the source to the end (customer). The facilitation of SCOR to be able to define more than one supply chain at a time in order to assist more wide and complex business processes would also improve its functionality. SCOPE of SCOR The SCOR Model is also capable of taking the account of all the dealings at the consumer / market level within its continuum of implementation that ranges from billing of the product, product final delivery, and market relations and promotion strategies. The SCOR process reference model not only concerns the company dealings of Sales, Marketing, or product development but also extends itself along complex supply chains in technical / non-technical environment; [BEA 2003] as also defined above the four levels of SCOR help to assist the organization in conducting its supply chain activities, and enhancing its operational value. Besides expanding the business functions, the fourth level puts forth some valuable organization specific processes, systems and practices to the administration. A number of companies around the globe, face supply problems related to customer satisfaction. Most of these companies work in the conventional form of stocking up high inventories which actually result in high expenditure values for the company. The scope of the SCOR process reference model extends here. It helps the companies in addressing these issues by integrating the best practices across the industry, and not only within the specific business window but along the length of the whole supply chain. It helps to effortlessly evade a superfluous expenditure and cut costs, thereby escalating the development of higher cost savings. The SCOR Model sets up prearranged standards for all phases of product development like as scheduling, forecasting, re-sourcing, assembling deliveries, and even returns. The SCOR process reference Model ascertains the limitations related to each development phase of the process, and these limitations are supported by the industry principles which in turn are consequent of the optimal procedures and best practices across the industry. Even if products have to go through re-engineering, the benchmarks based on the best practices shared will develop standards for the re-engineering of products, processes involved and costs associated [Metric 2003]. The complete form of the supply chain consists of the plan, source, make and delivery that are driven as the market requirements of supply and demand. The SCOR Model generates a cushion stock which is based on the perception of the above mentioned demand and supply chain. The cushion stock is created by a sound consideration design and managed system which concludes in precisely accurate inventories and the prevention of a surplus [Perf 2003]. SCOR has fascinated a lot of companies in different countries globally and a number of them have already incorporated the SCOR Model into their business form. They have executed this model after evaluation and proper study and the continued use of the SCOR Model, will offer the businesses to gain the competitive edge over their business rivals not only locally, but also internationally. China has set an example for adjusting to the SCOR Model, and a number of Chinese companies nowadays assure for the model and stand behind it. OTHER REFERENCE MODELS CCOR Developed by the Supply Chain council, the CCOR model or the Customer-Chain Operations Reference-model CCOR-model is a similar supply chain management model to SCOR. This unique CCOR framework has been offering the industry experts to associate the various business actions, performance evaluations, best technology within a single framework of the complete supply chain so as to offer high end support to the linked end customers and increase their satisfaction value. The Customer Chain Reference Model comprises of the finest procedures and pre-built models that allow the company management to highly improvise, foresee, meet and supervise their customer needs. CCOR is implemented in order to track and continuously improve the end client's chain processes with the help of a number of measurements across the supply chain. This model deals with the supply, demand, attributes and requests of the clients in relation to the development of the product. The key management procedures encompassed in CCOR are plan, relate, sell, price and assist. Implementation of CCOR Effectual Customer-Chain Operations Reference-model CCOR-model begins from comprehending the requirements of the client at the end of the supply chain. On a daily basis, it looks after the client's requirements, what factors influence his demand and help logisticians collect significant data, such as order backlog, order fill time, and days of record stock, that, when considered against metrics, and other measures to develop performance which reduces costs.The Customer Chain Reference Model is executed in unison with the enterprise modeling solutions which helps the companies to proficiently and speedily construct and identify the absolute range of a client chain - and subsequently investigate the customer requirements. DCOR The Design Chain Operations Reference-model DCOR-model is the latest invention of the Supply Chain Council, which was developed by the SCC's Technical Development Steering Committee. The DCOR model is actually an extension of the SCOR model and is fundamentally set up on the five basic management procedures of Plan, Research, Design, Integrate and Amend. It concerns the activities related to final product development as well as research and development. However this does not relate to every business activity. DCOR is centered on activities related to novel ideas like Product launch, New Product and modern technology up-gradations as its major implementation procedures. Implementation of DCOR This Design Chain Operations Reference-model rapidly organizes the design chains involved in the supply chains as per the best industry standards and practices. DCOR implements an inter and intra level approach for each department, in order to simplify the communications and assist in spotting the alterations that would be beneficial for the company. Furthermore, Design Chain Operations Reference-model offers a customary structure of high-level plan series that is recommended by the members of the SCC. It offers assistance in swiftly reacting to any sort of design changes and further employing these changes, to increase the efficiencies. It also implements the leveraging of design chain models and interpretations for additional purposes, such as Enterprise Architecture, requirements analysis, ISO certification, premeditated scheduling and application development. Value Reference Model Value Reference Model (VRM) was developed by the global not for profit Value Chain Group and provides for an open source semantic guidebook for the management of a value chain encircling one combined reference structure which represents the procedure domains of product development and improvement, client relations and market supply networks. This incorporated procedural outline directs the model, design, and capacity of the trade performance by exclusively taking in the plan, administration and implementation of necessities that are required for the different phases of product design and offers product quality, procedural superiority, and customer excellence. Implementation of VRM Designed by the VCG, the VRM has been employed in many companies to help the businesses to assimilate the three decisive spheres - Product Development, Supply system and Customer satisfaction. It plays an important role in administering the various levels decision making and operations that exist in almost every product supply chain across the industry. It is implemented to offer a universal language which facilitates both the internal and external teamwork. Also it sets up a structure for the assimilation of supply chain processes and IT. [VRM 3.0, 2004, VCG] Advanced Product Quality Planning(orAPQP) APQP is an outline of measures and modus operandi that are employed to build upproductsinbusiness, mostly theautomotive manufacturing sector. Advanced Product Quality Planningis fairly comparable to the opinion of Design forSix Sigma(DFSS). It is a definite procedure for a manufactured goods improvement scheme formany car manufacturing companies. According to the Automotive Industry Action Group(AIAG), the intention of APQP is "to produce a product quality plan which will support development of a product or service that will satisfy the customer." The process is described in the AIAG manual 810-358-3003". [Wixon, Jim 2000] Implementation of APQP APQP is implemented to determine the client's needs and expectations with the help of reviewing the complete product planning process which helps to define the inputs based on the outputs required. The reviewing process also incorporates the product plan verification, design evaluation, material & technical specifications. It further implemnst the control action plan and regulates the control action parameters in the improvement cycle of the product. Process Classification Framework Developed by the APQC, Process Classification Framework enables companies to apply the finest benchmarking performance and metrics which serves as a, highly sophisticated, business unbiased business process model through the entire supply chains. The Process Classification Framework is a top level, standard project model that promotes companies to observe their actions from a cross-industry process viewpoint in place of a narrow functional viewpoint. It helps the companies are free to select the frame which appears to be the most appropriate to their precise procedure enhancement requirements, whether the processes are concerned with benchmarking, business process management/re-engineering, or content management. [APQC, IBC, 2000] Implementation of PCF The PCF is employed by a number of companies to effortlessly find out which procedures require supplementary evaluation or improvement. Bigger companies can influence the profound study that is planned along PCF strategy to neutrally assist in comparing performance against the set baselines throughout the process improvement efforts. All businesses can profit from the plenty of key performance pointers that are provided by the PCF. CONCLUSION SCOR can be used as an evaluation modeling tool, for executing and positioning the various supply chain techniques and performance metrics for significant decision making in reference to further product chain enhancement. With the advantages that SCOR has to offer, it is rapidly increasing its industry presence. If the basic concepts of SCOR are firmly rooted within the industry, it will be soon poised to become a standard supply chain management technique. References [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. [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. [Metric 2003] "SCOR Model Metric Interdependencies v2.2", SCOR Model 5.0, web-site: HP-IT Business Process Modelling Group. [BEA 2003] "Aligning IT with Business Goals", BEA Business White Paper, BEA Systems Inc., http://www.bea.com [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/. Christy D.P, (1994), Safeguarding Supply chain Networks, Journal of International Economics, Vol. - 2, pg 33,44 Chopra S, and Maendil P, (1999) Supply Chain Management Strategy and Planning, Prentice hall, NJ. SCC (1999), Supply chain reference model: Overview of SCOR, Supply chain council, Pittsburg, PA. [APQC, IBC, 2000], Available online at http://www.numa.org.br/download/Desenv_Produto/framewrk.pdf [Wixon, Jim 2000] Available online at: http://www.npd-solutions.com/qfd.html [VRM 3.0, 2004, VCG], Available online at: http://www.value-chain.org/en/cms/2996 Read More