Supply Chain Management

Licence d’excellence Marketing, Logistique et Digital

Pr. Ilham RHAROUBI

Année universitaire: 2023/2024

Chapter 3: Supply chain strategy
• Procurement and Sourcing
• Supply chain strategy
• Lean Vs agile supply chain
• Supply chain drivers
• Supply Chain Operations Reference (SCOR) Model
 Purchasing vs Procurement
• Defini&on: Procurement is a strategic
func/on that involves the en/re process of
acquiring goods, services, or works from
external sources.
• Scope: It encompasses ac/vi/es such as
planning, sourcing, nego/a/on, purchasing,
and contract management.
• Example: Developing long-term rela/onships
with suppliers, nego/a/ng favorable terms,
and ensuring the overall efficiency of the
acquisi/on process.
• Definition: Purchasing is a subset of
procurement and specifically refers to the
transactional process of buying goods or
services.
• Scope: It focuses on the actual buying
process, including order placement, supplier
communication, and payment processing.
• Example: Placing an order for a specific
quantity of raw materials from a supplier,
handling the transactional aspects of the
acquisition
 Sourcing Vs supply chain
• Definition: Sourcing is the broader process
of identifying, evaluating, and selecting
suppliers to obtain goods or services.
• Scope: It involves activities such as supplier
identification, evaluation, negotiation, and
selection.
• Example: Conducting a comprehensive
assessment of potential suppliers based on
factors like quality, cost, reliability, and
sustainability
• Definition: The supply chain encompasses the
end-to-end process of creating and delivering
products, involving the entire network from
raw material suppliers to end customers.
• Scope: It includes procurement, logistics,
production, distribution, and customer service.
• Example: Managing the entire lifecycle of a
product, from sourcing raw materials to
manufacturing, distribution, and ultimately
delivering the finished product to customers.
The key components of procurement

1. PEOPLE

People represent the individuals involved in the procurement process, including

procurement professionals, buyers, suppliers, and other stakeholders.
People are responsible for various aspects of procurement, such as negotiating with
suppliers, making purchasing decisions, ensuring compliance with procurement policies,
and building relationships with vendors.
People competencies: Competent and skilled individuals are crucial for the success of the
procurement process. Collaboration and communication among team members are vital
to streamline activities and make informed decisions.
The key components of procurement

2. PROCESSES

Processes refer to the series of interconnected steps and activities that define how
procurement is carried out within an organization.
Procurement processes include requisitioning, vendor selection, negotiation, purchase
order creation, receiving goods or services, and payment processing.
Efficiency and Effectiveness: Well-defined and optimized processes contribute to the
efficiency and effectiveness of procurement operations. Streamlining processes helps
reduce errors, delays, and costs.
The key components of procurement

3. PAPERWORK

Paperwork involves the documentation and record-keeping associated with procurement

transactions.
Documentation Examples: This includes purchase orders, contracts, invoices, receipts,
and other relevant paperwork that tracks the procurement lifecycle.
Compliance and Accountability: Proper documentation is critical for compliance with
regulations, internal policies, and auditing purposes. It ensures transparency,
accountability, and provides a historical record of procurement activities.
The key components of procurement

These three components are interconnected, and their effec1ve integra1on is

essen1al for a well-func1oning procurement process. People follow established
processes and generate the necessary paperwork to ensure a transparent and
accountable procurement cycle.
Benefits of Considering People, Processes, and Paperwork:
• Efficiency: Streamlining processes and u1lizing skilled individuals can improve the
efficiency of procurement opera1ons.
• Compliance: Proper documenta1on ensures compliance with regula1ons and
internal policies.
• Risk Mi=ga=on: Well-defined processes and proper paperwork help mi1gate risks
associated with procurement ac1vi1es.
Sourcing and Pricing

Sourcing strategy deals with planning, designing and building a reliable and
competitive supplier base, determining the strategy for procurement,
defining pricing strategies and supply chain requirements.
The strategy involves confirming to the objectives of stakeholders in
operations, finance, marketing and distribution.
Some supply chain managers favor “everyday low pricing” strategies to
reduce demand distortion, improve customer service, and lower costs.
Others apply “high-low pricing” strategies to clear slow moving items and
build retail traffic, thereby increasing revenues.
• Sourcing is the entire set of business processes required to purchase goods and services.
• Sourcing processes include:
üsupplier scoring and assessment
üsupplier selection and contract negotiation
üdesign collaboration
üProcurement
üsourcing planning and analysis
• The most significant decision is either to outsource or perform in-house.
• In business, the term word sourcing refers to a number of procurement practices, aimed at finding,
evaluating and engaging suppliers of goods and services. The methodology involved in procuring
the necessary materials, supplies, and services necessary to sustain a supply chain system.
• A thorough understanding of a company’s business strategy, the resources required to deliver that
strategy, the market forces and the unique risks within the company associated with implementing
specific approaches is essential for success.
• To ensure the achievement of desired results and continued alignment with business objectives, a
periodic review of the sourcing strategy is needed.
Sourcing strategies
The sourcing strategies used in supply chain management includes:
Ø Single sourcing: Single sourcing is a method whereby a purchased part is supplied by only one supplier.
A Just-in-time (JIT) manufacturer will frequently have only one supplier for a purchased part so that
close relationships can be established with a less number of suppliers. These close relationships and
mutual interdependence promote high quality, reliability, less time and cooperative action.
Ø Multisourcing: Multi-sourcing is a method whereby procurement of a good or service is from more
than one independent supplier. It is used sometimes in a company to induce healthy competition
between the suppliers in order to achieve higher quality and lower price.
Ø Outsourcing: Outsourcing is the process of having suppliers that provide goods and services previously
provided internally. Outsourcing involves the replacement of internal capacity and production by that
of the supplier. This third party can increase the supply chain surplus relative to performing the activity
in house. Outsourcing makes sense only if it increases the supply chain surplus without increasing the
risks.
Ø Insourcing: Insourcing is the process where the goods or services are developed internally.

3PL
A growing number of companies are turning to
third party logis6cs organiza6ons to handle the
customer fulfilment in the supply chain.
Companies that are accustomed to true
partnering with customers and suppliers have
less trouble moving to the third party logis6cs
and achieving the poten6al cost savings.
The key steps are to conduct a complete search
for the right third party logis6cs vendor,
thoroughly review cost proposals and contracts
to ensure there is financial benefit, and work
with the third party logis6cs.
Typical Services included:
• Transporta6on – air, road, rail,
ship
• Warehousing
• Pick and Pack, Labelling
• Light manufacturing /assembly
• Vendor managed inventory (VMI)
• Inventory management
• Customs clearance
• Managing reverse logis6cs –
returns
• Recycling of packaging
 Reasons why companies often Outsource Logistics

• Improve services & Increase flexibility

• Reduce costs: Economies of scale and scope
• Avoid capital investment & convert logistics
from capital to expenditure
• Logistics is a non-core activity, concentrate on
core competencies
• Reduce labor costs
• Logistics service providers offer greater logistics
expertise
FOCUS IS NOW ON LOGISTICS OUTSOURCING

• A study show that relationships between buyer and supplier, i.e.

focal firm and third party logistics provider become more and more
satisfactory…. Which was the main concern of outsourcing, due to
lack of information sharing and goal incongruences.... i.e.
• 3PL relationships are increasingly popular so there is a positive
trend

• Study investigated 500 manufacturing firms in the US:

ØPositively satisfied with service provider (92%) and successful
relationships (98%)
ØIncreasing use of outsource logistics activities (67%)
ØReturning to insourcing remains less prevalent (26%)
Problems with Outsourcing

• Loss of control over distribution network

• Loss of management expertise in logistics
• Loss of direct contact with customer!
• Increasing risk of service failure
• Tendency to underestimate core competences
• Dependency on contractors

Source: Tsai et al. (2012) “The dark side of logistics outsourcing”

 In-house and Outsource
• Insourcing (or in-house, contrac1ng in) is defined as the delega1on of opera1ons from produc1on
within a business to an internal but independent en1ty that specializes in that opera1on for example,
either by hiring local subcontractors or building a facility.
• Insourcing is a business decision made to maintain control of cri1cal produc1on or competencies.
• The independent en1ty is internal yet not a part of the organiza1on and will usually have a specialized
team who will be proficient in the providing the required services.
• For example, Toshiba insourced with UPS (Unit Parcel Service) in a way that UPS now is in control of
the supply chain for Toshiba. If a customer’s laptop at home needs repair, UPS will pick it up and fix it
at the Toshiba/UPS Repair Centre and deliver it back to the customer. UPS is the in charge of delivering
products for Toshiba.
• For example, BMW outsourced with Boss Sound System in a way that Boss does all the music for the
BMW cars. It is cheaper for BMW to make a deal with Boss sound system instead of opening a new
factory to produce speakers and subwoofers. Boss is the in charge of doing sound systems in BMW.
• The ability of businesses to outsource to suppliers outside the na1on is referred to as off-shoring or
offshore outsourcing.
3PL and 4PL

• Third-party logistics (3PL) involves using external organizations to execute

logistics activities that have previously been performed within an
organization itself.
• The third-party logistics includes any form of outsourcing of logistics
activities previously performed in-house. For example, a company with its
own warehousing facilities employing external transportation.
• Third party logistics, 3PL provider performs one or more of the logistics
activities relating to the flow of product, information and funds.
• Traditionally, 3PLs focused on specific functions such as transportation,
warehousing and information technology.
• Third parties increase the supply chain surplus effectively if they are able to
aggregate supply chain assets to a higher level than a firm itself.
 The differences beween 3PL and 4PL
3PL
1. Provides logistics services such as
transportation, warehousing, and
distribution.
2. Executes specific logistics functions on
behalf of a company.
3. Operates as a standalone service provider,
offering specialized services.
4. Primarily focused on operational logistics
tasks.
5. Uses technology for specific logistics
functions.
6. Offers customized solutions within its
specialized services.
7. Does not take ownership of the client's
supply chain strategy.
8. Implements strategies provided by the
client.
4PL
1. Manages and integrates the entire supply chain,
including multiple 3PLs.
2. Takes a broader role, overseeing the entire supply
chain strategy, coordination, and optimization.
3. Acts as an integrated supply chain manager,
coordinating various logistics providers for seamless
operations.
4. Focuses on strategic planning, coordination, and
optimization of the entire supply chain.
5. Leverages advanced technologies for end-to-end
visibility, analytics, and decision-making.
6. Tailors comprehensive supply chain solutions to
meet the unique needs of the client.
7. Assumes a higher level of ownership, often acting as
an extension of the client's business.
8. Develops and implements supply chain strategies,
often acting as a strategic partner.
3PL and 4PL

• A fourth-party logistics (4PL) targets management of the entire process,

whereas a third party logistics (3PL) service provider targets a function.
• 4PL may be a general contractor who manages other 3PLs, truckers,
forwarders and custom house agents.
• Outsourcing a noncore activity such as logistics does not guarantee any
growth in SC surplus.
• The basic advantage that a 4PL may provide comes from greater visibility
and coordination over the firm’s supply chain, which requires sophisticated
information technology which is both costly and needs expertise.
Supply chain strategy

A supply chain strategy is a plan for how a business will manage and
op7mize its supply chain to meet its strategic goals

Supply chain strategy is a long-term plan that outline how a company

will achieve its goals by managing its supply chain

A well-designed supply chain strategy helps businesses achieve their

goals by ensuring that they have the right processes, systems, and
partnerships in place to effec7vely manage their en7re supply chain
 “A strong supply chain strategy is essen3al for any business that
wants to remain compe33ve in today’s fast-paced, global economy”
Key elements of a supply chain strategy
Key elements of a supply chain strategy
Supply chain strategy steps
• Step 1: define strategic objectives
Reducing costs, improving customer service or expanding into new markets
• Step 2: conduct a SC assessment
Help identify areas of improvements and opportunities for optimization
• Step 3: develop a SC design
Design that outlines the optimal network configuration, supplier relationships,
inventory levels, transportation modes and technology systems
• Step 4: implement and monitor
Help identify areas where further improvements can be made and ensure that the
supply chain continues to support the organization’s strategic objectives
Amazon's Supply Chain Strategy:
Amazon is known for its highly
efficient and customer-centric supply
chain strategy, which has played a
significant role in its success.
key aspects of Amazon's supply chain
strategy:
• Customer-Centric Focus
• Fulfillment Center
• Advanced Forecasting and
Demand Planning
• Prime Membership Program
• Inventory Management
• Robotic Technology
• Collaborative Supply Chain
• Cross-Docking Strategy
• Continuous Innovation
Toyota’s Supply Chain Strategy:
Toyota, a pioneer in lean manufacturing
and just-in-time (JIT) production, has a
renowned supply chain strategy that has
become a benchmark for efficiency and
effectiveness.
The key aspects of Toyota's supply chain
strategy:
• Just-in-Time (JIT) Production
• Lean Manufacturing
• Supplier Partnerships
• Kanban System
• Andon System
• Cross-Functional Teams
• Global Production Network
• Kaizen Philosophy
• Quality Control Circles
• Resilience and Flexibility
 A differentiated supply chain strategy

When there are different products with:

§ different characteris3cs
§ e.g. demand vola3lity/ value / volume /
weight / shelf-life / cri3cality, etc.
§ different service requirements
§ e.g. lead-3me / delivery frequency / order
quan33es, etc.

Managers need to decide

……….what is the right supply chain for each product-customer segment?

“One size never fits all”

 different products’ characteristics
e.g. demand volatility/ value / volume / weight / shelf-life / criticality, etc.

Example: Imagine a company that sells both electronic gadgets and

non-perishable household goods. Electronic gadgets may have high
demand volatility due to rapid technological changes, whereas
household goods may have more stable demand. Additionally, gadgets
might be high in value but lower in volume and shelf-life compared to
household goods.

à The nature of products can vary significantly in terms of demand

patterns, value, volume, weight, shelf-life, and criticality.
 different service requirements
e.g. lead-time / delivery frequency / order quantities, etc.

Example: Consider two products: a customized artisanal product and a

standardized commodity. The artisanal product may require longer lead
times and specific delivery frequencies to accommodate the crafting
process, while the commodity may demand frequent and consistent
deliveries due to high customer demand.

à Products may have diverse service requirements, influencing aspects

like lead-time, delivery frequency, and order quantities.
 Why Does It Ma-er in Supply Chain Strategy?
• Op#mizing Supply Chain Processes:
Recognizing these differences allows supply chain managers to tailor processes for each
product category. For example, implemen;ng agile supply chain prac;ces for high-demand,
low-shelf-life items and lean prac;ces for stable-demand, non-perishable items.
• Efficient Resource Alloca#on:
By understanding varied characteris;cs and service requirements, companies can allocate
resources more efficiently. For instance, alloca;ng more warehouse space for products with
longer shelf-life and less for those with a shorter shelf-life.
• Mee#ng Customer Expecta#ons:
Mee;ng diverse service requirements ensures that customer expecta;ons are met. Some
customers may priori;ze quick deliveries, while others may value customiza;on and are
willing to wait longer.
Recognizing the diversity in product characteristics and service requirements
is fundamental in designing a supply chain that is responsive, efficient, and
aligned with customer needs. It allows for targeted strategies that enhance
overall supply chain performance and customer satisfaction.

"Just as every product is unique, so should be its journey through the

supply chain. Understanding and adapting to these differences enable
companies to deliver the right product, at the right time, and in the right way
to meet customer expectations."
 Designing a Responsive Supply Chain
Five Key concepts:

1. Differentiate - ‘One size never fits all’: Segment /prioritise the product
/customer base and design the best supply chain for each;
2. De-couple the supply chain: between Lean (push) and Agile (pull) processes;
place strategic inventory at the decoupling point;
3. Postpone: delay adding value wherever possible (form and place postponement);
4. Reduce the Lead-time Gap: work to reduce the gap and become less reliant on
finished product forecasts;
5. Use real-time demand data: make real-time demand available upstream at the
information de-coupling point, and use it to make supply & production decisions;
 Designing a Responsive Supply Chain
Five Key concepts:

1. Differentiate - ‘One size never fits all’:

Recognizing that different products or customer segments may have
unique supply chain requirements. It involves tailoring the supply chain
strategy to meet the specific needs and characteristics of each product
or customer group.

• Example: A company that sells both high-end luxury goods and

everyday consumer products would differentiate its supply chain
strategies. The luxury goods may require a more personalized and
slower supply chain, while the consumer products might benefit from a
faster and more cost-efficient approach.
 Designing a Responsive Supply Chain
Five Key concepts:

2. De-couple the Supply Chain:

This concept involves separating the supply chain into distinct segments,
allowing for flexibility and responsiveness. The push-pull boundary, also
known as the decoupling point, separates lean (push) processes from
agile (pull) processes.

• Example: A company may produce standardized components in bulk

(lean), and these components are stored until customer demand
triggers the assembly of the final product (agile). This separation allows
for efficient production and quick response to changing demand.
Designing a Responsive Supply Chain
Five Key concepts:

3. Postpone:
Postponement involves delaying the customiza4on or final
configura4on of a product un4l closer to the customer order. This helps
reduce the risk associated with forecas4ng and allows for a more
responsive and agile supply chain.

• Example: In the electronics industry, the assembly of specific product

configura4ons may be postponed un4l customer orders are received.
This reduces the need to produce and stock mul4ple varia4ons,
minimizing excess inventory and improving responsiveness.
Designing a Responsive Supply Chain
Five Key concepts:

4. Reduce the Lead-time Gap:

The lead-time gap refers to the time between placing an order and
receiving the final product. Reducing this gap is crucial for
responsiveness. It involves minimizing delays and uncertainties
throughout the supply chain.

• Example: Fast-fashion retailers aim to reduce the lead-time gap by

quickly adapting to trends and bringing new designs to market in a
short time. This requires efficient coordination between design,
production, and distribution.
Designing a Responsive Supply Chain
Five Key concepts:

5. Use Real-time Demand Data:

Exploit real-time data on customer demand to make informed and
timely decisions. This involves having visibility into demand fluctuations
and adjusting supply chain activities accordingly.

• Example: Retailers using point-of-sale data to monitor customer

purchasing patterns in real-time can adjust inventory levels,
promotions, and replenishment strategies swiftly to meet changing
demand conditions.
 Recap

• Designing a responsive supply chain involves a strategic approach

tailored to specific product and customer characteristics.
• Decoupling, postponement, and reducing lead times enhance
flexibility and responsiveness.
• Real-time demand data enables data-driven decision-making for
optimal supply chain performance.
• Implementing these concepts helps organizations create a supply
chain that is agile, adaptable, and capable of responding swiftly to
changes in the market or customer demand.
 Lean is about
E.G. Consider demand volume …. efficiency through
standardized,
forecast-driven
production with a
80%
focus on
Agile economies of
scale.
% of total
• Forecast for capacity,
demand execute to demand
• Make to order Agile emphasizes
Lean • High priority in production flexibility and
schedule responsiveness,
• Hold inventory in generic
form with a make-to-
• Make & distribute to forecast order approach
• Low priority in production based on actual
schedule
• Focus on efficiency 20% % of products demand.
• Seek economies of scale
Two Supply Chain strategies (NOT mutually exclusive!)

Lean
“having no surplus flesh or bulk” §
Waste elimination §
Robust processes §
Minimisation of inventory and WIP §
Cost transparency in the supply chain §
Multi skilled workers §
Reduced change-over times §
Continuous improvement §
Physically Efficient § Market Responsive
Agile
“quick in movement : nimble”
Quick response -velocity
Flexible processes
Customised service
End-to-end Visibility
Postponement of final configuration
Synchronised with true demand
Value creation
 Consider demand volume and variability

High
“Agility” is needed in
less predictable
environments where
Demand Variability AGILE
the demand for variety
Product Variety/

is high.

“Lean” works best in

LEAN
high volume, low
variety and predictable
environments.
Low
Low High
Volume Sales

(Christopher, 2011, pp 100)

Supply chain order de-coupling point
Supply chain order de-coupling point

The Supply Chain Order De-coupling Point refers to the specific stage
in the supply chain where products shift from being standardized and
mass-produced to becoming customer-specific or customized. It is the
point in the production process where the product's generic features
are established, and any further differentiation or customization is
postponed until closer to the customer.
The aspects of Supply chain order de-coupling point
• Standardized vs. Customized Products:
• Standardized Phase: Up to the de-coupling point, products are typically produced in a
standardized manner with minimal variations. This phase involves creating generic or
standard configurations.
• Customized Phase: Beyond the de-coupling point, customization occurs to meet specific
customer demands. Products are adapted or configured based on individual
requirements.
• Flexibility and Responsiveness:
• The de-coupling point allows supply chains to balance efficiency and responsiveness.
• Before this point, processes focus on efficiency, cost-effectiveness, and high-volume
production.
• After the de-coupling point, the emphasis shifts to responsiveness, customization, and
meeting specific customer needs.
 The aspects of Supply chain order de-coupling point
• Strategic Placement:
• The exact location of the de-coupling point varies based on the industry, product characteristics,
and customer expectations.
• For example, in the automotive industry, the de-coupling point might be closer to the end of the
assembly process, allowing for customization of features like color and accessories.
• Postponement Strategies:
• Postponement involves delaying the final configuration or customization of a product until there is
more clarity about customer demand.
• This strategy helps reduce the risk of producing excess inventory of customized products that may
not align with actual market demand.
• Balancing Efficiency and Responsiveness:
• The concept of the de-coupling point reflects the challenge of balancing conflicting goals within a
supply chain: the efficiency of mass production versus the responsiveness to individual customer
preferences.
 Supply chain drivers
Supply chain drivers determine the supply chain performance. For each driver, managers must make tradeoffs
between efficiency (cost) and responsiveness. The drivers of supply chain include:
1. Inventory: It consists of all raw materials; work in process, and finished goods within a supply chain.
Inventory is maintained in the supply chain because of mismatches between supply and demand. Increasing
inventory gives higher responsiveness but results in higher inventory carrying cost.
2. Transporta@on: It involves moving inventory from one point in the supply chain to another point. A number
of decisions have to be taken in designing a supply chain regarding transporta@on. The six basic modes of
transporta@on are:
• Air
• truck (road)
• Rail
• Ship
• Pipeline
• electronic transporta@on (the newest mode for music, documents etc)
3. Facili@es: A facility is a place where inventory is stored, manufactured or assembled. Hence, facili@es can be
categorized into produc@on facili@es and storage facili@es. The facili@es related decisions involve loca@on,
capacity, manufacturing methodology or technology and warehousing methodology.
4. Informa@on: It consists of data and results of analysis regarding inventory, transporta@on, facili@es,
customer orders, customers, and funds. Good informa@on drives good decisions.
Supply chain drivers
 Supply Chain Operations Reference (SCOR) Model
The supply chain operations reference model (SCOR) is a management tool used to
address, improve, and communicate supply chain management decisions within a
company and with suppliers and customers of a company. The model describes the
business processes required to satisfy a customer’s demands. It also helps to explain
the processes along the entire supply chain and provides a basis for how to improve
those processes.
The SCOR model was developed by the supply chain council with the assistance of 70
of the world’s leading manufacturing companies. It has been described as the “most
promising model for supply chain strategic decision making.” The model integrates
business concepts of process re-engineering, benchmarking, and measurement into its
framework. This framework focuses on five areas of the supply chain: plan, source,
make, deliver, and return. These areas repeat again and again along the supply chain.
The supply chain council says this process spans from “the supplier’s supplier to the
customer’s customer.”
 Supply Chain Operations Reference (SCOR) Model

• The supply chain model, which address both the

upstream and downstream sides.
• The Supply-Chain Operations Reference model
(SCOR) measures total supply chain performance.
It is a process reference model for supply-chain
management, spanning from the supplier’s
supplier to the customer’s customer. It is the most
widely used model.
• It includes delivery and order fulfilment
performance, production flexibility, warranty and
returns processing costs, inventory and asset turns,
and other factors in evaluating the overall effective
performance of a supply chain.
Supply Chain Opera/ons Reference (SCOR) Model
SCOR is based on five dis/nct management processes: Plan, Source, Make, Deliver, and
Return.
• Plan - Processes that balance aggregate demand and supply to develop a course of
ac/on which best meets sourcing, produc/on, and delivery requirements.
• Source - Processes that procure goods and services to meet planned or actual demand.
• Make - Processes that transform product to a finished state to meet planned or actual
demand.
• Deliver - Processes that provide finished goods and services to meet planned or actual
demand, typically including order management, transporta/on management, and
distribu/on management.
• Return Processes associated with returning or receiving returned products for any
reason. These processes extend into post-delivery customer support.
 SCOR processes
1. Plan
Demand and supply planning and management are included in this first step. Elements
include balancing resources with requirements and determining communication along
the entire chain. The plan also includes determining business rules to improve and
measure supply chain efficiency. These business rules span inventory, transportation,
assets, and regulatory compliance, among others. The plan also aligns the supply chain
plan with the financial plan of the company
2. Source
This step describes sourcing infrastructure and material acquisition. It describes how to
manage inventory, the supplier network, supplier agreements, and supplier
performance. It discusses how to handle supplier payments and when to receive, verify,
and transfer product
 SCOR processes
3. Make
Manufacturing and production are the emphasis of this step. Is the manufacturing process
make-to-order, make-to-stock, or engineer-to-order? The make step includes, production
activities, packaging, staging product, and releasing. It also includes managing the
production network, equipment and facilities, and transportation.
4. Deliver
Delivery includes order management, warehousing, and transportation. It also includes
receiving orders from customers and invoicing them once product has been received. This
step involves management of finished inventories, assets, transportation, product life
cycles, and importing and exporting requirements.
5. Return
Companies must be prepared to handle the return of containers, packaging, or defective
product. The return involves the management of business rules, return inventory, assets,
transportation, and regulatory requirements.
The
performance
section of SCOR
focuses on the
measurement
and
assessment of
the outcomes
of supply chain
process
execution.

The SCOR performance attributes

 Benefits of Using the SCOR Model
The SCOR process can go into many levels of process detail to help a company
analyze its supply chain. It gives companies an idea of how advanced its supply
chain is. The process helps companies understand how the 5 steps repeat over and
over again between suppliers, the company, and customers. Each step is a link in
the supply chain that is criBcal in geCng a product successfully along each level.
The SCOR model has proven to benefit companies that use it to idenBfy supply
chain problems. The model enables full leverage of capital investment, creaBon of
a supply chain road map, alignment of business funcBons, and an average of two
to six Bmes return on investment