Lecture 6 (Part A)

Supply Chain Management Models

 Supply Chain Operational 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.
 SCOR Processes
• 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.
 SCOR Processes
• 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.
• 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, transportation management, and distribution
management
 SCOR Processes
• Return: Processes associated with returning or receiving
returned products for any reason. These processes extend
into post-delivery customer support.
 Global Supply Chain Forum Model(GSCF)
• The GSCF defines supply chain management as “the
integration of key business processes from end user through
original suppliers that provides products, services, and
information that add value for customers and other
stakeholders”
 GSCF Processes
• Customer Relationship Management: Provides the structure
for how relationships with customers are developed and
maintained.
• Customer Service Management: Provides the firm’s face to
customers, a single source of customer information.
• Demand Management: Balances customer requirements with
supply chain capabilities, forecasting and synchronization.
• Order Fulfilment: Encompasses all activities necessary to
define customer requirements, design a network, and enable
a form to a meet customer requests while minimizing total
delivered cost
 GSCF Processes
• Manufacturing Flow Management: Includes all activities
necessary to obtain, implement, and manage manufacturing
flexibility in the supply chain and to move products through
the plants.
• Supplier Relationship Management: Provides the structure
for how relationships with suppliers are developed and
maintained.
 GSCF Processes
• Product Development and Commercialization: Provides
structure for working with customers and suppliers to develop
products and bring them to market.
• Returns Management: Manages activities associated with
returns, reverse logistics, “gatekeepers”, and return avoidance
within the firm and across key members of the supply chain.
 Barriers to SCM
• Regulatory and political considerations: Laws and
Regulations, War and government stability
• Lack of top management commitment: Top management has
the ability to allocate the necessary resources for supply chain
endeavours and the power to structure, or restructure,
corporate incentive policies to focus on achieving
organizational and interorganizational objectives.
• Reluctance to share, or use, relevant information:
Proprietary information
 Barriers to SCM

Incompatible information systems

◦     Software incompatibility – one kind of software can't talk to
an other kind
◦     Single integrator approach – all relevant software is provided
by a single vendor (example: the complete Microsoft Office
Suit)
◦     Best-of-breed approach – chooses the best application for a
particular function
Incompatible corporate cultures: “How we do things around
here” simply don't match.
 Barriers to SCM

Globalization
◦     Global competition
◦     Longer and more unpredictable lead times – time from when
an order is placed until it is received for shipments
◦     Various errors (documentation, packaging, routing, etc)
 Supply Chain Management and Integration

• Vertical integration – one organization owns multiple participants in

the supply chain. Example: A car company also owning producers of
parts and steal producers.
• Formal contracts (franchising) – attempts to combine the benefits of
tight integration of some functions along with the ability to be very
flexible while performing other functions. Example: McDonald's
• Informal agreements – various organizations band together for
common goals and objectives, with one organization exerting the
greatest degree of control over the entire supply chain.
• Good because: organizations are independent and can get out easier
• Bad because: the controlling organization might become a kind of a
dictator within the supply chain