Chapter 4 Part 2

Main ideas and concepts

1) Performance Matrix for supply chain activities (measurement dimensions)

A “Matrix for supply chain performance” is introduced as a model to measure how well supply chain activities perform. Activity performance is assessed across the following dimensions:

• Cost: cost involved in executing the activity
• Time: time required to carry out the activity
• Capacity: volume of work a system (or part of the supply chain) can handle within a given period
• Capability: aggregate ability of a supply-chain unit to perform an activity (with reliability as a common subdimension)
• Reliability: ability to consistently fulfill promises
• Availability / readiness: ability to provide products/services at the required time
• Flexibility: ability to quickly change according to output/work needs
• Productivity: how effectively resources are used to convert inputs into outputs
• Quality: level of resource usage in the supply chain
• Outcome: results produced by the activity process

2) SCOR model (Supply Chain Operations Reference model / framework)

The SCOR model is explained as a supply chain concept/framework that integrates:

• Business process performance
• SCOR/SCOR-aligned practices/implementation
• Human skills

Key points:

• Developed by an independent non-profit organization, treated as an inter-industry standard
• Standardization purpose (for SCC) is to improve understanding of supply chain management as a step toward effective and efficient management

Benefits of applying SCOR include:

• Increasing speed of system implementation
• Supporting organizational learning objectives
• Improving inventory/system change (interpreted from turnover or system change of inventory)

3) Structure of SCOR: 3 integrated elements

SCOR integrates three main management elements:

• Business process engineering
  • Captures complex processes as they are
  • Defines what desired processes should look like in the future
• Benchmarking
  • Collects operational performance data from similar companies
  • Sets internal targets based on comparisons (similar or different depending on needs)
• Management process
  • Measures, controls, and improves processes

4) SCOR scope clarification (what’s included vs. excluded)

SCOR scope concepts described in the subtitles include:

• Included
  • Model process types/categories/elements (e.g., planning, sourcing, make, deliver, return, enable)
• Excluded
  • “Activity/implementation” details such as company industry/location and specific technology used

5) SCOR process types/categories/elements (example process groups)

SCOR defines process categories (types of supply chain processes). Example named categories include:

• Plan
• Source
• Make
• Deliver
• Return
• Enable

Example deliver elements and items (as stated) include:

• Product delivery schedule
• Product transfer
• Auto payment

Category descriptions (paraphrased):

• Plan
  • Balances demand and supply to develop optimal production and delivery needs
• Source
  • Purchases goods/services to meet actual or planned demand
• Make
  • Transforms materials into final products to meet actual or planned demand
• Deliver
  • Provides finished products/services to meet actual or planned demand, including:
    • Order management
    • Transportation
    • Distribution management
• Return
  • Returns/receives products for reasons such as:
    • Unsuitable condition
    • Not matching requested type/spec
    • Damaged condition
  • Includes post-delivery customer service related to returns
• Enable
  • Prepares, maintains, and controls the information network so planning and execution processes are linked

6) Performance attributes mapped to SCOR “Level 1” metrics

SCOR uses performance attributes, which are mapped to Level 1 metrics.

Performance attributes:

• Reliability: completing work as expected
• Responsiveness: speed in completing work
• Agility: ability to respond to customer needs
• Cost: cost to carry out work
• Asset management efficiency: efficient use of assets

Level 1 performance metrics listed in the subtitles:

• Perfect Order Performance
  • Orders sent on time and with correct information per customer request/contract ÷ total orders
• Full Time / Full-Time Order
  • Time (days) from product received until received at the customer’s place
• Absentee Flexibility (as transcribed; likely order fulfillment flexibility)
  • Time (days) needed to respond to a 20% increase in production, assuming no raw material constraints
• Absenteeism (as transcribed; appears related to delivery capability under increased demand)
  • Percentage increase in the maximum number of deliveries that can be maintained/achieved within a period
• Downside Supply
  • Use of the quantity ordered within 30 days before delivery without inventory or additional costs
• Order Value at Risk / “Everest value” (as transcribed)
  • Risk management focused on the financial impact on the organization
• Total Cost to Serve
  • Direct and indirect costs across planning, sourcing, and making products/services
• Cash / Working Capital Collection
  • How working capital is used and the timing of invoice collection
• Return on Fixed Assets / Return obtained from invested fixed assets
  • Return from investment in fixed assets within the supply chain context
• Return on Working Capital
  • Investment relative to the company’s working capital position compared to income

Speakers or sources featured

• No individual speakers are named in the provided subtitles.
• SCOR / SCC / “SCC” (Supply Chain Council) is referenced as the organization behind SCOR, but no specific person is identified.