MANGT 660 (A): Supply Chain Planning and Control

Chapter 12Manufacturing Focused Supply

Chain Integration (2/2)

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Supply Chain Integration

• SC excellence cannot be achieved without an integrated SC P&C system involving:1. Information sharing across the SC• Coordination of purchasing, manufacturing, and

resource-planning information

2. Systems design and implementation of relevant processes• Example: Supply Chain Operations Reference

(SCOR) model– Provides a supply chain framework for integrating supply

chain processes with related terminology, metrics, and best practices.

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1. Information Sharing

• The 3 aspects of information sharing:1) Information-sharing support

technology2) Information content3) Information quality

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1-1. Information-Sharing Support Technology

• Investment in information technology (IT)

• Three categories based on the length of the planning periods:1) Supply chain execution• Focuses on short-term daily activities• Examples: Efficient warehouse

management, transportation management, and collaborative manufacturing

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1-1. Information-Sharing Support Technology (cont’d)

2) Supply chain planning• Focuses on medium- to long-term activities

3) Supply chain execution management• Supporting tools bridging “supply chain

execution” and “supply chain planning”

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1-2. Information Content

• Choosing the appropriate information to share

• Can be classified by content

Manufacturer

information

Distribution information

Retailer information

Supplier information

Customer information

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1-3. Information Quality

• The degree to which the information shared meets the needs of the organizations

• The 9 aspects of information quality1) Accuracy2) Availability3) Timeliness4) Internal connectivity5) External connectivity6) Completeness7) Relevance8) Accessibility9) Frequency of updates

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Information Sharing and Supply Chain Practice: Example 1

• Dell– Customer information• Direct receipt of customer order information

from website• Real time price updates• Customization

–Manufacture information• Direct sharing of order information

– Supplier information• backlog and inventory

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• Virtual manufacturing model– Outsourced more than 50% of production

capacity

• Customer information– Orders through online customer interfaces

• Manufacture information– Electronic order sharing with component

suppliers

• Supplier information– Suppliers are involved in Cisco’s product

design process

Information Sharing and Supply Chain Practice: Example 2

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2. SCOR Model

• Supply chain operations reference (SCOR) model– Integrating the business planning

function with the production function (S&OP)

– Includes customer interactions, physical transactions, and market interactions

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2. SCOR Model (cont’d)

• Supply chain operations reference (SCOR) model– A process reference model

developed by PwC and endorsed by the Supply-Chain Council (SCC)

– A cross-industry de facto standard diagnostic tool for supply chain management.

– A management tool, spanning from the supplier’s supplier to the customer’s customer

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2. SCOR Model (cont’d)

• Supply chain operations reference (SCOR) model (cont’d)– Integrating the business planning

function with the production function (S&OP)

– Includes customer interactions, physical transactions, and market interactions

– Enables users to address, improve, and communicate SCM practices within and between all interested parties in the extended enterprise

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2. SCOR Model (cont’d)

• The Benefits– Faster cycle times, less inventory– Improved visibility of the supply

chain– Access to important customer

information in a timely fashion

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2. SCOR Model (cont’d)

• Levels of the SCOR model

Level 1 (Process Types)

Defines the scope and content

Level 2(Process

Categories)Choose the Configuration of processes

Level 3(Decompose Processes)

Specify the best practices of each process

Level 4(Decompose Process

Elements)

Define practices to achieve competitive advantage

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Level 1 (Process Types)

Plan

Source(Buyer–Supplier

Relationship)

Make(Transformation Process)

Deliver(Outbound Logistics)

Business Plan

Supply Chain

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1) Plan (Planning)

• Processes intended to develop a course of action that best meets sourcing, production, and delivery requirements– Balance aggregate demand and supply to

develop a course of action which best meets sourcing, production, and delivery requirements

– Use historical data for demand forecast development

– Information gathering and re-balance supply chains in real time

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2) Source (Buyer–Supplier Relationship)

• Processes that procure goods and services to meet planned or actual demand– Connects manufacturers with suppliers

• Good practices– Use designated cross-functional procurement

team– Establish long-term supplier–buyer

relationships– Reduce the supplier base– JIT delivery from suppliers– Supplier performance evaluations and

providing feedback

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3) Make (Transformation Process)

• Processes that transform raw materials into finished goods to meet supply chain demand

• The 4 groups of practices – JIT production– Total preventive maintenance (TPM)– Total quality management (TQM)– Human resource management (HRM)

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4) Deliver (Outbound Logistics)

• Processes that provide finished goods and services to meet planned or actual demand

• Good practices– Share real-time information with supply

chain partners– JIT delivery– Using a single contact point for all order

inquiries