What you need to know about supply chain management: while there are the occasional horror stories about botched SCM implementations, if you have a good understanding of what you want to achieve and a measured approach to implementation, you can prevent the nightmare from featuring your company

Automotive Design & Production, Feb, 2005 by Lawrence S. Gould

"I wish we could ship a company a CD and that company would suddenly become an efficient supply chain leader," sighs Karin Bursa, marketing vice president for Logility, Inc. (www.logility.com; Atlanta, GA). Alas, that is not to be. Supply chain management (SCM) practitioners must invest time and effort--"sweat equity"--defining the supply chain, understanding and selecting the applicable technologies, and then managing the implementation project. Given the advances in technology, help is on the way.

START WITH A MODEL

Probably the most well-known description of supply chain business requirements and processes is the Supply Chain Operations Reference (SCOR) model from the Supply-Chain Council, Inc. (SCC; www.supply-chain.org; Pittsburgh, PA). The latest version of the SCOR model, released in June 2003, is the sixth major revision of the model introduced in 1996. The model is a broad framework to help professionals users translate business objectives to operational objectives, and those objectives then to information technologies (IT).

The bummer is that the model tends to be "trailing-edge," admits Scott Stephens, the SCC's chief technology officer. "We look at stuff pretty much after it's been released--after practitioners have had some use with it." Also, adds Andrew White, research director for SCM at the Gartner Group (www.gartner.com; Atlanta, GA), the SCOR model "doesn't give you the important stuff: What makes my business competitive?" But it's a start. Says White, "SCOR is a good leveler. It's a standard set of high-level business processes--activities within a department or domain, right down to a shopping list of metrics and key performance indicators (KPIs). It's a great way to get running very, very quickly, or maybe walking very, very quickly."

Other models exist. The lean-manufacturing folks have methodologies that help define SCM needs. So do the Six Sigma folks. RosettaNet (www.rosettanet.org), to a degree, identifies standardized processes and standardized workflows, but it doesn't identify KPIs and metrics. The Gartner Group also has a model; it's more a general business framework, versus manufacturing-specific, and it doesn't go anywhere near the detail of the SCOR model. Europeans, by the way, tend to gravitate toward the Efficiency Consumer Response Scorecard, which, points out White, suggests grocery industry supply chain requirements but it is not specific to that industry.

Applying the SCOR model to supply chain design can be automated. For example, ProVision from Proforma Corp. (www.proformacorp.com; Southfield, MI) is a software modeler for designing, defining, and analyzing business processes. The ProSCOR module of ProVision provides the high-level supply-chain definitions and best practices used by the SCC. After the SCM design phase, this same module can help tie business processes back to business objectives by providing metrics (KPIs) to measure the effectiveness of those business processes. As needed, the supply-chain model can be translated into simple English for business documentation, enterprise architecture analysis, ISO certification, and other business needs. The software can also highlight changes made between As-Is and To-Be supply-chain processes, thereby helping address process implementation issues and tasks. The module's simulator can calculate process timings, analyze activity-based costs, and identify bottlenecks, resource constraints and excessive queuing.

Of course, using the SCOR model as a standard can lead to what Stephens calls "cookie-cutter solutions." On the other hand, he notes, these solutions let supply-chain practitioners focus on customizing what they need to, to the degree they need to. "Every company will do things a little bit differently, and that's probably the way it should be because that's what provides companies competitive advantage," he says.

SAP (www.sap.com), for one, isn't knocking the cookie-cutter approach--as a first step. SAP incorporates the SCOR model's 300-plus KPIs throughout its business software, starting with the SAP Solution Manager. This software-based implementation guide lets users map almost on a one-for-one basis the SCOR model's best practices against what the users want in their SAP ERP and SCM implementations.

Once in operation, the SAP ERP and SCM systems automatically deposit the data from ERP and ongoing supply chain transactions into SAP's business intelligence applications. These, in turn, calculate the plan-source-make-deliver KPIs and deliver them to SAP's management cockpit" for role-based breakdowns of the SCOR model. So, for example, plant managers view the KPIs relevant to their jobs, sales managers view the KPIs relevant to their jobs, and so on.

BEYOND SCM DESIGN

Insofar as implementing the "M" in SCM, several technologies and IT approaches are becoming more commonplace. For instance, Logility's Lifecycle Planning Engine includes pre-trained neural networks and a number of profiles (different planning algorithms and methods) to help tune sales forecasting. Analysts would apply these profiles to specific product families or items, and then decide how granular the forecasts should get. The key here is the neural network technology. A best-practice template is just not slapped into place to manage the supply chain; instead, the neural net actually interacts with real-time supply chain information, and then decides on a course of action. The result, says Logility's Bursa, is to better "synchronize the availability of manufactured items with when you're going to need them in the marketplace." In short, to better balance supply and demand.