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Unit 13: Supply Chain Management and JIT

One difference is that these resources may not be owned by the same firm. It is possible for the Notes
output of an entire supply chain to be limited because one firm does not have capacity to meet
surging demand. It is also possible for every firm in the supply chain to be operating at a low
utilization because there is not enough demand in the market for the products from the supply
chain. There are bottlenecks inside the supply chain just as there are bottlenecks inside firms. To
properly manage the supply chain, its members must be aware of the location of their bottlenecks
internally and also of the bottlenecks in the supply chain.

13.6.2 Basic Understanding of the SCOR Model

The Supply Chain Operations Reference model (SCOR) has been developed by the Supply Chain
Council as the cross-industry standard for supply-chain management. The SCOR model is based
on a benchmarking process and used to measure the performance of an existing supply chain
and its related processes. It covers customer interactions from order entry through paid invoice,
product transactions and market interactions from understanding demand to fulfilling individual
orders.

The SCOR model, whose conceptual framework and linkages are shown in Figure 13.5, is a
process reference model that expands to analyze processes involving cross-functional activities.
It looks at five distinct management processes that constitute the basic elements of a value chain:
1. Plan: Processes that balance aggregate demand and supply to develop a course of action
which best meets sourcing, production and delivery requirements;
2. Source: Processes that procure goods and services to meet planned or actual demand;
3. Make: Processes that transform product to a finished state to meet planned or actual
demand;
4. Deliver: Processes that provide finished goods and services to meet planned or actual
demand, typically including order management, transportation management, and
distribution management and,

5. Return: Processes associated with returning or receiving returned products for any reason.
These processes extend into post-delivery customer support.

Figure 13.5: The SCOR Model

The model uses a four-level pyramid; Process-Type Level; Configuration Level; Process Element
Level; and Implementation Level - that defines the steps a company needs to take to measure
and improve supply chain performance.

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