The SCM framework provided by The GSCF operationalizes the management of relationships in the supply chain by defining eight business processes to be implemented across organizations {Figure 2.3}. The eight business processes are:
@® Customer Relationship Management
@ Customer Service Management
@ Demand Management
@® Order Fulfillment
@ Manufacturing Flow Management
® Supplier Relationship Management
@ Product Development and Commercialzation
® Returns Management
A firm operates within a supply chain; the fact that management has not implemented formally a SCM approach does not mean the firrn operates in isolation.
Relationships with customers and suppliers exist, products are manufactured and flow to the end-customers, and some data are shared in some wary. AT present,
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some companies have formally implemented portions of this SCM framework.
Nevertheless, after some inspection, management may find that many activities performed in their companies will resemble parts of this framework. Their next objective would be, then, to formally establish the processes and extend them to key members of the supply chain in which they participate.
The framework provided by The GSCF is not the only one available. The Supply-Chain Council publishes and periodically updates the “Supply-Chain Operations Reference-model” (SCOR). Version 5.0, the latest release (°), has five business processes to be implemented first within the firm and eventually extended across the supply chain. The processes are Plan, Source, Make, Deliver, and Return [42]. Plan, source, make, deliver are the original processes and returns is an addition to the framework mentioned in Version 4.0 and described in Version 5.0.
This framework is similar to the one provided by the GSCF in some aspects.
The most relevant similarity is that the objective of the Supply-Chain Council and SCOR is to provide a standard set of business processes to facilitate coordination among firms in the supply chain. In general, SCOR is operationalized to a greater degree in contrast to the current state of develooment of the GSCF framework. For example, SCOR includes detailed metrics for the processes. The use of SCOR starts by seeking operational efficiency within the firm and it is meant to be extended to other supply chain members to achieve operational efficiency across the supply chain. Nonetheless, a review of the metrics reveals that the orientation of SCOR is internal to a single firm because, for example, there is no metric that includes considerations external to the firm. The bias toward internal operational efficiency is verbalized in the boundaries defined for the model:
SCOR does not attempt to describe every business process or activity, including: sales and
a) SCOR Version 6.0 was released a few days before the publication of this dissertation.
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marketing, research and technology development, product development, some elements of post-delivery customer support [43].
What SCOR does include is traditionally called operations management. In this case, supply chain management seems to be the new name for operations management in the supply chain.
Researchers from Michigan State University (MSU) have dedicated some efforts to SCM as well. Their initial view of SCM was:
[The extension of logistics integration]... through external integration, is referred to as supply chain management... [44].
It since has evolved to:
The scope of what is involved in a supply chain is clearly broader than logistics [45]. Supply chain management consists of firms collaborating to leverage strategic positioning and to improve operating efficiency [46].
The SCM framework suggested by scholars from MSU includes eight business processes as the foundation of supply chain management; these are: Product Design/Redesign, Process Design/Redesign, Measurement, Capacity Management, Plan, Acquire, Make, Deliver [47].
The MSU framework includes four of the five processes included in the latest release of the SCOR model (9). The process that is not included is returns, added to
b) The SCOR model has been updated periodically since its introduction in 1996. In 2000, when the description of MSU framework was published, SCOR Version 4.0 had four processes: plan, source, make, and deliver. The fifth process, return, was added to SCOR Version 5 in 2001.
SCOR Version 6.0, the latest release of the model, was published in 2003.
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the SCOR model after the article with the description of the MSU framework was oublished. The MSU frarnework, however, suggesis that SCM is a broader concept than that specified in the SCOR model by including, for exampie, product design and capacity management, These hwo processes are included in the GSCF view of SCM as product develooment and commerciaiization, and demand management, respectively, The MSU and the GSCF frameworks differ in that, for example, the GSCF members view measurement not as a process, but as a management component since it is an integral part of every process rather than an element by Hself [48].
Other authors that defined SCM as something different from operations management or logistics do not provide a framework for ifs implemeniation and, thus, ihe review is beyond the focus in this section of the dissertation.
As noted, the GSCF’s view of SCM is broader than operations management and logistics outside the firm. For example, early involvement of customers and suppliers in the product development and commercialization process is central to successful product rol-out [49] which also has been identified in the iferature [50].
Product development and commercialization affects, for exampie, demand management, order fulfilment, and manufacturing flow. In short, the product developmen process needs fo be included in the SCM framework since its effects on other processes need to be considered. Thus, a SCM framework should assist managers with the integration of all activities in the supply chain as well as show them how each business process interacts with other processes and with the corporate functions in which the functional expertise resides. Certainly, this extends beyond logistics and operations managemeni.
SUPPLY CHAIN MANAGEMENT AND THE MANAGEMENT OF LTOs
The GSCF's view of SCM is appropriate for this research given that this framework acknowledges the need for explicitly treating the management of the oy `
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demand as a business process extending beyond the boundaries of a single firm, which will enabie the implernentation of dynamic time-based postponement. This research is intended to contribute fo the further development of the SCM framework by exploring ways to implement ihe demand management process.
Figure 2.4 shows the demand managemen? process at the strategic and operational levels, the subprocesses for each level, and the interfaces with other processes. At the strategic level, management ciefines how the operational process is going to be implemented. The strategic process willbe executed at regular periods of time, or as part of changes in the environment, business practices or technology, such as the implementation of an advanced pianning system or the development of closer relationshios with customers or suppliers. The operational process is the actualization of demand management.
The demand management process is about forecasting and synchronizing [51]. Particularly, this research is part of the analysis needed al the strategic level for the subprocesses: determine forecasting approaches, plan information flow, and determine synchronization procedures. The objective of the strategic process is to provide a blueprint for implernenting the operational orocess. As part of designing the operational process, managers evaluate alternative solutions. This research can be considered ihe evaluation of one possibie way to implement ihe operational demand management process for LTOs.
Specifically, for the first subprocesses at the strategic level, determine forecasting approaches, the selection of the forecasting aigorithm itself, is beyond the scope of this research. However, this study includes recommendations about the data io input into the forecasting process and the frequency of forecasting throughout the life cycle of the LTO as well as how to extend the reach of the
“earning effect”, described in the previous section, beyond the individual firm to other members of the supply chain. Second, this research is exoected to show what information should flow across supply chain members to synchronize
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manufacturing and logistics activities. Finally, the focus of this study is the development of synchronization procedures to efficiently manage LTOs. This was accomplished by a new use of an optimization model to determine the tactical location of safety stock acrass the supply chain including the setting of inventory levels to the degree of predictability of demand and the risk associated with oroducis becoming obsolete.
Finally, it is worthwhile to note that this research would be less interesting if the setting was not a supply chain formed by a set of independent organizations.
The objective of this research ts not only to find the most efficient solution given the network structure, Dut to investigate the managenal challenges and concerns a holistic analysis presents to the members of ihe supply chain.
Insummiary, the key issues identified in the section Supply Chain Management in which the conceptual develooment of dynamic time-based postponement stems from are:
@ SCM is about managing the relationships across members of ihe supply chain.
@ One of the SCM processes is demand management which is about forecasting and synchronizing.
@ Demand management has potential to extend the “learning effect” beyond the single firm and, thus, to assist in the management of LTOs.