The recent renaming of the Council of Logistics Management (CLM) as the Council of Supply Chain Management Professionals (CSCMP) ushered in some interesting dialogue and debate within the practitioner and academic communities. At the center of this dialogue is discussion concerning the definition, scope, and conceptualization of supply chain management (SCM). While emerging definitions rightly consider it to be a cross-disciplinary concept, there is confusion regarding which organization within a business should own SCMrelated managerial decisions.
That confusion is widely evident. At many companies, departments are still operating within functional silos and managers are still performing the same logistics or purchasing activities as they were before the term "supply chain" was added to their job titles— even at companies that have reorganized functions into a single supply chain group. In fact, one researcher recently examined 50 job descriptions with the term "supply chain" in the title and concluded that only one of those positions was a true supply chain management position; all of the others focused on logistics and purchasing tasks.1 Moreover, there is still disagreement about which functions should fall under the umbrella of supply chain management. Managers at some companies, for instance, are expressing frustration that their "supply chain" organizations have been defined as extending upstream from production to key vendors, while initiatives involving finished-goods distribution are largely marginalized.
A more fundamental concern is the failure to develop clear and consistent definitions and terminology for SCM. Many practitioners and academics define supply chain terms differently, and they are still trying to sort out how SCM differs from logistics and debating which definitions accurately capture the realities of this management philosophy.2
At the same time, a number of supply chain management frameworks have been developed by various partnerships among industry trade groups, academic institutions, and supply chain consulting firms. Generally speaking, these models create a structure for organizing and standardizing processes used to manage the supply chain. They also provide a standard that facilitates communication among supply chain participants. Two of the best-known examples are the Supply-Chain Operations Reference model (commonly referred to as the SCOR-model), developed by the Supply-Chain Council, and the Supply Chain Management Institute's SCM Framework, developed by The Global Supply Chain Forum.3
The emergence of several SCM frameworks undoubtedly has supported advances in supply chain management theory and practice. But we contend that it also has added to the confusion surrounding SCM because each framework has its own terms, processes, and metrics that often compete with those of other models. We further argue that many of these frameworks are not broad enough in scope to capture the systematic, process-oriented, boundary-spanning, and strategic nature of SCM.
In this article, we examine the differences between four leading SCM frameworks, including their advantages and limitations. In addition, we propose that a critical step in closing the gap between SCM theory and actual practice would be the development of a single, unifying SCM framework that both incorporates the best aspects of the existing, widely used frameworks and addresses their current limitations.
A definition of SCM
To avoid the confusion created by multiple SCM definitions, terms, and metrics, our analysis of the leading SCM frameworks uses the following definition from CSCMP of supply chain management. In the definition below, we have highlighted the words that describe what we contend is critically important to understand: Supply chain management is not something apart from existing functionality, instead it is something that modifies existing functionality.
Supply chain management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers. In essence, supply chain management integrates supply and demand management within and across companies.
Supply chain management is an integrating function with primary responsibility for linking major business functions and business processes within and across companies into a cohesive and high-performing business model. It includes all of the logistics management activities noted above, as well as manufacturing operations and procurement, and it drives coordination of processes and activities with and across marketing, sales, product design, finance, and information technology.
Two important conclusions to be drawn from this definition are first, that SCM is a strategy, and second, that it modifies behaviors at the functional level in order to reach organizational goals. Therefore, an accurate and valuable SCM model will capture the strategic implications of SCM and how it drives functional behaviors within a company. In our view, an effective supply chain framework must support the CSCMP definition of supply chain management.
What makes an effective framework?
Supply chain frameworks establish a common language for communicating ideas, concepts, and methodologies and for discussing and documenting supply chain activities. They build a structure for modeling supply chains and communicating with participants while supporting the communication and comparison of benchmarks and best practices.
They also create a process framework linked to performance measurement (metrics) that can communicate the relevance of the SCM strategy to everyone in the organization. Without such a framework, it is difficult to capture the strategic implications of SCM, because decision makers cannot align or measure the effectiveness of actions and decisions relative to corporate strategy.
Thus, supply chain frameworks should contain certain essential attributes and functionality if they are to be effective as management tools. An effective SCM framework should:
We used these attributes as the criteria for our evaluation of four commonly used SCM frameworks. In addition to the SCOR and Global Supply Chain Forum models already mentioned, we evaluated the APQC Process Classification Framework (PCF) and the Supply Chain Consortium's Best Practice Framework. Figure 1 provides a summary of our evaluation of each competing framework, which we discuss in detail in the following sections.
The widely used SCOR-model, or Supply Chain Operations Reference-model, was developed by the Supply-Chain Council (SCC) to provide a standardized method for measuring supply chain performance and to create a common set of metrics that could be used for benchmarking purposes.4 According to the SCC, SCOR enables users to "address, improve, and communicate supply-chain management practices within and between all interested parties."5
SCOR is based on five distinct management processes: plan, source, make, deliver, and return.6 There are three "levels" of process detail in the SCOR-model (see Figure 2). Level 1 includes the "process types," usually depicted as shown in Figure 3. At Level 2, each process is broken down into "process categories," where each process type is developed and its application is specified at the task level. This level shows the organization's customized configuration of planning, enabling, and executing each process (as it applies to make-to-stock, make-to-order, or engineerto- order products) in accordance with the model's standards. For example, under "Level 1: Deliver," the drill down to Level 2 would define the organization's plan to deliver, its execution of delivery (delivering stocked, made-to-order, or engineered-to-order product), and the enablement of the delivery process through the establishment of policies and rules, management of assets, performance assessment, and so forth. At Level 3, the organization defines its operational strategy by identifying the strategic elements within each process, such as standard activities, inputs and outputs, metrics, and best practices. Level 4 and below further define the process elements by creating a hierarchy or flow of tasks and activities within each element.7, 8
As explained in the next paragraph, one of the key features of the SCOR-model is that it derives metrics that are based on performance metrics applied in levels 1 through 3. Those metrics are classified by the supply chain performance attributes of delivery reliability, responsiveness, flexibility, cost, and asset management efficiency.
The hierarchical nature of the metrics allows users to diagnose performance problems and decide on future courses of action. Level 1 metrics are cross-functional in nature and generally are meant to measure organizational performance that is tied at a high level to the organizational strategy. Because they are derived from the company's performance on lower-level metrics for individual processes, Level 1 metrics facilitate root-cause analyses. For example, the Level 1 metric "perfect order fulfillment" is calculated from the cross-functional Level 2 metrics "percent of orders delivered in full," "delivery performance to customer commit date," "perfect condition," and "accurate documentation."
The model is also highly process-focused. Users can "build" its scope to include the extended supply chain, from supplier's supplier to customer's customer. It does not, however, attempt to describe every business process or activity, including integrated crossfunctional areas such as sales and marketing (demand generation), research and technology development, product development, and some elements of postdelivery customer support. Because the SCOR-model does not include these functions, it is more limited compared to the other models we evaluated. There are other downsides to the SCOR-model. For one thing, it is much more complex than the other models we evaluated, and therefore requires a significant amount of training to understand and build the custom model. For another, benchmarking data are aligned to the framework and are only provided by the SCC to its own members. Still, the assessment phase of the model (phase two, involving the analysis and potential benchmarking of metrics) is very helpful in establishing the "as is" status of the member organizations and assists in developing the "to be" plan for supply chain users. Qualitative benchmarking, meanwhile, is linked to the member organization's custom model and is developed by the user itself.
Overall, the SCOR-model facilitates decision making and resource allocation. It also embeds the concept of continuous improvement in the user organization, which can fuel a competitive advantage if the user perseveres despite the complexity of the model.
Lastly, the SCOR-model provides a cross-industry standard application and has been readily adopted by the information technology and consulting communities. It's also well suited for electronics and consumer goods. However, the model's framework of plan, source, make, deliver, and return focuses on improving the efficiency of internal processes. Because of that, it seems to be limited to transactionbased or internally focused environments and is not supportive of organizations that are extending their view to include strategic partnerships and extended supply chain efficiency.
The SCMI GSCF Framework
The GSCF framework was developed by researchers associated with The Global Supply Chain Forum (GCSF) at Ohio State University's Supply Chain Management Institute (SCMI).9 The Global Supply Chain Forum includes noncompeting companies and a team of academic researchers who have been meeting regularly since 1992 with the objective of improving the theory and practice of SCM.10
The Global Supply Chain Forum model depicted in Figure 4 aims to highlight the fact that SCM is more broadly conceived than merely "logistics outside the company." Rather, this model reflects the belief that SCM represents a single company's orientation toward boosting total process efficiency and effectiveness across the supply chain by integrating and re-engineering eight key business processes: customer relationship management, customer service management, demand management, order fulfillment, manufacturing flow management, supplier relationship management, product development and commercialization, and returns management. Those processes apply across any network of organizations—from end user through original suppliers—that provides products, services, and information that add value for both customers and stakeholders.
The concept here is that the eight processes need to be managed and integrated, and that achieving cross-functional and cross-firm involvement is critical. Customer relationship management (CRM) and supplier relationship management (SRM) processes are the essential linkages required to facilitate the integration of supply chain members. The remaining and more traditional six processes—purchasing, production, logistics, marketing and sales, finance, and research and development (R&D)—are coordinated through the CRM and SRM linkages. Since all of the eight processes are cross-functional, every organization in the supply chain needs to be involved in the implementation of those processes. Corporate silos and functional silos within companies erect barriers to this integration.11
The framework's focus on the integration of services across various partners differentiates the GSCF model from the process focus of the SCOR-model and APQC's PCF model (to be discussed next). Because of this focus, however, the GSCF framework is less clear than the other models about the measurement of internal performance. Another drawback is that the model does not provide any benchmarking information.
Overall, the GSCF model is most applicable for advanced and efficient supply chains as an enhancement to already established internal frameworks and measurement by other means. The model would seem to be effective in organizations that have already rationalized their supply base to a few key suppliers or channel partners, where relationships between stakeholders are well-developed and strong (see Figure 5). In addition, it would appear to work better where demand variability is low and customer demand is visible.
In other words, the model supports the theory that integrated and collaborative supply chains lead to win-win relationships, resulting in improved productivity, better demand planning, reduced inventory levels, reduced cost, and higher margins. In short, the model is suited for organizations that believe that supply chain management revolves around relationship management—that the supply chain is managed linkby- link, relationship-by-relationship, and that the organizations that manage these relationships best will reap the most benefits.
The APQC PCF
APQC, a member-based nonprofit organization (formerly known as the American Productivity & Quality Center), was founded in 1977 to help organizations improve productivity and quality by providing best practice research, metrics, and measures. The mission of AQPC's Process Classification Framework (PCF) is to "establish an open, universal standard for a process framework, created by industry for industry." The framework was developed to be independent of industry, company size, or geography.12
The PCF is organized around 12 cross-organizational operating and management processes and their associated activities, as shown in Figure 6. It also has key performance indicators (KPIs) that are tied to each process and were developed by practitioners. The framework provides open-standard data for organizations to use to compare themselves against peer groups and evaluate and improve their performance.
In the context of the full enterprise, the PCF organizes its processes and activities into levels, similar to the SCOR-model. Level 0 represents the "process category" level. This is the highest PCF level and is represented in Figure 6. Level 1 represents the "process group" level within each process category; Level 2, the "process" level within each process group; and Level 3, the "activities" level within each process. PCF process categories 4.0 and 5.0 (circled in Figure 6) encompass the extended supply chain, including supply chain planning, procurement, manufacturing, logistics, and customer order management.
The chevron chart in Figure 7 illustrates levels 1 through 3 for the PCF process group 4.5, "logistics," under process category 4.0, "deliver products and services." Logistics processes (Level 2) include 4.5.1, "define logistics strategy," through 4.5.5, "manage returns: manage reverse logistics." Level 3 lists the activities that are standard to each Level 2 process. An example is "pick, pack, and ship product for delivery" under PCF 4.5.3, "operate warehousing."
Much as the Supply-Chain Council did with its SCOR-model, APQC developed standard measures for processes that are tied to the PCF. However, the APQC PCF-linked metrics are more traditionally defined in comparison to the other models we evaluated.
PCF also includes an open-standards (accessible by members and nonmembers) benchmarking database that APQC offers to all companies that contribute measurement data to their Open Standards Benchmarking Collaborative (OSBC) research. The OSBC database, which is tied to the PCF processes, enables quantitative (standard metrics and key performance indicators) benchmarking in the categories of cost effectiveness, productivity, process efficiency, and cycle time. The best practice data subsequently derived are reported to all benchmarking participants. In addition, the research derives and reports qualitative best practices that are also tied to PCF processes and activities.
It is interesting to note that APQC's PCF-linked common metrics provided the basis for the SCOR-model benchmarking for SCC members described earlier. For that project, APQC and the SCC aligned common metrics, creating a new database of metrics that are unique to the SCOR-model definitions.
Like the SCOR-model, the PCF is highly process-focused, but it is easier to understand, apply, and use. Also, as an enterprisewide framework, the PCF provides a better cross-functional view of the enterprise.
While the PCF is a standard framework applicable to all industries, it also enables industry-specific versions. Given the generic nature of the PCF, new companies can readily use it as a starting point for analyzing their supply chains. Organizations can begin with enterprisewide standard processes and measurement and later tailor them to meet specific needs through the APQC benchmarking gap analysis. Because the PCF-derived benchmarking data are neutral in regard to industry, geography, and company size, the information can be further analyzed by these peer groups for relevant comparisons. It is very useful for open-standards benchmarking participants that have modeled their processes under PCF to compare their performances with industry peers.
Moreover, because organizational strategies can be mapped into the PCF's supply chain framework, both internally and externally integrated companies can use the framework in managing their supply chains. The model is well-suited to organizations that realize the importance of strategic partnerships as well as collaboration within functions.
While the other frameworks rely more on the members of the creating organization for model development and enhancement, the PCF continues to develop based on input from both within and outside of APQC's membership. APQC acts as a neutral party, facilitating cross-industry working groups and practitioner forums as needed. The organization continuously collects inputs during working groups and through follow-ups; it then reviews, evaluates, and arbitrates suggestions and changes to the PCF and publishes revisions.
Supply Chain Best Practices Framework
The Supply Chain Consortium was established to conduct benchmarking and share best practices among its members. An advisory board comprising senior supply chain executives leads the consortium and its program and content development.
The Supply Chain Best Practices Framework was developed by the consortium in 2004 to provide an integrated structure for defining, measuring, and improving supply chain processes. Facilitated by the consulting firm Tompkins Associates, the framework establishes an end-to-end view of extended, intercompany supply chains, including vendors and suppliers, manufacturers, distributors, and end-user customers. The consortium designed the framework to enable the collection, analysis, and sharing of benchmarking and best practices information.13
The consortium model encompasses four industry-specific frameworks: retail, consumer products manufacturers, industrial and commercial manufacturers, and distributors/wholesalers. The framework covers process terms that are similar to those of the other models we evaluated, such as plan, source, make, deliver, and return. But, as shown in Figure 8, it has also modified and extended the supply chain terminology to include profile, move, store/sort, and control.
The consortium says the goal of its framework is to understand the "practical implementation" of characteristics common to "world-class supply chains," such as efficiency, velocity, reliability, collaboration, visibility, integration, and so forth. These common attributes of measurement and continuous improvement were developed from the measurement and benchmarking derivatives of the three other models evaluated. Like the APQC PCF and SCC SCORmodel benchmarking, the Supply Chain Best Practices Framework promises to be very helpful in mapping gaps and deciding future courses of action.
This model, however, appears to be mostly focused on data collection, analysis, and reporting, rather than on organizing and standardizing processes and creating a common language and structure to model supply chains. It appears to be less effective than the three others as a management tool because it is yet another version of "standards." This model obviously benefits consortium members by allowing them to conduct benchmarking among themselves. But it's questionable whether it has the ability to mesh with the more widely used standard processes and metric definitions, such as the APQC PCF or the benchmarking alliance between APQC and the SCC SCOR-model metrics.
There are other supply chain frameworks in addition to the four discussed here. A number of authors have outlined their own supply chain models in handbooks and publications. Consulting firms sometimes use their own models to aid them in carrying out assignments.
An obvious question surrounding these many models is whether standardization—and possibly even agreement on a single supply chain model—would benefit the supply chain management profession. An even more important question is whether it is even possible to develop a single, unifying SCM model, given the unique circumstances and environmental variables that exist in each supply chain. These are important questions to consider. However, we believe that an improved framework that addresses the current limitations of the existing models and includes the flexibility needed to address the differences among supply chains could have a profoundly positive impact on supply chain practice.
Before any group or organization can begin the process of developing a unifying SCM framework, it is critical to first identify what is missing from existing models and also what needs to be included in the new framework. As Figure 1 clearly indicates, the four examined frameworks have provided some guidance and support to practitioners, but each model fails to adequately fulfill all of the criteria that are necessary for a holistic framework. The new framework must therefore address the limitations identified in Figure 1. In addition, none of the models specifically explains the relationship between SCM and corporate strategy, nor do they foster a workable understanding of the interactions between SCM and functional activities. A unified framework must address this shortcoming as well.
The four models we evaluated also neglect the issue of supply chain orientation. In our opinion, SCM is an orientation, or a viewpoint, that recognizes that an organization can't go it alone and that vertical integration won't accomplish the goals of SCM. A more formal definition of supply chain orientation is "the recognition by a company of the systemic, strategic implications of the activities and processes involved in managing the various flows in a supply chain."14 When companies have a supply chain orientation, they understand that they need to leverage supply chain entities both upstream and downstream to optimize the value offered to their customers and to their customers' customers.
When this orientation is strongly entrenched, all of the company's standard functional areas and processes are structured, staffed, and measured differently than if this orientation had not been strongly embraced. Companies can still pursue specific strategies, such as a financial "lowest cost" strategy or a "market share" strategy. They will still have marketing, sales, accounting, manufacturing, human resource, logistics, and other functional areas regardless of their orientation and strategy. Each functional area, however, will act differently depending upon the degree to which it has adopted a supply chain orientation.15
We believe that a new SCM framework is needed—a model that defines this idea at a strategic level and further defines how each functional area should act in organizations that have strongly embraced a supply chain orientation. Toward this end, we present a simple model in Figure 9 that portrays supply chain orientation within a sample organization. The focus of this model is on the internal alignment of functions and activities to enhance internal process efficiency and effectiveness. Each circle represents an internal function that is responsible for all or part of the business processes identified in previous models. Because SCM requires coordination and collaboration among functions within the company, the circles in the model overlap.
Supply chain management, of course, seeks to integrate processes not only within a company's sphere of control but also across enterprise boundaries within the supply chain. Thus, supply chain management is best portrayed as the integration of processes and activities across a network of supply chain entities in order to enhance total supply chain process efficiency and effectiveness. This is another important characteristic that is missing from the current SCM models. We believe that Figure 10 captures the overlap among participants in the supply chain, and that it represents another improvement over the current, process-oriented SCM frameworks.
In our opinion, Figures 9 and 10 identify important considerations that must be included in the development of any new framework if that framework is to exert any influence on the effort to match supply chain practice with theory. Figures 9 and 10 also identify two of the most popular, and important, paths of exploration for SCM research today: one that is focused on the alignment required internally among one organization's functions, activities, and processes, and another that is focused on the alignment required externally among the functions, activities, and processes of a network of supply chain entities.
We recognize that our evaluation of current SCM frameworks and our recommendations for a new and improved framework will differ from those of many supply chain professionals and academics. We also recognize that the development of a new framework will require collaboration among a broad cross-section of organizations, trade associations, and academics. It may require the leadership of a formal professional group, such as CSCMP, to drive and manage the process. In our opinion, because of its effectiveness as a global supply chain association, CSCMP could bring a broad array of stakeholders and industry experts together to tackle this challenging task.
Ultimately, who leads the process is less important than the pursuit of a common goal: the development of a comprehensive, unifying, and commonly embraced supply chain model. If the supply chain profession can agree that pursuit of an improved SCM framework is needed and will coalesce around upcoming efforts to develop that framework, the resulting outcome will advance the profession and improve the performance of supply chains around the world.
Editor's Note: A panel discussion on this topic featuring the authors of this article has been scheduled for October 7 at CSCMP's Global Annual Conference in Denver, Colorado, USA. If you are unable to attend but wish to share your thoughts on the development of a unifying SCM model, please send an e-mail to email@example.com.
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