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ADVANCE SUPPLY CHAIN MANAGEMENT By

Dr. p.n.mukherjee
MODELS & ADVANCED PLANNING : SUPPLY CHAIN OPERATIONS REFERNCE (SCOR) MODEL :

SCOR Model is developed by the Supply Chain Council (SCC) founded in 1996.

SCOR is a Tool for REPRESENTING, ANALYZING & CONFIGURING

Supply Chains.

SCOR designs and determines the CORE PROCESSES to achieve the DESIRED

PERFORMANCES and remove the BOTTLENECKS.

SCOR formulates Standardized Terminology, Standardized Process Definitions,

Metrics and best Practices for Modeling and Configuring the Supply Chains.

SCOR MODEL
Supply Chain Entities are analyzed by using common Entities known as

METRICS which are common KPIs or Key Performance Indicators. SCOR model uses Standardized Terminology defines & unifies used Terms which improves the Communication between Entities of a Supply Chain. There are about 120 such Process Terms defined in the glossary of the SCC. SCOR model develops the Supply Chain from the Suppliers suppliers to the Customers Customers. SCOR model breaks up the entire Supply Chain into various sub-Processes of Suppliers Interactions, Physical Material Interactions, The Conversion Process inside the organization, Customer Interactions as well as the Market Interactions

of the Demand Fulfillment.

Standardized Definitions of SCOR Model:


ACTIVITY is a single Step in fulfilling an Accomplishment. TASK consists of Several Activities. PROCESS- is a complete Sequence of Activities to accomplish an End Objective

w.r.t. the content & Time (a Customers Order). BUSINESS PROCESS- is a Process related to Business Objectives/ Targets. CORE PROCESS- is a Value addition Process by Conversion for creation of the Business Out put of Products/Services. SUPPORT PROCESS- is a Process that is necessary to execute the Core Process. BEST PRACTICES- a Recognized & Proven best Management Method and Practices for Designing & Performing a Process. REFERENCE MODEL is a Generic Recipe for Software Engineering or Process Development for the effective & efficient performance of a Business within a Specified Domain. Bill-of-Materials (BOM) is a Structured List of all the Parts or Materials needed to produce a particular Finished Product, assembly, sub-assembly, manufactured or purchased Part. Deliver Stocked Product - The process of Delivering a Product maintained in a Finished Goods State prior to the receipt of a firm Customer Order. Plan & Build Stock Transportation Modes are selected and efficient Loads are built.

LEVELS OF SCOR MODEL :


THE STANDARD PROCESSES ARE DIVIDED INTO THREE HIERARCHICAL LEVELS : LEVEL 1 PROCESS TYPES. LEVEL 2 PROCESS CATEGORIES. LEVEL 3 PROCESS ELEMENTS .

S U P P L SOURCE I E R S

PLAN

MAKE

DELIVER

C U S T O M E R S

RETURN
SCOR- models level 1

RETURN

SCOR Model Level 1 :


This is PROCESS TYPES Model comprising both the OPERATIONAL &

STRATEGIC Activities. There are FIVE Elementary Processes in Supply Chain : a. PLAN : is a Process for Demand & Supply Planning and balancing. Strategic issues are Make or Buy decisions, Resource & Capacity Planning & Supply Chain configuration. The Operational Issues are Demand Planning, MRP & DRP. b. SOURCE Process required to procure PRODUCTS & SERVICES to meet Current & Planned DEMAND. Strategic issues are Vendor Management decisions & Sourcing quality. The Operational Issues are Ordering, receiving, inspection, holding & issuing materials & components. c. MAKE - Process that transforms Materials, Intermediaries and Products in their next State meeting Planned and Current Demand. Strategic issues are Engineering Design, Facility Planning etc. The Operational Issues are requesting & receiving materials, manufacturing Products, Testing & Packaging i.e. Production Execution. d. DELIVER Processes that provide Products & Services of the right quantity at the right Time and Right Place. Strategic issues are deciding on Mode, Cost & Time

of Transportation, Distribution Management decisions etc. The Operational Issues are receiving, entering & maintaining Orders, Product, their status, Warehousing, Packaging, Invoicing, Payment Collection etc.

e. RETURN - Process that manages the Returns of Products or intermediaries for further processing at the organization. The Strategic issues are decision on Reverse Logistics, Recycling of Packaging Materials, Value added Services to Customers on the Products/ Intermediaries supplied by them. The Operational Issues are returning or providing Raw Material to Suppliers, obtaining Rejected products or intermediary product for further processing & their Transportation, Warehousing & Packaging.

SCOR Model Level-2


S P1: Plan supply chain C PLAN U U P P2: Plan source P3: Plan make P4: Plan deliver P5: Plan return S P L T DELIVER I D1: Deliver stocked product O MAKE SOURCE E S1: Source purchased products M1: Make-to-stock M D2: Deliver make-to-order product R S2: Source make-to-order E Products M2: Make-to-order D3: Deliver engineer-to-order S S3: Source engineer-to-order
product M3: Engineer-to-order

SOURCE RETURN
R1: Return defective product R2: Return MRO product R3: Return excess product

R S DELIVER RETURN
product

R1: Return defective product R2: Return MRO product R3: Return excess product

ENABLE PLAN

SOURCE

MAKE

DELIVER

RETURN

SCOR Model Level 2 :

The Five Process Types of Level 1 are divided into 20 Process Categories integrating Suppliers and Customers with the organization and eliminating duplication/overlapping of the Activities and Processes. Each Process categories belongs to one of the Types : PLANNING It balances the Supply & Resources to the Demand in an Planning Horizon. It should incorporate the Supply Chains Flexibility to the Change in the Demand. EXECUTING It is the CORE Process incorporating Scheduling, Sequencing, Transforming and Transporting Materials, Products & Services on a defined Time Scale. ENABLING It is a Support Process to the Planning & Executing including flow of information & interfacing between the processes and instrumental in increasing the Efficiency & Effectiveness of the Processes.
SCORs level 2 metrics example P1: Plan Supply Chain
Performance attributes Reliability Metric Forecast accuracy Delivery performances to customer request date Fill rate ReRe-plan cycle time Cumulative source/ make delivery time Demand/ supply planning cost Sales per employee Return on assets Capacity utilization Inventory days of supply CashCash-toto-cash cycle time

Flexibility Responsiveness Cost Assets

SCOR Model Level 3 :


The Focus at this level is the PROCESS ELEMENTS. PROCESS CATEGORIES are decomposed into PROCESS ELEMENTS. Detailed Metrics & Best Practices are incorporated in the SCOR Model in a

logical sequence in the Input-Output Model.

SCC gives following definition for this Process Category & the Process Elements :

P1.0 Development & establishment of the Courses of Action over specified Time period that represent a Projected appropriation of Supply Chain resources to meet Supply Chain Requirements. P1.1 Process of identifying, prioritizing & considering as a whole with constituent parts, all sources of Demand in the Supply Chain of a Product or Service. P 1.2 - Process of identifying, evaluating & considering as a whole with constituent parts, all things that add Value in the Supply Chain of a Product or Service. P 1.3 - Process of Development & establishment of the Courses of Action over specified Time period that commits Supply Chain resources to meet Supply Chain Requirements. P 1.4 - Establishment of the Courses of Action over specified Time period that represent a Projected appropriation of Supply Chain Requirements. The input output streams of a Process Element are not linked to other Process Elements. However Brackets indicates the corresponding Supply Chain Partner, Process Types, Process Categories and Process Elements from where the information or the Materials comes.

TYPES OF PROCESS CATEGORIES Plan Planning Executing Enabling EP P1 Source P2 S1S1-S3 ES Make P3 Deliver Return P4 P5

M1M1-M3 D1D1-D3 R1R1-R3 EM ED ER

METRICS & BEST PRACTICES : The SCOR Model ensure Performance Measurement at each Level. Level 1 provide an Overview of the Supply Chain to Evaluate the Management. Metrics are Reliability in terms of Delivery performance and perfect order fulfillment, Responsiveness and Flexibility in response time and customer urgencies related to Customers. Internal Metrics are the Minimum Wastages, Cost, Value addition, Return on Investment, Employee attrition rate etc. The Metrics are divided into two categories EXTERNAL or CUSTOMER DRIVEN & INTERNAL or MANAGEMENT DRIVEN.

was selected corresponding to the Process Categories and Process elements In 1997, An Integrated Supply Chain Benchmarking Study was conducted for the SCC members. The associated Best Practices to help the members of SCC and other organization in similar Industry to improve the Supply Chain Performance to the World Class Level.

CUSTOMER DRIVEN is subdivided into Reliability, Flexibility & Responsiveness & INTERNAL is subdivided into the Cost & Assets.

(Customer) Customer requirements (D1.3, D1.10) Order backlog, shipments (EP.3) Planning data (EP.9) Revised aggregate forecast and projections, revised business assumptions P1.1
Identify, prioritize, & aggregate supply chain requirements

(EP.1) Planning decision policies (EP.2) Supply chain performance improvement plan (EP.4) Inventory strategy

P1.3
Balance supply chain resources with supply chain requirements

P1.4
Establish and communicate supply chain plans
Supply chain plans (P2.1, P3.1, P4.1) (Customer)

P1.2
Identify, assess, and aggregate supply chain resources

(P2.4) Sourcing plans (EP.5, EP.6) Projected internal & external production capacity (P3.4) Product make plans (EP.5, EP.6) Revised capital plans (P4.4) Delivery plans (EP.5, EP.6) Outsource plans (EP.3) Planning data ( EP.8) Regulatory requirements (Customer) Inventory

Example of SCOR- models level 3

PROCEDURE FOR APPLICATION OF SCOR MODEL IS IN FOUR STEPS : 1. Analyze the Basis of Competition This is based on Level 1 of SCOR Model. These Metrics are entered in the Supply Chain Score Card with the current position along with indication of the Aspired Competitive Position. A preselection for detailed Modeling & Analysis is made. 2. Configure the Supply Chain This is done in SEVEN STEPS. Define Business Unit. Geographically place Entities that are involved in Source, Make, Deliver & Return Process Types. This includes Suppliers, the Organization & its

PROCEDURE FOR APPLICATION OF SCOR MODEL :

Customers. Enter the MAJOR FLOW OF MATERIALS as directed arrows between location of the entities. d. Assign and link Source-Make-Deliver & Return processes to each location using second levels Process Categories. Define Partial Process Chains of the Modeled Supply Chain. A partial Process chain is a sequence of processes planned by a single P1 planning Process Category. Enter Planning Processes ( P2 P5) using dashed lines between Processes of Planning & Execution. Define a Top Level P1 Planning Process i.e. a Planning Process Category coordinating two or more Partial process Chains. 3. Align Performance level, Practices & Systems Critical Process categories of Level 2 can be detailed in level 3. At this level the most differentiated Metrics and the Best practices are available. Thus detail Analysis & Improvements of Process Elements are carried out for better efficiency. 4. Implement the Supply Chain Processes & Systems Even if this level is not part of the SCOR Model still continue to use the Metrics of the SCOR Model. The Metrics provide Data for the Internal & External data for Benchmarking Studies to measure and document consequence of change processes within a Supply Chain.

SCOR MODEL is an excellent Tool to Analyze, Visualize & structure the Supply Chain to find out the scope of improvements in terms of the redundancies and weaknesses leading to the STRUCTURAL CHANGES & STRATEGIES TO IMPROVE THE PERFORMANCE OF A SUPPLY CHAIN TO A WORLD CLASS LEVEL & SUSTAIN THERE.

SUPPLY CHAIN TYPOLOGY :


Supply Chain Typology helps the SCM Planning Process. It helps to identify the type of decision problems facing the Supply Chain and guide the selection of Standard & Specialized Modules, Models and Algorithms for the Decision Support. The Functional Attributes of the Supply Chain Typology is grouped into Four Categories : PROCUREMENT TYPE. PRODUCTION TYPE, DISTRIBUTION TYPE & SALES TYPE.
Functional Attributes Of A Supply Chain Typology
Categories Procurement type Attributes Number and type of products procured sourcing type Flexibility of suppliers Suppliers lead time and reliability Materials life cycle Organization of the production process Repetition of operation Changeover characteristics Bottleneck in production Working time flexibility etc. Distribution structure Pattern of delivery Deployment of transportation means Loading restrictions Relations to customers Availability of future demands Demand curve Products life cycle Numbers of product types Degree of customization BillBill-ofof-materials (BOM) Portion of service operation

Production type

Distribution type

Sales type

Advanced Planning System APS.

Planning is the decision making process of identifying & evaluating the Phases/steps of APS-

alternatives of future Activities and their sequential arrangement and selecting the Best one for accomplishment of the end objectives.

Recognition & Analysis of a Decision Problem Defining the end objectives. Forecasting the Future Developments. Identification & Evaluation of the Feasible & best activities & Solutions. Interlinking them on a time scale. Selection of the best Solution to achieve the end objectives in Time.

FLOW OF GOODS

Procurement

Production

Distribution

Sales

Long Term

Mid Term

Short term Flow of information

Supply Chain Planning Matrix

Procurement Planning

Long Term

Materials program Supplier selection Co-operations Personnel planning Material requirements planning contracts

Mid Term

Short - Term

Personnel planning Ordering materials

Production Planning

Long Term

Plant location Production system

Mid Term

Master production scheduling Capacity planning Lot-sizing Machine scheduling Shop floor control

Short - Term

Distribution Planning

Long Term

Physical distribution structure

Mid Term

Distribution planning

Short - Term

Warehouse replenishment Transport planning

Sales Planning

Long Term

Product programme Strategic sales planning

Mid Term

Mid-term sales planning

Short - Term

Short-term sales planning

Coordination and data flows of APS modules


procurement
Long-term
Configuration

production

distribution

sales

Strategic StrategicNetwork NetworkPlanning Planning


Simulation results Long-term forecast Forecast Capacity booking Distribution quantities and allocation Forecast

Mid-term
Purchasing quantities

Master MasterPlanning Planning


Capacity booking Stock levels

Demand Demand Planning Planning

Short-term

Purchasing Purchasing & & Material Material Requirements Requirements Planning Planning
Due dates

Production Production Planning Planning


Lot-sizes

Lot-sizes

Distribution Distribution Planning Planning


Transportation qualities and modes
Current orders

Scheduling Scheduling
Due dates

Transport Transport Planning Planning

Demand Demand Fulfillment Fulfillment & &ATP ATP


Supply

EnablerEnabler-KPIKPI-Value network
APS Enablers
synchronization of purchasing decisions and order promising based on forecast/ATP simulation of additional receipts / re-scheduling of orders creation of feasible master plans considering all constraints collaborative forecasting based on consistent, transparent forecast database

Logistics KPIs

Value / ROA

On Time Delivery

Revenue

Order Lead Time Expenses Inventory Turns Assets Forecast Accuracy

Integration of several OLTP systems:

Central Unit APS

Entity A OLTP

Entity B OLTP

Entity C OLTP

Integration of Data Warehouse :

DW
OLAP Tools

APS :
Model Building

Historical Data

KDD & Data Mining Tools. Time Series Analysis.

KDD- Knowledge discovery in Databases.

Software Modules of i2 Technologies Five. Two :


Software Modules of i2 Technologies Five. Two :
PROCUREMENT
LONG TERM

PRODUCTION

DISTRIBUTION

SALES

SUPPLY CHAIN STRATEGIST

MID TERM

SUPPLY CHAIN PLANNER DEMAND PLANNER FACTORY PLANNER TRANPORTATION MODELER OPTIMIZER MANAGER

SHORT TERM

OPTIMAL SCHEDULAR

DEMAND FULLFILLMENT

SUPPLY CHAIN STRATEGIST Supports Strategies across the entire Supply

Chain. The optimal combination of various Resources & other entities as well as Material Flow with related costs & constraints can be modeled under different scenarios. DEMAND PLANNER Increases Forecasting Process accuracy through Statistical methods with Causal factors & multiple inputs from different organizational locations with data integration. The demand Planner Module with PRO (Product Relationship Object) creates the dependent forecasts. SUPPLY CHAIN PLANNER- enables Modeling & optimizing Supply Chains w.r.t. Material, Capacity, Transportation & Customer Service Constraints. It generates optimized feasible plans across several factories & independent ERP system. The Strategy Driven Planning SDP enables Planners to formulate strategies to solve problems.

FACTORY PLANNER Generates the PRODUCTION PLAN with minimum

Cycle Time with backward Scheduling & ATP. Material & Capacity constraints are dealt with Constraint Anchored Optimization. OPTIMAL SCHEDULER Manages the complex Manufacturing environment with detailed Scheduling & sequencing based on genetic algorithms. Decoupling of Constraint definitions and optimization algorithm handles large number of complex

TRANSPORTATION MODELER, OPTIMIZER & MANAGER - Plans

Constraints.

&designs the Distribution Planning Process. Transportation Modeler utilizes the Transportation network efficiently. Transportation Optimizer automatically builds & routes Loads and determines Pick-up and delivery times w.r.t. delivery, equipment & Personnel constraints along with cross docking opportunities. Transportation Manager execute & manage Transportation process from Order Management through Customer Service and Financial Settlement.

FEATURES OF i2 FIVE.TWO.
0 CONTENT SOFTWARE Administers common language across Supply Chain

& develops Catalogs for Standard data, analyze Companys Data Management & provide Classification schemes for legacy system data spanning over several different systems. Coordination of Modules- Data Integration is done by i2 Operational Data Storage (ODS). ODS data warehouse incorporates all Planning relevant Data, connect all Planning Module and support data exchange between Modules.

SYSTEM INTEGRATION The Web Methods i2 Integration platform links

Business Processes, Enterprise & Legacy applications, Data Bases and Work Flows both within and across Enterprises.

I2 Collaboration Modules :

Contains Right Works added e-Procurement Technology & Transaction capability provides Strategic Sourcing, Collaborative design & Manufacturing and collaborative e-Procurement for both the Direct and indirect Goods. It also enables multi Enterprise real time Pricing, availability, order brokering, multi language and currency transactions. Collaboration Planner is used to integrate the Suppliers and Customers into the Planning Process thro an Internet based Platform. CUSTOMER RELATION SHIP MANAGEMENT (CRM)- Downstream the Supply Chain CRM maximizes Customer Service by ATP, Demand fulfillment, optimum product & service parts availability thro Order management, monitoring, tracking with Inventory Collaboration with DRP.

SUPPLIER RELATION SHIP MANAGEMENT (SRM)-

SOFTWARE MODULES OF J.D. EDWARDS ADVANCED PLANNING


SOFTWARE MODULES OF J.D. EDWARDS ADVANCED PLANNING
PROCUREMENT
LONG TERM

PRODUCTION

DISTRIBUTION

SALES

STRATEGIC NETWORK OPTIMIZATION

MID TERM

PRODUCTION & DISTRIBUTION PLANNING (PDP) DEMAND PLANNING ( DP) PDP ORDER PROMISING

SHORT TERM

PRODUCTION SCHEDULING .PROCESS (PSP)

DISCRETE

SOFTWARE MODULES OF SAP APO


SOFTWARE MODULES OF SAP APO
PROCUREMENT PRODUCTION DISTRIBUTION SALES

LONG TERM

NETWORK DESGN

MID TERM

SUPPLY NETWORK PLANNING DEPLOYMENT AND TLB ( Transport Load Builder) TP/VS Transport Planning Vehicle Scheduling DEMAND PLANNING

SHORT WORKBENCH TERM

PURCHASING

PRODUCTION PLANNING AND DETAILED SCHEDULING

GLOBAL ATP Available to Promise

SAP APO Advance Planner & Optimizer:


APO is a fully integrated APS Advance Planning Software System developed in

1998 by SAP AG , Walldorf, Germany. NETWORK DESIGN Strategic Network Planning Task assign, open and close location within the Supply Chain using Demand data from Demand Planning Module. Distribution Centers to Customers are assigned based on the Distance & Cost. It covers Transportation, Storage, Handling & Production. DEMAND PLANNING- In addition to Statistical Methods it provides Promotion planning Tools, Life Cycle concepts, input data variations, new Product initiations & Collaborative Forecasting. It has OLAP tools for Dat Warehouse integration. SUPPLY NETWORK PLANNING- provides Planning & Optimizing functions considering Capacity Constraints & Costs thro Linear & Mixed Integer Programming Models using ILOG CPLEX for the solution. It also contains Modules deployment, Transport Load Builder & VMI (Vendor Managed inventory.
GLOBAL ATP performs multi level component & capacity check based on

current data. It provides product substitution methods, alternative site selection for

Production & Purchasing and methods for allocation of Products & Components to Customers, Markets and Orders etc. PRODUCTION PLANNING & DETAILED SCHEDULING- provides optimization methods for Capacity and Material planning with multi level Forward & backward scheduling using different constraints in simulation & interactive scheduling. DEPLOYMENT & TRANSPORT LOAD BUILDER (TLB)- Allocates Inventory by matching actual supply to Planned Supply, by Push & Pull strategies, predefined Quotas & priority rules. Transport load Builder ensure that Vehicles are loaded within a specified minimum & maximum range to derive a feasible deployment plan respecting vehicle loads.
TRANSPORTATION PLANNING & VEHICLE SCHEDULING

TP/VS This is SAP APOs short term Planning Module for Transportation Process. On basis of daily shipment Plans optimal Vehicle loadings & Routings can be derived. This model allow inclusion of multiple pick-ups, deliveries, multiple depots, time windows & changes of existing Plans. PURCHASING WORKBENCH is used to make automatic decisions on multiple Supply Sources and replenishments. COORDINATION AND INTEGRATION OF SOFTWARE MODULES APO offers a graphical user interface , the Supply Chain Cockpit , an overview of Supply Chain from which all APO liveCache software modules can be accessed. The Alert Monitor gives timely warning Signals. The Supply Chain Engineer graphically build a Macro Model of Supply Chain.
SYSTEM INTEGRATION & COLLABORATION- APO provides two

different options for integrating OLTP System. The Core Interface (CIF) allows direct access to SAP R/3. The other systems can be integrated thro Business

Application Programming Interfaces (BAPI).

SAP uses Internet and associated Technologies such as XML for collaboration between Business Partners.

EDLP (Electronic Data Processing on line):


ECR
Logistics Efficient -Replenishment - Unit Load Improvement Quality Cost-Time
Marketing

S U P P L Y Technology

D E M A N D

Efficient.. -Store Assortments - Promotions -Product Introductions Improvement Turnover - Profit

EDI Data Warehouse


Possible savings by complete implementation : $30 per year !

Bar Code, RFID POS-Scanning