“Deliver” Management on SCOR Model (1)

“Deliver” Management on SCOR Model (1)

By: Wibisono Adhi

In manufacture industry, speed is one of the most important elements to support business process. On time and in full delivery usually become the common customer points of interest that will determine business success to satisfy customer expectations. The main point of delivery management system is to provide reliable delivery process that meet customer and company expectation with reducing delivery cost as low as possible. In order to provide reliable delivery process, there are so many variable and factors which may affect the quality of the delivery process. Those variable and factors may come from internal or external of the company. Those are always related to all stake holders especially partners or the customers itself. They need serious attention from company management. There are at least 5 points that would make a difference in delivery process management which are network design, decoupling point, incoterms, transportation, warehousing and reverse logistic. 

Network design allows selecting the most cost-effective solution to meet customer requirements. For example with network redesign there can be cost reduction, less average distance to customers, and less carbon footprint. This efficiency may be conduct just only by rearranging the distribution line or merely put additional distribution center. With a proper network design it may give a better service level, optimizing a network and reduce distribution cost. Factories, warehouse, and transportation have often already been optimized individually, but in global perspective these partial optimization may not be (and is not likely to be) a global optimum. By enlarging the optimization scope, distribution managers can emulate to lever from bigger perspective for example by optimizing product synergies, it also helps to solve volume issue and transportation cost issue or others. Network optimization starts usually with customers’ requirements, so it always takes into accounts services and lead time. The global optimization is heavy, recurrent, and significant approach, which requires good modeling of flows together with storage and transportation cost. 

Network optimization can be done at three levels. The first level that I like to point out is on strategic level. On Strategic level it is all about position of nodes and arcs. Strategic choices will define long term investment (usually 10 years or 5 years planning). Some question need to be answered considering given service offering and volume forecast. The question such as where factories and warehouses should be located to meet current and future requirement of target market, which assets/means should be put in place to best utilize transportation modes between network nodes, and how to find synergies with other flows. Although the business planning is made for a long term, these questions can be considered each year, or whenever necessary. For example to follow an acquisition, with additional resource a network modification is always possible as long as it is still coverage within company’s master plan. Next level that not less important is network optimization on tactical level. On this level of management, planning activity is made based on actual business event. Tactical choices determine how the define network is operated. Tactical choices such as which factory/warehouse will serve which customers, where the backup scenarios are (e.g.; in case of shortage or transport limitation), how company manage volume variation in the network, which level of flexibility should be put in place and how it is implemented, which transportation mode should be used on a given route. This level calls for the use of shop-floor scheduling rules and manufacturing tradeoffs. On the last layer, operational level, it is order execution optimization. Some points which able to be optimized are order preparation, order size and frequency trade off (EOQ), choice of the best transportation mode, joint shipment delivery scheduling, organized response to random events, information feedback, and performance measures. This optimization supported by the rigorous application of management of management rules defined during strategic and tactical optimizations. 

Management of the information flow is the key to optimization at tactical and operational levels. On tactical process MRP, MPS, and DRP are best be done using factory programming, while business transactions such as order, shipping and invoice handling may be improved adapting to external stakeholder. A key success factor is visibility, i.e. access by all supply chain actors to the same relevant and up to date information. Although different actors manage each optimization stage, a supply chain managers is a natural link between all stages. Sometimes we will not find any team in a company merely focusing on strategic, tactical or operational level. Nevertheless, a team will be formed to take care of specific task such as network optimization unit, supply planning unit, and shipping unit.