Putting an end to islands of manufacturers
A new paradigm integrates the planning processes of manufacturers, their customers, and suppliers to create a finely tuned product flow that cuts costs and boosts productivity.
By Staff -- Modern Materials Handling, 2/1/1998
For the typical manufacturer, it's not easy to consistently make high-quality product on schedule.To begin, there always seems to be something that happens out on the shop floor. It could be late deliveries, materials shortages, or unexpected equipment down time, to name three common obstacles.
Meanwhile, manufacturers try and make best use of their manufacturing capacity by forecasting and planning demand for their products. However, much of that gets done with little input from customers and suppliers.
For the consultants at Pittiglio Rabin Todd & McGrath (PRTM) in Weston, Mass., this manufacturing-centric approach to the supply chain seemed ripe for improvement about two years ago.
"We started looking for levers that could streamline the ways that companies worked with each other," says PRTM director Bill Helming. The firm's practice focuses on manufacturers in the computer, telecommunications, life sciences, general industrial, and chemical industries.
What they wound up with was a framework now known as the Supply Chain Operations Resource (SCOR) model. It was developed with input from top executives at more than 75 major manufacturers and the market research firm, Advanced Manufacturing Research (ARM) in Cambridge, Mass.
But the effort didn't stop there. Those 75 companies also formed a group called the Supply Chain Council, an independent not-for-profit corporation. Over 200 manufacturers, including some of the best known names in America, are charter members of the Council, headquartered in Pittsburgh.
At the group's conference held in late November, there was much discussion about how the SCOR model can be used to streamline the manufacturing supply chain. Helming estimates that between 50 and 100 companies are already using the model.
As the artwork on the previous page shows, manufacturers tend to manage their manufacturing operations as if they were islands. Activities between companies such as the flow of materials, products, and information are not coordinated. Joint decision making is nearly impossible if not unheard of.
The SCOR model, explains Helming, broadens the perspective of all companies in the supply chain. Rather than putting the emphasis on the supplier/manufacturer/customer segments, SCOR shifts the focus to the four processes that are part of each stage of the supply chain for each company.
The first process is planning. The other three are called source, make, and deliver. Each time a supplier and customer trade materials, products, and related services, all four processes are involved.
By planning demand and supply cooperatively, suppliers and customers create much improved visibility of materials and information at each stage of the supply chain. Beyond managing relationships between suppliers and customers, planning manages the source/ make relationship as well as the make/deliver relationship.
According to the model, the source process includes activities to obtain, receive, inspect, hold, and issue materials. The make process focuses on production activities while the deliver process includes order, warehouse, and transportation management.
Phil Schoepke, also of PRTM, points out that SCOR does not offer a point-of-view about the best way to manage the supply chain. Instead, it is designed to help companies find inefficiencies and improve their practices.
To help with that, the model offers additional levels of detail for each of the processes.
The make process, for instance, is broken into five different types of manufacturing from make-to-stock to engineer-to-order for process and discrete industries.
For each of the five types of manufacturing, the model offers performance attributes and potential measures manufacturers can use to assess their operations. It also offers some best practices.
The artwork on this page details the six major elements within the make process. At the front end, various information links are made to the other processes to initiate production. This information is used in stepping through the make process until product is ready for shipment. That information can be used to guide future production as well as planning for the source and deliver processes. Additional details are available on the Internet at www.supply-chain.org.
"The real value of the model," says Schoepke, "is to let people break down manufacturing into its components and evaluate the efficiency and contribution of each to the supply chain. When they do this, people will see that the supply chain is much more than just what happens on the shop floor."
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