Watching a conductor sway his baton to embellish the music is rather satisfying. The sound produced by the various sections of the orchestra moves people to tears. These tears are of happiness though, unlike the ones you would have when you are forced to experience a supply chain gone haywire. The various logistic, booking, order fulfillment, warehouse management, sales operation, purchasing and supplier systems & teams are similar to the orchestral sections that work in tandem to create something valuable your organization. Aspects that are worthwhile for any organization, such as yours, are increased revenue through perfect order rates, reduced inventory and reduced inventory cycles which subsequently leads to reduced costs. Now you must be wondering how can these be achieved?
Yes, your organization can improve its revenue through Supply-Chain Organization Reference (SCOR). This reference model is the standard diagnostic tool for supply chain management. SCOR is made up of five distinct management processes and encompasses the back and front-end supply chain.
- Suppliers Supplier
- Supplier – Internal or External
- Your Organization
- Customer – Internal or External
- Customers Customer
These five processes will effectively bring the following advantages to the organization:
- Improve operating income
- Improve service
- Increase profit through continuous supply chain improvement
- Improve return-on-asset for fixed asset technology investments
- Reduce costs
For any orchestra to play a moving symphony, they would require months of rehearsing. The conductor uses this time to understand which sections can improve.
Similarly, a supply chain head in any organization, with the help of supply chain dashboards and a robust supply chain strategy, can use key KPIs of the SCOR framework to understand which systems and teams need improvement. The Key Performance Indicators are:
- Perfect Order Fulfilment
- Order Fulfilment Cycle Time
- Supply Chain Management Cost
- Cost of Goods Sold
- Cash-to-Cash Cycle Duration
- Forecast vs. Inventory
These KPIs are further broken into smaller manageable KPIs. For example, supply chain management cost could be broken down as cost to return, cost to source, cost to deliver, cost to plan. These have been done so that a detailed analysis is possible.
The KPIs can be implemented by using business intelligence tools such as Power BI, Birst, Qlik Sense, among others. A logical model for SCOR could look like:
This model should be physically implemented where integration of various systems to a central data warehouse in Microsoft stack, or Network BI in Birst, or InMemory Model in Qlik, is possible. These can be implemented using a physical architecture as:
Being a closely knitted organization is imperative to be successful. Ideally, delivery of these reports should be across your organization, from top executives to members of the ground team (Operational Users). This would enable everyone involved in the processes to maintain clarity on your organization’s supply chain operations and have a single version of the truth than having multiple report layers which are inconsistent. Another aspect that is crucial to smooth supply chain operations is the mode of delivery of these reports.
It is also important to provide executives with access to KPI’s on Mobile devices with collaboration features, operational users with access to the reports on their mobile devices or surfacing data using Chatbots enabling them to have information at their fingertips from the Datawarehouse or other Line of Business systems. The information analyzers can be given a robust capability of creating their respective reports and they can also enable data integration to create data mashups with data from market research or data in spreadsheets, or work with statistical tools such as R, to create their own predictive models.
The supply chain organization reference framework helps your organization to function with efficacy. KPIs offer you a checklist to go by and reports help in analyzing various strategies – two aspects that help your framework run smoothly. I can already hear the symphony being played loud and clear, thanks to the quick optimization of your supply chain using SCOR.
If you are keen to learn more about how you can get started, then please write to us at info@acuvate.com
