supply chain management based on sap systems - readingsample
TRANSCRIPT
SAP Excellence
Supply Chain Management Based on SAP Systems
Architecture and Planning Processes
Bearbeitet vonGerhard F Knolmayer, Peter Mertens, Alexander Zeier, Jörg Thomas Dickersbach
1. Auflage 2008. Buch. xi, 207 S. HardcoverISBN 978 3 540 68737 5
Format (B x L): 15,5 x 23,5 cmGewicht: 497 g
Wirtschaft > Betriebswirtschaft: Theorie & Allgemeines > Wirtschaftsinformatik, SAP,IT-Management
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Chapter 2
The Scope of Supply Chain Management
2.1 Collaboration in Supply Chains
2.1.1 Insufficient Collaboration Results in the Bullwhip Effect
The key feature of SCM is close collaboration between two or more business partners. One of the goals aspired to is to smooth processes and to avoid unpredictable ordering behavior of the main customers; more specifically, to avoid the upstream demand amplification already studied in System Dynamics models (Forrester 1961) and popularized as the bullwhip effect (Lee et al., 1997a, b). The first company to report this phenomenon was Procter&Gamble, which it observed in its diaper supply chain. The most prominent model showing the bullwhip effect is the Beer Game (Sterman 1989). Delays in transferring order information and in fulfillment (due to lead times) and the absence of information sharing are main reasons for the bullwhip effect.
To reduce the bullwhip effect, the members of the supply chain may try to improve their information systems and/or their physical systems. Since the speed of data transfer technology has been dramatically improved in recent years, the assumptions prevalent in the Beer Game about the delays in information transfer can only stem from administrative processes in order management. Data is typically not transferred in real-time, and the coordination effort resulting from the using of different systems may also contribute to time-lags. Furthermore, if the demand is static and normally distributed, there is no reason to order distinct volumes at different time points. If the retailer ordered steadily, the other companies would not have to react nervously to unexpected order volumes. Thus, the bullwhip effect is at least partially homemade.
The main implication of studying the demand amplification is that transferring Point-of-Sales (POS) data to the other partners in the supply chain will considerably reduce the bullwhip effect. However, the question arises why a retailer should share its POS data with other members of the supply chain. One argument is that the supply chain is becoming more competitive, by realizing smoother planning, scheduling, and execution processes. The retailer may also agree to provide the POS data if it assumes that this supportive behavior will result in lower purchase prices or, at least, improve its bargaining power. Furthermore, data about capacity, capacity usage, and inventory may also be shared and be beneficial for the down-stream companies. Simulation studies show that the information exchange typically
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is more important for upstream than for downstream companies (Chatfield et al., 2004).
With respect to collaboration, several maturity levels of supply chains have been defined:
Stage 1: Functional Focus: Operating discrete supply chain processes with
Stage 2: Internal Integration: Company-wide aligned and integrated supply chain processes continuously measured and steered to achieve common
Stage 3: External Integration: Collaboration with strategic partners (customers, suppliers, and service providers) including joint objectives, shared plans,
Stage 4: Cross-Enterprise Collaboration: Information Technology and e-business solutions resulting in real-time planning, decision making, and execution of customer requirements (Roussel and Skov 2007).
The data recorded in the course of the survey shows that only a few companies realize collaboration beyond stage 2; thus, today collaboration between inde-pendent legal entities is not very common. However, it should be recognized that the evolution does not necessarily follow this sequence and that some stages (in particular stage 2) may be skipped.
SCM and sourcing decisions are closely related. The number of suppliers may be reduced when a supply chain is designed. In an idealistic view, single sourcing would be appropriate for parts that are offered by supply chain partners. However, risk management may contradict a single sourcing policy. Globalization has a huge impact on achieving supply chain goals. Sometimes offshoring decisions are based on rather myopic views on direct production costs, neglecting such matters as the total cost resulting in the supply chain and the impact on lead times.
2.1.2 Types of Collaboration
2.1.2.1 Information Exchange
Information access and data transfer are highly recommended in SCM systems. Information exchange is bidirectional, while information transfer may be uni-directional. As the company delivering data may not know whether the data trans-ferred or exchanged is relevant for the recipient, the terms data exchange and data transfer would be more suitable. Transfer or exchange of data does not necessarily imply that the recipient is using this data. Therefore, data transfer does not imply that the planning processes of the supply chain partners are based on consistent data. A simplified morphological box distinguishing different types of data ex-change is shown in Table 2.1.
2 The Scope of Supply Chain Management
are well documented and understood.
objectives.
functional management of resources. Supply chain processes and data flows
common processes, and performance metrics.
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Table 2.1 Types of data exchange
Data characteristics
Occurrences
Source of data Last element in supply chain (retailer, OEM)
Tier-1 supplier
Tier-2 supplier …
Recipient of data Next organization upstream
Next but one/two … organizations upstream
Next organization downstream
Next but one/two … organizations downstream
Category of data Actual data Forecast data Planning data Meta data Amount of data All data Selected data,
defined statically
Rule-based selected data
Granularity of data
Elementary data
Aggregated data
Type of provision Data access (pull)
Data transfer (push)
Timeliness Time-point Period Up-to-dateness Real-time
data Delayed data, delay time-based
Delayed data, delay rule-based
Delayed data, delay resolved ad hoc
Actual data may be about (e.g.)
sales volumes at POS, warranties, capacity usages, events, and compliance issues.
Planning data concern (e.g.)
strategies, investments in physical systems and information systems, events such as promotions, announcements of end-of-life products, or of
new product introduction, procurement, production, scheduling, distribution, and financial matters.
2.1 Collaboration in Supply Chains
inventories,
—
—
—
—
—
—
—
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Meta data may be exchanged to coordinate
quality control, and the use of IS, in particular the
customization of IS, data models, process models, and numbering systems.
Another type of data transfer tries to improve the capabilities of the suppliers,
Collaborative forecasting is based on data exchange or transfer, but does not
a consensus on future data that may be used in local planning or in collaborative planning efforts.
The Delphi method is a well-known procedure for collaborative forecasting of
toward a consensus when those involved are informed about opinions expressed by other experts. However, the result of applying the Delphi method is not a forecast accepted by all concerned. The Delphi method is typically not used in routine forecasting of operative data but in forecasting future trends. Application of the Delphi method can be supported by specific IT systems.
Achieving a common forecast of quantitative data, for example about future demand for certain products or product groups, is a difficult task. Planning typically means considering distinct scenarios that differ in the assumptions and data un-derlying them. A company may look at several scenarios, and the common forecast may be just one of several considered. An agreement to use only a consensus
be enforced.
2 The Scope of Supply Chain Management
2.1.2.2 Collaborative Forecasting
forecast may reduce the value of local planning processes considerably and cannot
necessarily result in collaborative planning. This distinction is also emphasized in
future trends. Results show that divergent opinions of experts converge some way
the CPFR model (cf. Section 2.1.2.4). The goal of collaborative forecasting is to find
materials and agricultural best practices. To translate its words into actions, Nestlé employs over 800 agronomists, technical advisers, and field technicians. Their job
world to improve their production quality, as well as their output and efficiency. They do this on a daily basis in as many as 40 countries. This specialist team has pioneered the development of sustainable local fresh milk and coffee production (Nestlé 2006).
•
Mini case: Nestlé supports sustainability in the supply of agricultural raw
•
for example with respect to product quality.
•
is to provide technical assistance to more than 400,000 farmers throughout the
•
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2.1.2.3 Collaborative Planning
Collaborative Planning aims to coordinate the plans of several partners in the supply chain. The associated models can be managed by one or more of the firms involved or by a trusted service provider.
Several types of models may be used. Spreadsheet models and simulation models may be developed to show the consequences of different decisions in certain planning scenarios (“What-If Models”). How-to-Achieve Models change the pers-pective by stipulating target values and determining the corresponding value of an independent variable. Decision models are used to determine the best solution by optimizing algorithms or to find a satisfactory solution by applying heuristics.
Collaborative planning differs from individual planning in several ways (Table 2.2, partially based on Windischer and Grote 2003).
Table 2.2 Comparison of individual planning and collaborative planning
Individual planning Collaborative planning Recognizing the sequential order of events
Communication of anticipated events
Recognizing goals Lateral agreements on goals Recognizing the availability of alternatives
Information exchange about the availability of alternatives
Recognizing the adequacy of plan’s resolving
Recognizing the adequacy of common plans
Monitoring planned actions and diagnosing errors in individual plans
Monitoring and diagnosing errors in common plans
Revising individual plans Coordination of planning and feedback about modifications
Canceling individual plans Common reflection and common decisions to cancel plans
Depending on the amount of information transparency agreed upon, several types of collaborative planning can be distinguished. One of them is Open Book Planning. The collaborating entities deliver data into a common planning model. The semantics of this data (i.e., the definitions used in the data models) must be carefully coordinated. The data and the results obtained by the planning procedure become visible to all participating entities. A very high level of trust is necessary between the partners for this approach to be realized. Even entities belonging to the same group may have objections against (detailed) Open Book Planning. The Open Book may be accessible only to selected members of the supply chain. However, in such a situation it may be even more difficult to make sure that the other entities deliver correct planning data.
Another approach is to install a trusted service-provider as the entity collecting data for the planning model and delivering the planning results to the supply chain partners. In this case the cooperating entities are treated equally with respect to information transparency. However, results of a planning model are usually not
2.1 Collaboration in Supply Chains
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implemented without further consideration. The purpose of decision models is to provide insight, not numbers. Insight is based on understanding relationships bet-ween input data and output data. It may be difficult to gain insight if the effects of modifying input data cannot be discussed in detail because the input data is clande-stine.
A common planning model may become complex owing to its size and the details considered, and it may be difficult to find appropriate algorithms for deter-mining an optimal solution or even for applying a sound heuristic. Decomposition has been recommended to reduce the complexity of decision models. In this case it is not necessary to exchange all details of the data relevant to the planning model, but only some results obtained from local planning models.
Decomposed decision models are solved in an iterative way. The results of the planning model Pir of entity i in iteration r are used by the collaborating entity j in iteration r + 1. Entity j will consider the effects of Pir on its own situation and decision variables and develop plan Pj, r + 1, which is communicated to entity i. Thus, the planning results of one entity appear as input data in the plan of the other entity.
For obvious reasons only a limited number of such organizational iterations can be realized. The optimal solution, which could be determined by an Open Book model, will typically be missed. However, numerical experiments show that even a small number of organizational iterations may result in solutions that are quite close to the optimum of the Open Book model and, from the perspective of the supply chain, far better than local solutions obtained without collaborative plan-ning (Dudek 2004; Dudek and Stadtler 2005).
2.1.2.4 Collaborative Planning, Forecasting, and Replenishment (CPFR)
Several frameworks for structuring collaboration tasks exist. The best known is the CPFR
CPFR model distinguishes eight collaboration tasks. For collaboration between a retailer and a manufacturer the tasks are exemplified in Table 2.3.
2.1.2.5 Collaborative Scheduling
As scheduling decisions are often short term and taken close to execution, real-time information exchange and contingency management among geographically dispersed entities may be beneficial (Jia et al., 2002; Boyson et al., 2003).
The schedule of transports may determine production schedules, and a need for the exchanging of information between distribution and production schedulers results (Chen and Vairaktarakis 2005). The customer may receive information about successfully finished operations and the time intervals for which remaining operations are scheduled. This could be done via alerting mechanisms (e.g., sending e-mails or messages to a PDA), by providing information on the Web, or even by allowing access to (parts of) the partner’s scheduling system.
2 The Scope of Supply Chain Management
Interindustry Commerce Solutions (VICS) Association. Fig. 2.1 shows that the ®® framework. CPFR is a reference model developed by the Voluntary
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Fig. 2.1 Visualization of the CPFR® process (VICS 2004)
Table 2.3 Collaboration tasks between a retailer and a manufacturer (cf. VICS 2004)
Replenishment
2.1 Collaboration in Supply Chains
Manufacturer Tasks Collaboration Tasks Retailer Tasks
Strategy and Planning
Demand and Supply Management
Execution
Analysis
Account Planning Market Planning
Collaboration Arrangement Joint Business Plan
Vendor Management Category Management
Market Data Analysis Sales Forecasting POS Forecasting
Planning Order Planning/Forecasting Demand Planning
Production and Supply Planning Logistics/Distribution Order Fulfillment
Order Generation
Logistics/Distribution
Store Execution Supplier Scorecard
Exception Management Performance Assessment Customer Scorecard
Execution Monitoring
Buying/Re-buying
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2.1.2.6 Collaborative Execution
resources and the redesign of physical processes. In this case not only information and planning systems are influenced by SCM but also the physical execution systems.
Changes of physical systems have been suggested by such production manage-ment concepts as Just-in-Time (JIT), Lean Production, and Agile Manufacturing. JIT needs close collaboration between the partners, and reducing setup times is an important precondition for the realization of JIT procedures. Cross-docking is a concept intended to minimize handling times at distribution centers by tight co-ordination of inbound and outbound transports. Track&Trace systems show the progress made in bridging the spatial distance between supplier and recipient and allow the recipient to prepare for arrivals, but also to adjust production schedules if an item required should arrive too late. Visibility of real-time data for business partners is regarded as one of the main properties of a “real-time enterprise.” Many SCM systems support the visualization of data.
2 The Scope of Supply Chain Management
Mini case: In the chemical industry, changes in the schedule of one plant can affect several other plants, and ripple effects may increase the magnitude of changes in plants downstream. For instance, in the Bayer company the plant schedules are highly interdependent. The results of the nightly centralized scheduling run are broken-down into plant-specific models where decentralized planners use these models for local changes. The local scheduling persons should
be able to work on a smaller model of the facilities they are allowed to schedule but at the same time be able to share data with and view infor-mation from other plants, be able to see the schedule changes of relevant production steps in other plants, make other plants aware of schedule changes, and reduce conflicts and find a mutually agreeable solution for product chains running through multiple plants with the help of a chain planner.
Complex communication mechanisms are set up to achieve these goals. Central coordination mechanisms are combined with complementary information exchange amongst decentralized decision makers between the scheduling runs (Berning et al., 2002).
Mini case: Several companies with basically decentralized organizational struc-tures achieved significant improvements through central coordination of material handling. For instance, the largest Swiss retail company Migros helped to develop an Application Service Providing (ASP) platform for achieving better visibility and
regional warehouses, and its supermarkets (Knolmayer and Dedopoulos 2006). transparency of the associated pallet flows between its suppliers, the central
Collaborative execution may be closely connected with reassignment of tasks and
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2.1.2.7 Collaborative Monitoring and Controlling
Many criteria have been proposed for measuring and evaluating the perfor-mance of a company’s logistical system. Examples are
(differently defined) service levels, response delay, the difference between the delivery day initially requested
by the customer and the negotiated day, lateness, computed from the differences between negotiated delivery day
and actual delivery day, (differently defined) stocks, e.g., work in progress (WIP) as a percentage
of sales, mean and variance of throughput times, and percentages of scrap in production and corrupted inventory.
The Supply Chain Operations Reference (SCOR®) model developed by the Supply-Chain Council (SCC) defines more than 200 Key Performance Metrics at the highest of four levels. SAP SCM™ provides more than 300 KPI that are based
oriented performance attributes are distinguished (cf. Supply Chain Process Im-provement 2007):
Customer-facing performance attributes Reliability
o Delivery performance o Perfect order fulfillment o Fill rates
Responsiveness (Order fulfillment lead times) Flexibility
o Supply chain response time o Production flexibility
Internal-facing Costs
o Costs of goods sold o Total SCM costs o Warranty/returns processing costs
Asset management efficiency o Cash-to-Cash cycle time o Asset turn.
2.1 Collaboration in Supply Chains
Mini case: In the 1980s, General Motors’ Service Parts Operation used sophisticated Operations Research methods for inventory and transportation management in its relationships with dealers. However, the service to consumers was consistently poorer than the service of most of its competitors, because the dealers’ inventory systems were out of control, resulting in outdated data and metrics and wrong stock-keeping decisions. This illustrates the fact that a supply chain is only as good as its weakest link (Hausman 2004).
on the SCOR® metrics. Three classes of customer-facing and two classes of internally
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The Supply Chain Performance Indicator, which has been defined by The Performance Measurement Group (2007), considers a broad spectrum of business-related metrics which shows the high impact of good SCM practices on business results. With respect to the large number of metrics it is recommended that the most relevant ones be selected. These may be visualized on a dashboard, using Kiviat graphs, spider diagrams, or Balanced Scorecards (Kaplan and Norton 1996).
and a Customer Chain Operations Reference (CCOR) model have been defined by the SCC. These models also define many metrics. A projection of some metrics to Balanced Scorecard Categories is suggested by Bolstorff (2006). Ways of projecting
For supply chains, two different controlling approaches exist. On the one hand, each entity in the supply chain can define its own criteria and eventually present the values achieved in a Balanced Scorecard; however, if this information is passed on to partners, a shared meaning should be accomplished, and this can only be reached when there is agreement upon the definition of data elements and co-ordinated procedures are applied. On the other hand, common metrics for the whole supply chain may be defined and eventually presented in a Supply Chain Scorecard; coordination of meta data becomes even more relevant when this approach is followed (cf. Ackermann 2003; Kleijnen and Smits 2003).
2.1.2.8 Collaborative Reassignment of Tasks
The most far-reaching type of collaboration is a coordinated restructuring of functions and processes, which may result in reassignment of task responsibilities
mediation or disintermediation may be considered when tasks are reallocated; one
Quality control can be moved from the customer to the supplier after a common
by applying Electronic Bill Presentment and Payment (EBPP) systems (SAP 2001) as part of Financial Supply Chain Management.
Vendor Managed Inventory (VMI) is probably the most common reassignment of responsibilities. The customer is no longer placing orders and, therefore, no due dates for delivery are fixed. The vendor is responsible for providing concerted inventory service levels. SAP recommends considering VMI if
key customers constitute a high percentage of the vendor’s sales figures, the products are standardized and requested repeatedly, product growth is not excessive, meaning that the requirement patterns are
stable and the vendor can assume that requirements will not occur spon-taneously, and
the transaction costs for order processing and production planning are high (SAP 2007).
2 The Scope of Supply Chain Management
the SCM metrics into terms of income statements, balance sheets, and Economic
®In addition to the SCOR
Value Added indicators have also been suggested (Camerinelli and Cantu´ 2006).
model, a Design Chain Operations Reference (DCOR)
quality management system has been agreed on. Financial flows can be reorganized
example of such an approach is the Fourth-party Logistics Provider (4PL) concept.
from one supply chain partner to another. In redesigning a supply chain, inter-
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Intentia (2001), a former vendor of ERP systems, describes benefits of VMI as follows:
Supplier benefits Visibility of the customer’s POS data simplifies forecasting. Promotions can be more easily incorporated into the inventory plan. Customer ordering errors, which in the past would often lead to a
return, are reduced. Stock level visibility helps identify priorities (replenish stock versus a
stockout). The supplier can see the potential need for an item before the item is
ordered. Customer benefits
Fill rates from the supplier, and to the end consumer, improve. Stockouts and inventory levels often decrease. Planning and ordering costs decrease since the responsibility is shifted
to the supplier.
right time.
Dual benefits
ations.
Both parties strive to offer better service to the end consumer. All parties involved benefit when the correct item is in stock when the end consumer needs it.
customer.
Extremely high benefits are reported from realizing VMI relationships. SAP
pendent third-parties (Table 2.4, cf. SAP 2007).
2.1 Collaboration in Supply Chains
60 locations in 25 countries, implemented the SAP Inventory Collaboration Hub™ in 2005. The costs of order processes and administration expense were reduced by more than 50%. Many A and B materials are stored via Supplier Managed In-ventory agreements. Capital lock-up was reduced by lower warehouse inventory and safety stocks (Brauchle 2006).
•••
•
The overall service level is improved by having the right product at the
•
The supplier is more focused than ever on providing superior service.
••
Data entry errors are reduced owing to computer-to-computer communic-
•
Overall processing speed is improved.
•
A true collaborative partnership is formed between the supplier and the
•
•
claims very optimistic figures that have been reported by SAP customers or inde-
••
Mini case: Knorr-Bremse, a leading producer of brake systems with more than
•
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Table 2.4 Potential benefits of VMI (SAP 2007)
Business benefits Vendor/customer Value potential Increased revenue/sales Vendor and
customer Lower inventory levels Vendor Increased service levels Vendor Operating costs through full truckloads Vendor Increased service levels Customer Inventory turns Customer Increased service levels Customer
When considering the potential of VMI one has to realize that it is based on the
transfer of detailed data, e.g., POS data and inventory data. Such data transfer may be realized with or without entering on a VMI relationship. An advantage of VMI is that no due dates are fixed by the customer, which makes the vendor flexible with respect to its execution processes. However, the vendor may lack some in-formation which is available only locally at the site of its customer. VMI partnerships should incorporate the obligation to transfer either such local information or at least forecast data based on it. Several simulation studies on VMI systems show significant cost reductions for the entire supply chain (Disney and Towill 2003a, b). As suppliers have access to actual sales and/or inventory data provided by the customers, the Bullwhip Effect can be reduced, resulting in a smaller variability of demand data (Småros et al., 2003). Thus, safety stocks, particularly of suppliers, can be reduced.
Sometimes a distinction is made between Vendor Managed Inventory and Supplier Managed Inventory (SMI). In the CPFR® context four alternatives are distin-guished (Table 2.5). The difference between VMI and SMI is primarily one of viewpoint: VMI involves the management of finished goods inventories outbound from a manufacturer, distributor, or reseller to a retailer, whereas SMI manages the flow of raw materials and component parts inbound to a manufacturing process (Pohlen and Goldsby 2003). IT ownership and IT architectures differ. In the SAP environment there is also a difference in the ownership of the collaborative application system – for VMI the application system is owned by the supplier and for SMI, by the customer.
Table 2.5 Assignment of responsibilities (cf. VICS 2004)
Alternative Sales forecasting Order planning Order generation
Conventional approach Retailer Retailer Retailer Co-managed inventory Retailer Retailer Manufacturer Supplier managed inventory Retailer Manufacturer Manufacturer Vendor managed inventory Manufacturer Manufacturer Manufacturer
2 The Scope of Supply Chain Management
100–200%
70% From 89% to 98%
28% From 93% to 99%
27–70% From 93% to 99%
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2.2 Business Architectures for Supply Chain Management
2.2.1 Supply Chain Planning Matrices
systematic frameworks. In the research literature several (slightly different versions
2002; Fleischmann and Meyr 2003; Fleischmann et al., 2005; Meyr et al., 2005). A detailed description of the matrix is given by Fleischmann et al. (2005,
p. 88). In our opinion, Supply Chain Planning Matrices have some disadvantages. The arrows in the top row imply that a certain flow occurs independently of the type of production system. However, for make-to-order production the sequence of the columns “Production,” “Sales,” and “Distribution” should be “Sales,” “Production,” and “Distribution,” and order-specific design activities for make-to-engineer production should appear. Furthermore, the execution and controlling processes are disregarded in the framework and the collaboration with other companies is not visualized in the matrix. We try to improve these shortcomings
Fig. 2.2 A supply chain planning matrix
2.2 Business Architectures for Supply Chain Management
in our pyramidal representation (cf. Section 2.2.3).
Several models have been followed to arrange the most relevant SCM processes in
of) Supply Chain Planning Matrices (Fig. 2.2) are presented (cf. Neumann et al.,
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2.2.2 The Supply Chain Operations Reference Model
the Supply-Chain Council is attracting a lot of attention. Today the Council counts about 1,000 corporate members worldwide and has established chapters in North
sponsor of its activities.
and system of notation for describing business processes. It is organized into four levels to allow differently detailed views on business processes and focuses on
model to describe the current status of the system (“as-is” situation) or to define a target status (“to-be” situation). Such models are often used in business process
performance of certain process elements. A company may decide to gather this data for internal performance evaluation or also for benchmarking with other companies. The SCC tries to motivate its members to deliver performance data for
“best practices.”
Plan Source Make Deliver Return
at four hierarchical levels. At the uppermost level, the process types are defined as
support companies in making basic strategic decisions regarding its operations in the following, sometimes vaguely formulated areas:
1. Delivery performance, 2. Order fulfillment performance, 3. Fill rate (make-to-stock), 4. Order fulfillment lead time, 5. Perfect order fulfillment, 6. Supply chain response time, 7. Production flexibility, 8. Total SCM cost, 9. Value-added productivity, 10. Warranty cost or returns processing cost,
2 The Scope of Supply Chain Management
America, Europe, Greater China, Japan, Australia/New Zealand, South East Asia,
®In practice, the Supply Chain Operations Reference (SCOR ) Model developed by
®The SCOR model defines five process types
public (Supply-Chain Council 2008). SAP AG is a member of the SCC and a main ® Brazil, and Southern Africa. In 2008, Release 9.0 of the SCOR model was made
The SCOR model is a process reference model, proposing a certain terminology ®
®reengineering projects. The SCOR model also defines metrics used to measure the
inter-organizational processes. A company or a supply chain may use the SCOR ®
®the SCOR metrics to support inter-organizational benchmarking and to recognize
shown in Table 2.6. According to the SCC, level 1 of the SCOR model aims to ®
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Definition Plan Processes that balance aggregate demand and supply to develop a
course of action which best meets sourcing, production, and delivery requirements.
Source Processes that procure goods and services to meet planned or actual demand.
Make Processes that transform products to a finished state to meet planned or actual demand.
Deliver Processes that provide finished goods and services to meet planned or actual demand, typically including order management, transportation management, and distribution management.
Return Processes associated with returning or receiving returned products for any reason. These processes extend into post-delivery customer support.
At level 2, e.g., the Make process is refined to
Make-to-stock production, Make-to-order production, and Make-to-engineer production,
whereas the Return process is detailed to
Return defective product, Return Maintenance, Repair, and Overhaul (MRO) product, and Return excess product.
Level 2 also defines some enabling processes. A typical example of an enabling process is to provide the necessary IT infrastructure for process execution.
In 2007, the SCC announced SCORmarkSM, a members-only benchmarking
SCORmarkSM benchmarking
to select the supply chain metrics most critical to its organization, to determine the target performance desired for each supply chain attribute
to enter the relevant data required to calculate the performance for each selected metric into the secure, confidential benchmarking portal.
2.2 Business Architectures for Supply Chain Management
11. Cash-to-cash cycle time, 12. Inventory days of supply, and 13. Asset turns.
portal based on the SCOR model, in association with APQC (Supply-Chain Council ®
2007). As part of the “analyze” phase of the SCOR model, a company may use ®
in the SCOR model, and ®
SCOR® process
Table 2.6 Level 1 Processes, as defined by the Supply-Chain Council
26
ARIS™ is a business process management tool developed by IDS Scheer and today offered as part of SAP’s NetWeaver infrastructure. Among other tools, an ARIS EasySCOR Modeler has been developed (IDS Scheer 2007).
are discussed by Huan et al. (2004) and Poluha (2007).
2.2.3 A Supply Chain Pyramid
as a reference framework. With the pyramidal form we reflect the hierarchy of
by Hieber (2002).
zational levels. Strategic, tactical, and operational planning tasks are distinguished
are combined at one level. Source and procurement and make and production are
2 The Scope of Supply Chain Management
The data is validated in a seven-step process to produce a report with
an executive scorecard to quickly spotlight on any gaps in the targeted performance levels for each supply chain attribute and
a detailed analysis for each specific metric selected, including best practice information on the drivers of performance and peer group reporting as available.
2001). The SAP Solution Manager is an implementation tool that allows mapping
SAP SCM™ systems automatically deposit the data from ERP and ongoing supply chain transactions into SAP’s Business Intelligence™ applications. These cal-
ERP™ and SAP SCM™ implementations. Once in operation, the SAP ERP™ and
culate the plan-source-make-deliver KPIs and deliver them to SAP’s management
Software vendors included SCOR metrics in their SCM systems (Gassmann ®
Based on the Supply Chain Matrices and the SCOR model, we present a global view ®
Some deficiencies of the SCOR model as seen from an academic point of view ®cockpit for role-based breakdowns of the SCOR model (Gould 2005). ®
of the SCOR model’s “best practices” against what the users want in their SAP ®
model, product design is enclosed in the pyramid to ®
avoid the formulation of a separate design model. Furthermore, the SCOR model ®
of the supply chain tasks in the form of a pyramid (Fig. 2.3) and use this pyramid
Compared with the SCOR
visualized in “information pyramids”; cf. Mertens 2007, p. 6). A slightly similar
Fig. 2.3 shows inbound- and outbound-collaboration tasks at various organi-
used synonymously. Execution is explicitly included in the pyramid.
lected CCOR). To emphasize the high importance of selling, we decided to split the
“task reference model of transcorporate logistics” in pyramidal form was proposed
decision rights, planning tasks, and the associated information needs (as often
does not explicity address sales activities (which later became part of the widely neg-
at the horizontal levels. For ease of presentation, operational planning and scheduling
27 2.3 Desirable Features of SCM Systems
Fig.
2.3
Pyr
amid
al re
fere
nce
fram
ewor
k fo
r Sup
ply
Cha
in M
anag
emen
t
2 The Scope of Supply Chain Management 28
2.3 Desirable Features of SCM Systems
This section gives a short description of some functionalities that could be helpful
involved in supply chains. Functions and processes in SCM systems have specific characteristics because
be stored. There is a need for special filtering and compression mechanisms before data is fed into common databases, to avoid too great an increase in
single bodies of data often have to be aggregated into larger groups: for instance, equipment into capacity groups, product characteristics into charac-teristics groups, products into product groups;
bigger problems have to be decomposed before they can be treated with optimization algorithms or heuristics; examples are the segmentation of a long planning horizon into several shorter time segments, for which solutions may successively be found although typically the global optimum will be missed.
for SCM. We do not describe functions that are also essential for enterprises not
data of several networked enterprises, not only those of one company, must
the sizes of databases and data warehouses;
In Section 2.3 we formulate desirable properties of SCM systems. In Chapters 3
support by means of IT systems, and there are some uncovered spots on the landscape. Product design activities are outside the scope of SAP’s systems, but there are interfaces to the most relevant CAD systems.
and 4 we discuss how these properties are covered by the SAP SCM™ 5.0 system.
SCM solution map is projected onto the SCM pyramid (Fig. 3.4). As we shall see,
delivery process into distribution and sales already in our Supply Chain Pyramid. We
controlling and support processes. Some strategic planning tasks are difficult to
processes are at least as important as return processes and therefore decided to men-
Supply Chain Visibility Model proposed by the IBM Institute of Business Value
(Butner 2007).
avoid arrows to indicate that sequences between sales and distribution activities de-
tion them explicitly in the SCM pyramid. These modifications are in line with the
The pyramid is refined stepwise in the remainder of the book. First, SAP’s
tactical and operational planning are well covered by the SAP system, as well as
pend on the type of business relationships. Finally, we think that regular after-sales
2.3.
1 D
esig
n o
f S
up
ply
Ch
ain
an
d In
form
atio
n A
rch
itec
ture
2.3 Desirable Features of SCM Systems 29
Des
irabl
e Fe
atur
es
Com
men
ts
Cov
erag
e by
SA
P SC
M™
a)
Vis
ualiz
atio
n of
the
com
plet
e su
pply
ch
ain/
netw
ork
at se
vera
l lev
els o
f de
tail.
Pow
erfu
l too
ls fo
r vis
ualiz
atio
n an
d na
viga
tion
(coc
kpit,
leits
tand
) are
requ
ired.
C
f. Se
ctio
n 4.
6.2.
A.
b)
Mod
ifica
tions
of t
he n
etw
ork,
e.g
.,
rega
rdin
g in
term
edia
tion
and
disi
nter
-m
edia
tion
or n
ew a
lloca
tion
of ta
sks
to th
e co
llabo
ratin
g fir
ms.
Whe
n st
ruct
urin
g a
supp
ly c
hain
, dec
isio
ns h
ave
to b
e m
ade
abou
t whi
ch ta
sks s
houl
d be
car
ried
out b
y th
e su
pply
cha
in p
artn
ers t
hem
selv
es a
nd w
hich
are
to b
e ou
tsou
rced
. With
the
impa
ct o
f the
Web
on
the
firm
s’
coop
erat
ion,
new
inte
rmed
iarie
s (e.
g., T
rust
Cen
ters
to
supp
ort f
inan
cial
tran
sact
ions
) are
foun
ded,
whe
reas
so
me
tradi
tiona
l int
erm
edia
ries (
e.g.
, tra
vel a
genc
ies)
ar
e de
clin
ing
in im
porta
nce.
For m
aste
r dat
a re
leva
nt fo
r mod
elin
g a
give
n su
pply
net
wor
k se
e Se
ctio
n 4.
7.3.
SAP
SCM™
doe
s not
pro
vide
func
-tio
nalit
y fo
r dec
isio
n su
ppor
t in
supp
ly
netw
ork
desi
gn.
c)
Con
figur
ator
to fo
rmul
ate
agre
emen
ts
and
cont
ract
s by
com
bini
ng te
xt
mod
ules
(e.g
., su
bcon
tract
ing,
serv
ice
leve
l agr
eem
ents
, per
iods
of n
otic
e,
allo
wan
ce o
f del
ays,
resp
onsi
bilit
y fo
r co
nsig
nmen
t sto
cks)
.
Whe
n th
e st
ruct
ure
of th
e su
pply
cha
in re
mai
ns fi
xed
for a
long
er ti
me
span
dur
ing
whi
ch so
me
partn
ers a
re
repl
aced
, the
con
tract
s with
new
par
tner
s can
be
deriv
ed
from
stan
dard
ized
agr
eem
ents
by
mod
ifyin
g ce
rtain
pa
ram
eter
s. Ex
ampl
es a
re c
ontra
cts b
etw
een
supp
liers
of
stan
dard
ized
pro
duct
s and
big
reta
ilers
.
Not
in sc
ope
of S
AP
SCM™
.
d)
Col
labo
rativ
e in
vest
men
t pla
nnin
g;
nego
tiatio
n of
inve
stm
ent p
ropo
rtion
s. In
supp
ly c
hain
s the
par
tner
s som
etim
es a
gree
to sh
are
larg
e in
vest
men
ts, s
uch
as w
areh
ouse
s nea
r airp
orts
or
proj
ects
to im
prov
e da
ta q
ualit
y, b
y us
ing
RFI
D
tech
niqu
es.
Not
in sc
ope
of S
AP
SCM™
.
2 The Scope of Supply Chain Management 30
D
esira
ble
Feat
ures
C
omm
ents
C
over
age
by S
AP
SCM™
e)
Dec
isio
ns a
nd a
ctio
ns to
avo
id
mul
tiple
qua
lity
chec
ks.
Mul
tiple
qua
lity
chec
ks (a
t the
supp
lier’
s site
bef
ore
ship
ping
and
at t
he c
usto
mer
’s si
te a
fter r
ecei
pt) c
an b
e av
oide
d if
the
partn
ers a
gree
on
a Q
ualit
y M
anag
emen
t sy
stem
: Res
ults
of q
ualit
y co
ntro
l mea
sure
s may
be
exch
ange
d vi
a a
porta
l whe
re th
e cu
stom
er c
an se
e th
em o
r hav
e th
em a
naly
zed
by a
n au
tom
ated
syst
em.
Not
in sc
ope
of S
AP
SCM™
.
f)
Nav
igat
ion
deta
ils o
f the
mas
ter f
iles
by a
ctiv
atin
g no
des a
nd a
rcs s
uch
as
info
rmat
ion
on c
apac
ity a
nd c
osts
of
fact
orie
s, w
areh
ouse
s, tra
nspo
rtatio
n ro
utes
, pro
duct
ion
prog
ram
s of
supp
liers
, tim
e zo
nes,
and
holid
ays a
t th
e lo
catio
ns o
f par
tner
s.
Top-
dow
n na
viga
tion,
ope
ning
win
dow
s, e.
g., t
o vi
sual
ize
such
add
ition
al in
form
atio
n as
cap
acity
co
nstra
ints
of s
uppl
iers
or c
usto
ms r
egul
atio
ns.
Not
in sc
ope
of S
AP
SCM™
.
g)
Man
agem
ent o
f var
iant
s, es
peci
ally
in
the
cont
ext o
f mul
tiple
sour
cing
. Th
e de
cisi
on o
n ho
w m
any
and
wha
t kin
ds o
f var
iant
s ar
e al
low
ed is
diff
icul
t bec
ause
of t
he im
pact
on
sale
s an
d th
e co
sts o
f pro
duct
ion,
inve
ntor
y, lo
gist
ics,
train
ing,
afte
r-sa
les s
ervi
ce, a
nd c
apita
l req
uire
men
ts.
AB
C a
naly
ses a
re re
com
men
ded
for s
uppo
rt of
var
iant
s m
anag
emen
t. W
hen
parts
are
pro
cure
d fr
om d
iffer
ent
supp
liers
, the
se p
arts
may
not
be
stric
tly id
entic
al. T
his
may
be
one
reas
on fo
r var
iant
s.
Not
in sc
ope
of S
AP
SCM™
.
2.3 Desirable Features of SCM Systems 31
Des
irabl
e Fe
atur
es
Com
men
ts
Cov
erag
e by
SA
P SC
M™
h)
Dem
onst
ratin
g th
e di
ffer
ence
s be
twee
n ob
ject
s [pr
oduc
ts, p
rodu
ct
feat
ures
(“pr
oduc
t in
terc
hang
eabi
lity”
), pr
oduc
tion
proc
esse
s] th
at c
an b
e su
bstit
uted
by
each
oth
er a
nd e
xpla
inin
g th
e im
plic
atio
ns, e
.g.,
addi
tiona
l cos
ts
caus
ed b
y a
subs
titut
ion.
Subs
titut
ion
proc
esse
s may
be
indu
ced
by c
hang
es in
th
e co
st o
f obj
ects
or r
esul
t fro
m so
urci
ng o
r pro
duct
ion
bottl
enec
ks.
Subs
titut
ion
is c
onsi
dere
d in
pla
nnin
g;
cf. S
ectio
ns 4
.4.6
and
4.7
.3.
i) Po
sitio
ning
of i
nven
tory
. D
ecis
ions
abo
ut st
orag
e lo
catio
ns o
f raw
mat
eria
ls,
com
pone
nts,
and
prod
ucts
are
fund
amen
tal i
n SC
M.
Crit
eria
incl
ude
cust
omer
dem
and,
serv
ice
leve
l ag
reem
ents
, tra
nspo
rtatio
n tim
e an
d co
sts o
f tra
nspo
rtatio
n be
twee
n si
tes,
valu
e of
the
parts
, the
ne
cess
ary
stor
age
spac
e (d
epen
ding
on
the
volu
me
per
item
), an
d sp
ecia
l tec
hnic
al c
ondi
tions
, suc
h as
coo
ling
or se
curit
y.
Dec
isio
ns o
n w
heth
er o
r not
to st
ock
an e
xist
ing
war
ehou
se c
f. Se
ctio
n 4.
4.2.
A.
Furth
er a
naly
ses a
re n
ot in
scop
e of
SA
P SC
M™
.
j) A
gree
men
ts o
n lo
t siz
es a
nd
prod
uctio
n cy
cles
. Se
t-up
times
and
set-u
p co
sts m
ay d
iffer
con
side
rabl
y be
twee
n su
pply
cha
in p
artn
ers.
The
situ
atio
n w
here
one
pa
rtner
pro
duce
s big
lots
a fe
w ti
mes
per
yea
r whi
le th
e do
wns
tream
par
tner
man
ufac
ture
s sm
all l
ots m
ore
ofte
n sh
ould
be
avoi
ded,
bec
ause
such
unc
oord
inat
ed
deci
sion
s res
ult i
n av
oida
ble
inve
ntor
ies.
Not
in sc
ope
of S
AP
SCM™
.
k)
Man
agem
ent o
f hie
rarc
hies
of t
he
sour
ces,
incl
udin
g se
rvic
e st
atio
ns.
Exam
ple:
Sup
plie
r ->
cen
tral
war
ehou
se ->
regi
onal
w
areh
ouse
-> se
rvic
e st
atio
ns.
Mai
nten
ance
as m
aste
r dat
a; c
f. Se
ctio
n 4.
7.3.
D
ecis
ion
supp
ort f
or su
pply
cha
in
desi
gn is
not
in sc
ope
of S
AP
SCM™
.
2 The Scope of Supply Chain Management 32
D
esira
ble
Feat
ures
C
omm
ents
C
over
age
by S
AP
SCM™
l) C
oord
inat
ion
of d
ata
mod
els i
n da
taba
ses,
data
war
ehou
ses,
and
data
m
arts
of s
uppl
y ch
ain
partn
ers.
Har
mon
ized
dat
a m
odel
s hel
p to
avo
id e
rror
s in
prod
uctio
n an
d co
mpa
rison
of m
anag
emen
t N
ot in
scop
e of
SA
P SC
M™
.
m)
Coo
rdin
atio
n of
pro
cess
and
w
orkf
low
mod
els.
Coo
rdin
ated
wor
kflo
w m
odel
s avo
id re
dund
anci
es,
supp
ort t
empo
ral c
oord
inat
ion,
and
incr
ease
tra
nspa
renc
y in
the
supp
ly c
hain
.
Ale
rts c
an b
e ex
chan
ged;
cf
. Sec
tion
4.6.
2.
n)
Coo
rdin
atio
n of
cus
tom
izin
g pa
ram
eter
s. D
eter
min
ing
the
para
met
ers o
f ER
P sy
stem
s and
oth
er
inte
rdep
ende
ncie
s. Ex
ampl
e: M
inor
mod
ifica
tions
of t
he p
aram
eter
s of t
he
func
tion
“con
sum
ptio
n of
pla
ns”
for f
inal
pro
duct
s may
ha
ve fa
r-re
achi
ng e
ffect
s on
stoc
ks o
f com
pone
nts a
nd
raw
mat
eria
ls.
Not
in sc
ope
of S
AP
SCM™
.
o)
Man
ifold
sim
ulat
ions
to e
valu
ate
alte
rnat
ives
. Si
mul
atio
ns c
ould
supp
ort t
asks
men
tione
d in
item
s g),
i), j)
, and
k) i
n pa
rticu
lar.
Cf.
Sect
ion
4.2.
com
plic
ated
eff
ects
, sid
e ef
fect
s, an
d so
ftwar
e pa
ckag
es is
a d
iffic
ult t
ask
beca
use
of m
any
info
rmat
ion,
e.g
., va
lues
of K
PI.
2.3.
2 C
olla
bo
rati
ve P
rod
uct
Des
ign
(“D
esig
n f
or
SC
M”)
2.3 Desirable Features of SCM Systems 33
Des
irabl
e Fe
atur
es
Com
men
ts
Cov
erag
e by
SA
P SC
M™
a)
Coo
pera
tion
of th
e su
pply
cha
in
partn
ers i
n pr
oduc
t des
ign,
val
ue
anal
ysis
, and
val
ue e
ngin
eerin
g.
An
SCM
-orie
nted
des
ign
cons
ider
s the
eff
ect o
f des
ign
deci
sion
s on
all p
artn
ers i
n th
e su
pply
cha
in. T
hese
ef
fect
s may
not
be
obvi
ous t
o th
e de
sign
ers o
f a c
erta
in
com
pany
; the
refo
re, c
olla
bora
tion
betw
een
desi
gn a
nd
man
ufac
turin
g ex
perts
of t
he p
artic
ipat
ing
com
pani
es
will
faci
litat
e a
“Des
ign
for S
CM
.”
Dur
ing
the
desi
gn p
roce
ss se
vera
l par
tner
s sho
uld
be
able
to se
e th
e ac
tual
des
ign
resu
lts o
n th
eir s
cree
ns a
nd
to a
dd h
ints
and
sugg
estio
ns. T
he e
valu
atio
n of
al
tern
ativ
e de
sign
s by
the
partn
ers i
n th
e su
pply
cha
in
will
ofte
n di
ffer
. Too
ls, e
.g.,
grou
pwar
e, fo
r bet
ter
help
ful.
Not
in sc
ope
of S
AP
SCM™
.
b)
Proc
ess p
lann
ing
taki
ng th
e ef
fect
s on
SCM
into
acc
ount
. co
ncep
ts o
r req
uire
men
ts o
f RFI
D, s
uch
as a
void
ing
the
pack
ing
or sp
ecia
l pro
tect
ion
need
s of p
rodu
cts (
e.g.
,
trans
port)
.
Not
in sc
ope
of S
AP
SCM™
.
c)
Mea
sure
s to
allo
w si
mpl
e tra
nsfe
r and
ex
chan
ge o
f pro
duct
-def
inin
g da
ta b
y co
ordi
nate
d ap
plic
atio
n of
CA
D,
PDM
, and
PLM
syst
ems.
com
pone
nts m
ay n
ot fi
t tog
ethe
r.
resu
lted
from
usi
ng v
ersi
on 4
in G
erm
an a
nd S
pani
sh
plan
ts w
here
as fa
ctor
ies i
n Fr
ance
and
the
UK
use
d ve
rsio
n 5
(Ste
inke
200
6).
Not
in sc
ope
of S
AP
SCM™
.
avoi
danc
e of
dam
age
thro
ugh
shar
p pr
ofile
s dur
ing
inte
rrup
tion
of R
FID
com
mun
icat
ion
by m
etal
lic
If in
com
patib
le C
AD
tool
s are
use
d, so
me
phys
ical
of th
e C
AD sy
stem
CAT
IA. I
nter
oper
abili
ty p
robl
ems
Exam
ple:
Del
ays i
n th
e de
velo
pmen
t of t
he A
irbu
s Sup
er-
coor
dina
tion
betw
een
supp
ly c
hain
par
tner
s may
be
jum
bo A
380
are
attr
ibut
ed to
the
use
of d
iffer
ent r
elea
ses
Exam
ples
are
the
impl
emen
tatio
n of
pos
tpon
emen
t
2.3.
3 S
ales
an
d D
eman
d P
lan
nin
g
2.3.
3.1
Stra
tegi
c an
d T
actic
al D
eman
d Pl
anni
ng
2 The Scope of Supply Chain Management 34
D
esira
ble
Feat
ures
C
omm
ents
C
over
age
by S
AP
SCM™
d)
Man
ifold
sim
ulat
ions
to e
valu
ate
pr
oduc
t and
pro
cess
alte
rnat
ives
. M
oder
n C
AD
syst
ems a
llow
the
eval
uatio
n of
som
e pr
oper
ties o
f phy
sica
l pro
duct
s and
pro
cess
es w
ithou
t th
e ne
cess
ity fo
r bui
ldin
g a
phys
ical
pro
toty
pe.
Exam
ple:
A su
bass
embl
y de
sign
ed b
y th
e su
pplie
r has
to
be
adju
sted
to su
it th
e to
ols a
vaila
ble
in th
e as
sem
bly
line
of th
e cu
stom
er’s
pla
nt.
Not
in sc
ope
of S
AP
SCM™
.
Des
irabl
e Fe
atur
es
Com
men
ts
Cov
erag
e by
SA
P SC
M™
a)
Porta
ls fo
r col
labo
rativ
e pl
anni
ng
(pla
nnin
g bo
ok).
The
plan
ning
boo
k is
the
mai
n sc
reen
whe
re th
e co
mm
on d
ata
is d
ispl
ayed
, ent
ered
, and
pro
cess
ed a
nd
whe
re in
tera
ctiv
e pl
anni
ng ta
kes p
lace
.
Cf.
Sect
ion
4.2.
3.A
.
b)
Met
hods
of c
alcu
latin
g cu
stom
er
lifet
ime
valu
es.
Estim
atin
g th
e cu
stom
er li
fetim
e va
lue
help
s in
deci
sion
s on
whe
ther
a c
usto
mer
shou
ld b
e in
vite
d to
be
com
e m
embe
r of a
supp
ly c
hain
.
Not
in sc
ope
of S
AP
SCM™
.
c)
Con
side
ratio
n of
the
prod
uct l
ife
cycl
e.
The
life
cycl
e pr
ofile
s hav
e to
be
adap
ted
to ta
ke
acco
unt o
f rec
ent d
evel
opm
ents
. The
par
tner
s sho
uld
prov
ide
rele
vant
dat
a fo
r det
erm
inin
g ty
pica
l pro
files
fo
r SC
M p
urpo
ses b
y us
ing
stat
istic
al m
etho
ds, e
.g.,
fore
cast
ing
met
hods
bas
ed o
n m
arke
t sat
urat
ion
and
sale
s dat
a ag
greg
ated
ove
r the
life
time
of th
e pr
oduc
t.
Cf.
Sect
ions
4.2
.1 a
nd 4
.4.1
.C.
2.3 Desirable Features of SCM Systems 35
Des
irabl
e Fe
atur
es
Com
men
ts
Cov
erag
e by
SA
P SC
M™
d)
Coo
rdin
ated
inve
ntor
y pl
anni
ng fo
r pr
oduc
ts n
ear t
o th
e en
d of
thei
r life
cy
cle.
The
exch
ange
of p
rodu
ct li
fe c
ycle
dat
a is
of u
tmos
t im
porta
nce
whe
n it
com
es to
inve
ntor
y m
anag
emen
t of
prod
ucts
that
will
soon
be
elim
inat
ed fr
om th
e sa
les
prog
ram
. Car
eful
coo
rdin
atio
n he
lps t
o ke
ep th
e rig
ht
inve
ntor
y in
the
right
war
ehou
ses,
shop
s, an
d se
rvic
e st
atio
ns.
Not
in sc
ope
of S
AP
SCM™
.
e)
Supp
ortin
g C
olla
bora
tive
Plan
ning
, Fo
reca
stin
g, a
nd R
eple
nish
men
t (C
PFR
).
CPF
R is
a th
orou
gh c
oord
inat
ion
of fu
nctio
ns a
nd
proc
esse
s in
the
supp
ly c
hain
with
pot
entia
l for
co
nsid
erab
le b
enef
its to
the
partn
ers.
Exam
ple:
Vol
vo, a
Sw
edis
h ca
r man
ufac
ture
r, im
plem
ente
d co
llabo
rativ
e pr
oces
ses w
ith o
ver 3
50
dom
estic
and
ove
rsea
s ven
dors
and
supp
liers
. One
of
the
mai
n fu
nctio
ns is
the
colla
bora
tive
exch
ange
of
fore
cast
s.
Cf.
Sect
ion
4.2.
3.
f)
Met
hods
of V
MI o
r SM
I. Th
e su
pplie
r con
trols
the
inve
ntor
y of
the
cust
omer
and
re
plen
ishe
s it w
hen
nece
ssar
y.
Exam
ple:
Woo
lwor
th c
alls
up
the
sale
s of a
ll ite
ms i
n ea
ch o
f its
bra
nche
s eve
ry d
ay a
fter c
losi
ng ti
me.
L’
Oré
al, t
he g
loba
l mar
ket l
eade
r in
the
cosm
etic
s in
dust
ry, d
eter
min
es d
eliv
ery
quan
titie
s and
cre
ates
an
optim
al d
eliv
ery
plan
usi
ng th
e SA
P SC
M™
supp
ly
netw
ork
plan
ning
cap
abili
ties b
ased
on
fore
cast
de
man
d, a
ntic
ipat
ed st
ock
mov
emen
ts, o
pen
orde
rs,
and
inve
ntor
y in
form
atio
n.
Cf.
Sect
ions
4.2
.3.B
, 4.3
.1.D
, and
4.
3.2.
2 The Scope of Supply Chain Management 36
D
esira
ble
Feat
ures
C
omm
ents
C
over
age
by S
AP
SCM™
g)
Col
labo
rativ
e fo
reca
stin
g su
ppor
ted
by a
met
hod
bank
with
fore
cast
ing
algo
rithm
s and
syst
ems t
o su
ppor
t the
se
lect
ion
of m
etho
ds, p
aram
eter
co
nfig
urat
ion,
and
the
inte
rpre
tatio
n of
resu
lts.
The
partn
ers m
ay u
se d
iffer
ent f
orec
astin
g pr
oced
ures
, w
hich
, mor
eove
r, m
ay b
e m
odifi
ed d
epen
ding
on
devi
atio
ns b
etw
een
fore
cast
, dem
and,
and
sale
s. If
co
llabo
rativ
e fo
reca
stin
g is
pra
ctic
ed w
ithin
the
supp
ly
chai
n, th
e pa
rtner
s sho
uld
be a
ble
to a
naly
ze th
e de
tails
, in
clud
ing
the
para
met
er se
lect
ions
and
the
resu
lts, b
y us
ing
an e
xpla
natio
n co
mpo
nent
.
Cf.
Sect
ion
4.2.
1.A
.
h)
Adm
inis
tratio
n of
tim
e se
ries a
nd
time
serie
s pat
tern
s, su
ch a
s sal
es
afte
r pro
mot
ions
, e.g
., se
para
ted
for
cust
omer
type
s and
regi
ons (
“glo
bal
fore
cast
ing
prof
iles”
) or p
atte
rns o
f ca
nnib
aliz
atio
n.
Ofte
n pr
omot
ions
are
lim
ited
to a
regi
on, e
.g.,
depe
nden
t on
the
loca
l wea
ther
or l
ocal
hol
iday
s. Pr
omot
ed p
rodu
cts m
ay c
anni
baliz
e ot
hers
. The
de
man
d m
ay b
e sh
ifted
to la
ter p
erio
ds b
ecau
se
cust
omer
s bui
ld u
p st
ocks
of t
he p
rom
oted
par
ts a
nd
buy
less
in th
e fo
llow
ing
perio
ds. F
or th
is re
ason
lo
gist
ic m
anag
ers d
o no
t fav
or p
rom
otio
ns, b
ut th
e ar
gum
ents
of t
he m
arke
ting
spec
ialis
ts o
ften
dom
inat
e,
so th
at th
e pr
oble
ms h
ave
to b
e so
lved
by
SCM
.
Adm
inis
tratio
n of
tim
e se
ries i
s a b
asic
ca
pabi
lity
of D
eman
d Pl
anni
ng a
nd
Fore
cast
ing;
cf.
Sect
ions
4.2
.1 a
nd
4.4.
1.
Prom
otio
n pl
anni
ng is
dis
cuss
ed in
Se
ctio
ns 4
.2.1
.D a
nd 4
.3.2
.C.
i) In
corp
orat
ing
exte
rnal
dat
a.
indi
cato
rs, s
houl
d be
mer
ged
with
inte
rnal
dat
a if
this
m
ight
impr
ove
the
accu
racy
of t
he fo
reca
sts.
Inco
rpor
atio
n of
ext
erna
l dat
a is
a
App
licat
ion
of e
xter
nal d
ata
for
4.2.
1.A
. j)
Stan
dard
ized
ana
lyse
s of t
he a
ccur
acy
of th
e fo
reca
sts a
nd o
f the
repl
enis
h-m
ent p
olic
y (F
orec
astin
g an
d re
plen
ishm
ent a
naly
tics)
.
Com
mon
par
amet
ers o
f the
ana
lysi
s met
hods
allo
w fo
r be
tter d
iagn
osis
of a
ppro
pria
te in
vent
ory
leve
ls in
the
partn
er c
ompa
nies
.
No
stan
dard
repo
rts.
For s
tock
ing
deci
sion
s cf.
Sect
ion
4.4.
2.A
.
SAP
BI™
.
fore
cast
ing
is d
escr
ibed
in S
ectio
n
basi
c co
ncep
t of S
AP
SCM
™ v
ia
Dat
a fr
om e
xter
nal d
atab
ases
, e.g
., bu
sine
ss c
ycle
2.3 Desirable Features of SCM Systems 37
Des
irabl
e Fe
atur
es
Com
men
ts
Cov
erag
e by
SA
P SC
M™
k)
Var
iabl
e ag
greg
atio
n of
reso
urce
s su
ch a
s wor
kers
(des
crib
ed b
y sk
ill
code
s), m
ater
ials
, pro
duct
ion
faci
litie
s, an
d tra
nspo
rt ve
hicl
es.
Agg
rega
tion
of p
erio
ds, r
egio
ns,
prod
ucts
and
pro
duct
cha
ract
eris
tics
(“ch
arac
teris
tic-d
epen
dent
fo
reca
stin
g”),
aggr
egat
ion
to v
irtua
l pr
oduc
ts (“
phan
tom
s”),
bloc
k pl
anni
ng w
ith b
ucke
ts.
Dis
aggr
egat
ion
of a
ggre
gate
pla
nnin
g
quan
titie
s to
coun
tries
and
fact
orie
s.
The
syst
ems s
houl
d be
abl
e to
avo
id in
form
atio
n ov
erlo
ad b
y pr
ovid
ing
pow
erfu
l agg
rega
tion
proc
edur
es. S
uppl
y ch
ain
partn
ers u
se d
iffer
ent
met
hods
and
par
amet
ers t
o ag
greg
ate,
e.g
., in
ord
er to
de
term
ine
data
abo
ut p
rodu
ct g
roup
s with
an
adeq
uate
st
atis
tical
bas
is. I
n di
ffer
ent c
ount
ries t
he p
rodu
ct
char
acte
ristic
s with
mos
t im
pact
on
the
mar
ket m
ay
vary
. Ex
ampl
e: It
shou
ld b
e po
ssib
le to
clu
ster
all
car m
otor
s w
ith d
efin
ed v
alue
s of t
he C
O2 o
utpu
t or a
ll to
ys m
ade
from
the
sam
e ra
w m
ater
ial.
l) Fo
reca
st a
fter c
onst
rain
ts.
If fo
reca
sts i
ndic
ate
a si
gnifi
cant
gro
wth
in d
eman
d,
info
rmat
ion
on se
rious
cap
acity
con
stra
ints
shou
ld
prev
ent p
lann
ing
with
thes
e sa
les f
orec
asts
.
Cf.
Sect
ion
4.2.
1.J.
m)
Col
labo
rativ
e de
man
d pl
anni
ng.
The
partn
ers i
n th
e su
pply
cha
in sh
ould
try
to d
evel
op
com
mon
scen
ario
s and
to a
chie
ve a
com
mon
est
imat
e of
the
dem
and
resu
lting
in u
se o
f the
se sc
enar
ios a
s the
ba
sis o
f sub
sequ
ent p
lann
ing.
Cf.
Sect
ion
4.2.
3.A
.
n)
Prod
uct m
ix p
lann
ing.
Su
pplie
rs o
ften
have
an
inte
rest
in re
ceiv
ing
orde
rs n
ot
only
for s
ingl
e pr
oduc
ts b
ut fo
r pro
duct
mix
es.
Exam
ple:
A c
hem
ical
com
pany
is in
tere
sted
in se
lling
pr
oduc
t A to
geth
er w
ith p
rodu
ct A
’, w
hich
em
erge
s as
a jo
int p
rodu
ct in
the
prod
uctio
n pr
oces
s.
Cf.
Sect
ion
4.7.
3.
data
, e.g
., of
tota
l pro
duct
ion
Cf.
Sect
ions
4.2
.1, 4
.2.2
.C
(reg
ardi
ng ti
me)
, and
4.2
.2.N
(reg
ardi
ng re
sour
ces)
.
2 The Scope of Supply Chain Management 38
Des
irabl
e Fe
atur
es
Com
men
ts
Cov
erag
e by
SA
P SC
M™
o)
Col
labo
rativ
e de
liver
y sc
hedu
les.
Info
rmat
ion
exch
ange
bef
ore
conf
irmat
ion
of sh
ipm
ent
date
s can
incr
ease
the
prob
abili
ty o
f shi
ppin
g in
tim
e.
Cf.
Sect
ions
4.2
.3.C
and
4.2
.3.D
.
p)
Col
labo
rativ
e pr
omot
ion
plan
ning
. Pr
omot
ions
may
be
trigg
ered
by
inve
ntor
y m
anag
emen
t (h
igh
inve
ntor
y le
vels
hav
e to
be
redu
ced,
add
ition
al
war
ehou
se sp
ace
is n
eede
d), f
rom
spec
ial s
ales
op
portu
nitie
s (e.
g., T
V a
nd v
ideo
sets
bef
ore
big
spor
ting
even
ts),
from
fina
nce
(nee
d to
impr
ove
liqui
dity
), or
by
prod
uct l
ife c
ycle
man
agem
ent (
new
m
odel
s will
soon
repl
ace
old
ones
). Se
vera
l par
tner
s m
ay b
e in
volv
ed, e
.g.,
supp
liers
of s
ervi
ce p
arts
. If
pro
mot
ion
plan
ning
is n
ot su
ffic
ient
ly c
oord
inat
ed,
peak
s in
dem
and
may
resu
lt an
d ra
w m
ater
ials
, co
mpo
nent
s, or
faci
litie
s may
cau
se b
ottle
neck
s. Su
pplie
rs tr
y to
avo
id a
situ
atio
n w
here
seve
ral
cust
omer
s sta
rt pr
omot
ions
at t
he sa
me
time
for t
he
sam
e pr
oduc
t gro
ups.
Cf.
Sect
ions
4.2
.3.A
and
4.3
.2.C
.
2.3 Desirable Features of SCM Systems 39
Des
irabl
e Fe
atur
es
Com
men
ts
Cov
erag
e by
SA
P SC
M™
Var
iabl
e se
t-up
of p
aram
eter
s di
stin
guis
hing
bet
wee
n fo
reca
st-
cons
umpt
ion
and
plan
-con
sum
ptio
n.
Whe
n an
ord
er a
rriv
es it
is n
eces
sary
to ju
dge
whe
ther
it
is th
e re
aliz
atio
n of
a p
lann
ed o
rder
or n
ot. I
f in
the
first
cas
e th
e or
der e
ntry
dat
e di
ffer
s fro
m th
e pl
anne
d ar
rival
dat
e, it
has
to b
e de
cide
d w
heth
er th
e in
com
ing
orde
r is a
real
izat
ion
of th
e ea
rlier
or t
he la
ter p
lann
ed
orde
r. If
the
inco
min
g or
der i
s allo
cate
d to
the
late
r one
, th
e sy
stem
rega
rds t
he o
rder
pla
nned
for a
pas
t per
iod
as a
n er
ror,
assu
mes
dec
reas
ing
dem
and,
and
ther
efor
e re
duce
s the
new
fore
cast
. If t
he o
rder
is c
lass
ified
as
unpl
anne
d, th
is c
an b
e a
trigg
er to
incr
ease
fore
cast
s an
d/or
dem
and
plan
s. Th
is d
ecis
ion
may
be
auto
mat
ed b
y a
set o
f rul
es. I
n an
SC
M re
latio
nshi
p th
is d
ecis
ion
can
be su
ppor
ted
by
info
rmat
ion
exch
ange
bet
wee
n cu
stom
ers a
nd su
pplie
r in
a m
ore
syst
emat
ic a
nd e
ffic
ient
way
than
in o
ther
bu
sine
ss re
latio
nshi
ps.
Cf.
Sect
ion
4.2.
1.F.
r)
Def
initi
on o
f rul
es fo
r the
leve
l of
safe
ty st
ocks
(e.g
. in
dist
ribut
ion
cent
ers)
and
cap
aciti
es.
The
situ
atio
n w
here
par
tner
s hol
d to
o hi
gh o
r too
low
in
vent
ory
leve
ls sh
ould
be
avoi
ded,
bec
ause
the
chan
ce
to o
ptim
ize
the
tota
l inv
ento
ry in
the
supp
ly c
hain
w
ould
be
redu
ced
if th
ey d
id.
Exam
ple:
If th
e pa
rtne
rs k
now
that
they
can
acc
ess
stoc
ks o
f oth
er p
artn
ers i
f nec
essa
ry th
ey d
o no
t nee
d to
ke
ep h
igh
safe
ty st
ocks
of t
heir
ow
n.
In a
cas
e st
udy
inve
ntor
y po
sitio
ning
was
iden
tifie
d as
th
e by
far m
ost i
mpo
rtan
t dri
ver f
or im
prov
ing
supp
ly
For i
nter
nal c
olla
bora
tion
cf. S
ectio
ns
4.2.
2.A
and
4.4
.2.B
. Col
labo
ratio
n w
ith e
xter
nal p
artn
ers r
egar
ding
safe
ty
stoc
k le
vels
is n
ot c
over
ed b
y SA
P SC
M™
.
chai
n m
etri
cs (S
imch
i-Lev
i et a
l., 2
008)
.
q)
2 The Scope of Supply Chain Management 40
Des
irabl
e Fe
atur
es
Com
men
ts
Cov
erag
e by
SA
P SC
M™
s)
Bac
kord
er p
roce
ssin
g w
ith d
iffer
ent
optio
ns.
If b
acko
rder
s occ
ur, t
he c
onfir
mat
ion
of c
usto
mer
or
ders
may
be
tem
pora
rily
revo
ked
for p
lann
ing
purp
oses
. The
opt
ion
sele
cted
will
influ
ence
the
depl
oym
ent p
roce
ss a
nd a
ffec
t whi
ch o
rder
s are
fu
lfille
d in
-tim
e.
Cf.
Sect
ion
4.2.
5.G
.
t) Fo
rmul
atio
n of
rule
s for
allo
catin
g sc
arce
pro
duct
s to
dist
ribut
ion
cent
ers
and
war
ehou
ses i
n ca
se o
f sho
rtage
s (D
eplo
ymen
t).
The
syst
em sh
ould
supp
ort c
onsi
sten
t beh
avio
r by
prov
idin
g de
ploy
men
t rul
es.
For d
etai
ls o
f dep
loym
ent r
ules
im
plem
ente
d in
SA
P SC
M™
see
Sect
ions
4.2
.2.I
and
4.4.
4.A
.
u)
Man
ifold
sim
ulat
ions
to e
valu
ate
alte
rnat
ive
proc
edur
es.
To b
e co
nsid
ered
: ret
rosp
ectiv
e fo
reca
sts t
oget
her w
ith
alte
rnat
ive
set-u
ps o
f the
par
amet
ers o
f the
fore
cast
ing
syst
ems a
nd o
f for
ecas
t-con
sum
ptio
n m
etho
ds [s
ee
item
s g) a
nd q
) abo
ve],
for t
he sa
fety
stoc
ks [s
ee it
em
r)],
and
for d
eplo
ymen
t [se
e ite
m t)
].
Cf.
Sect
ion
4.2.
2.3.
3.2
Ope
ratio
nal S
ales
and
Dem
and
Plan
ning
2.3 Desirable Features of SCM Systems 41
Des
irabl
e Fe
atur
es
Com
men
ts
Cov
erag
e by
SA
P SC
M™
a)
Met
hods
for A
TP (A
vaila
ble-
to-
Prom
ise)
and
CTP
(Cap
able
-to-
Prom
ise)
.
With
the
ATP
pro
cedu
re th
e sy
stem
che
cks w
heth
er a
da
te a
nd a
qua
ntity
spec
ified
by
a cu
stom
er c
an b
e co
nfirm
ed b
y th
e su
pplie
r. O
nly
inve
ntor
y an
d pl
anne
d sh
ipm
ents
are
con
side
red.
CTP
(Cap
able
-to-P
rom
ise)
as
sum
es th
at th
e cu
stom
er a
sks w
hich
qua
ntity
can
be
supp
lied
at w
hich
dat
e. If
the
cust
omer
acc
epts
, CTP
ge
nera
tes a
new
ord
er (p
rocu
rem
ent,
prod
uctio
n, a
nd/o
r tra
nspo
rtatio
n) to
cov
er th
e ne
w d
eman
d. C
apac
ity a
nd
time
cons
train
ts a
re ta
ken
into
acc
ount
.
Cf.
Sect
ion
4.2.
5.
b)
Que
ry o
f sto
cks a
nd p
rodu
ctio
n or
ders
ac
ross
the
bord
ers o
f a fi
rm, o
f cap
a-ci
ties o
f the
supp
liers
of r
aw m
ater
ial,
parts
and
(tra
nspo
rtatio
n) se
rvic
es
both
in A
TP a
nd in
CTP
che
cks.
Con
side
ratio
n of
the
resu
lts w
ith
resp
ect t
o ow
n op
erat
ions
. Inc
lude
st
atis
tical
val
ues f
or sc
rap.
Prio
rity
rule
s to
choo
se fr
om a
ltern
ativ
e ac
tions
whe
n pr
oble
ms w
ith
cust
omer
s’ re
ques
ts a
rise.
Eva
luat
ion
of a
ltern
ativ
e so
lutio
ns (e
.g.,
stoc
k tra
nsfe
r by
carg
o fli
ght v
ersu
s sal
e of
m
ore
expe
nsiv
e pr
oduc
ts a
t a re
duce
d pr
ice)
.
Som
etim
es th
ere
are
prob
lem
s eve
n w
ithin
a b
ig
ente
rpris
e w
ith d
ecen
traliz
ed st
ock
keep
ing
in
dete
rmin
ing
whe
re p
rodu
cts a
nd c
ompo
nent
s are
av
aila
ble.
Thi
s may
be
caus
ed b
y in
com
patib
le IT
sy
stem
s. Th
e pr
oble
m is
eve
n ha
rder
to so
lve
in su
pply
ne
twor
ks in
whi
ch e
xter
nal p
artn
ers a
re in
volv
ed. O
ne
way
out
is to
hav
e co
mm
on p
orta
ls w
here
the
loca
l sy
stem
s can
see
whi
ch a
nd h
ow m
any
item
s are
av
aila
ble
in d
iffer
ent l
ocat
ions
.
Onl
y w
ithin
the
corp
orat
e gr
oup;
cf
. Sec
tion
4.2.
5.B
.
2 The Scope of Supply Chain Management 42
Des
irabl
e Fe
atur
es
Com
men
ts
Cov
erag
e by
SA
P SC
M™
c)
Link
s bet
wee
n fin
al p
rodu
cts a
nd
mat
eria
ls w
ith th
eir s
ubst
itute
s,
toge
ther
with
info
rmat
ion
abou
t po
tent
ial a
dvan
tage
s and
di
sadv
anta
ges o
f a su
bstit
utio
n.
Info
rmat
ion
abou
t wel
l-sui
ted
subs
titut
es is
esp
ecia
lly
diff
icul
t to
obta
in in
inte
rnat
iona
lly o
rgan
ized
supp
ly
chai
ns, s
ince
pro
duct
feat
ures
con
cern
ing
qual
ity,
colo
rs, d
urab
ility
, priz
e, e
tc. m
ay b
e di
ffer
ently
ev
alua
ted
in d
iffer
ent c
ount
ries.
Cf.
Sect
ion
4.4.
6.
d)
Cla
ssifi
catio
n of
cus
tom
ers a
nd
orde
rs; c
onne
ctin
g th
e cl
asse
s with
pr
iorit
ies f
or o
rder
acc
epta
nce
and
exec
utio
n.
Supp
ort o
f dec
isio
n m
akin
g in
reso
urce
con
flict
s. Fo
r bac
kord
er p
roce
ssin
g cf
. Sec
tion
4.2.
5.G
.
e)
Prio
ritie
s for
the
use
of sc
arce
pr
oduc
tion
reso
urce
s suc
h as
mac
hine
to
ols.
Prec
ondi
tion:
Alte
rnat
ive
bills
of m
ater
ials
and
rout
ings
ha
ve b
een
docu
men
ted
in th
e m
aste
r dat
a.
Cf.
Sect
ions
4.2
.2.D
, 4.2
.2.E
, 4.2
.2.F
, an
d 4.
2.4.
D.
f)
Sele
ctio
n of
regi
onal
, nat
iona
l, an
d gl
obal
tran
spor
tatio
n fa
cilit
ies.
Trad
e-of
f bet
wee
n co
st, t
ime,
and
env
ironm
enta
l im
pact
of t
rans
porta
tion
optio
ns.
Cf.
Sect
ion
4.2.
6.A
.
g)
Con
side
ratio
n of
pic
k-up
win
dow
s. Pi
ck-u
p w
indo
ws d
eter
min
e w
hen
cust
omer
s or c
arrie
rs
are
allo
wed
to p
ick
up p
rodu
cts a
t the
supp
liers
’ site
. Th
ey a
re a
n im
porta
nt re
stric
tion
for t
rans
porta
tion
plan
ning
.
Cf.
Sect
ion
4.2.
6.
h)
Usi
ng g
eo d
ata
to lo
caliz
e tra
nspo
rts
and
to fo
reca
st a
rriv
al ti
mes
. M
ay b
e ba
sed
on R
FID
tech
niqu
es.
Geo
dat
a is
use
d to
cal
cula
te tr
ansp
or-
tatio
n du
ratio
ns; c
f. Se
ctio
n 4.
2.6.
A.
i) M
anifo
ld si
mul
atio
ns to
eva
luat
e al
tern
ativ
e pr
oced
ures
. Si
mul
atio
ns m
ay h
elp
to a
naly
ze th
e ef
fect
s of
alte
rnat
ive
prio
rity
rule
s; se
e ite
ms b
) and
e) a
bove
. C
f. Se
ctio
n 4.
2 (b
ut n
ot in
co
mbi
natio
n w
ith b
acko
rder
pr
oces
sing
as d
escr
ibed
in S
ectio
n 4.
2.5.
G).
2.3.
4 P
rocu
rem
ent
Pla
nn
ing
2.3.
4.1
Stra
tegi
c Pr
ocur
emen
t Pla
nnin
g
2.3 Desirable Features of SCM Systems 43
Des
irabl
e Fe
atur
es
Com
men
ts
Cov
erag
e by
SA
P SC
M™
a)
Mak
e-or
-buy
dec
isio
ns.
Portf
olio
mod
els a
nd L
inea
r Pro
gram
min
g m
odel
s may
be
use
d to
det
erm
ine
the
cons
eque
nces
of d
iffer
ent
exte
nts o
f ver
tical
inte
grat
ion.
Not
in sc
ope
of S
AP
SCM™
.
b)
Dec
isio
ns b
etw
een
cent
raliz
ed a
nd
dece
ntra
lized
pro
cure
men
t. D
eskt
op p
urch
asin
g sy
stem
s may
pro
vide
tran
spar
ency
ev
en if
MR
O p
arts
are
ord
ered
dec
entra
lly.
Not
in sc
ope
of S
AP
SCM™
.
c)
Dec
isio
ns b
etw
een
sing
le so
urci
ng
and
mul
tiple
sour
cing
of c
erta
in p
arts
. Ef
fect
s of c
ompe
titio
n, ri
sks o
f una
vaila
bilit
y, a
nd th
e ad
vant
ages
of c
lose
coo
pera
tion
with
pre
ferr
ed
supp
liers
hav
e to
be
cons
ider
ed.
Not
in sc
ope
of S
AP
SCM™
.
d)
Met
hods
to e
valu
ate
supp
liers
of
prod
ucts
and
serv
ices
. Th
ese
met
hods
may
hel
p in
sele
ctio
n of
par
tner
s for
a
long
-tim
e co
llabo
ratio
n in
supp
ly c
hain
s and
thus
in
stru
ctur
ing
the
netw
ork.
Eva
luat
ing
the
tech
nolo
gica
l an
d fin
anci
al p
ositi
on o
f the
supp
liers
may
be
as
rele
vant
as s
tatis
tical
dat
a on
pas
t per
form
ance
. M
ultip
le-c
riter
ia d
ecis
ion-
mak
ing
proc
edur
es m
ay b
e us
ed to
stud
y th
e tra
de-o
ffs b
etw
een
diff
eren
t pr
ocur
emen
t goa
ls.
Not
in sc
ope
of S
AP
SCM™
.
e)
Con
tract
man
agem
ent.
Arc
hivi
ng c
ontra
cts a
nd d
efin
ing
aler
t mec
hani
sms
whe
n co
ntra
cts m
ay b
e pr
olon
ged,
can
celle
d, o
r m
odifi
ed.
Not
in sc
ope
of S
AP
SCM™
.
2.3.
4.2
Tac
tical
Pro
cure
men
t Pla
nnin
g
2.3.
4.3
Ope
ratio
nal P
rocu
rem
ent P
lann
ing
2 The Scope of Supply Chain Management 44
Des
irabl
e Fe
atur
es
Com
men
ts
Cov
erag
e by
SA
P SC
M™
a)
Dire
ctor
y of
sour
ces.
Glo
bal d
irect
orie
s of s
ourc
es fo
r raw
mat
eria
ls, p
arts
, pr
oduc
ts, a
nd se
rvic
es a
re n
eede
d w
hen
supp
liers
hav
e to
be
repl
aced
rapi
dly.
Not
in sc
ope
of S
AP
SCM™
.
b)
Adm
inis
tratio
n of
sour
cing
prio
ritie
s an
d qu
ota
arra
ngem
ents
. R
ules
for s
ourc
ing
deci
sion
s sho
uld
be d
efin
ed a
nd
docu
men
ted.
N
ot in
scop
e of
SA
P SC
M™
.
c)
Coo
rdin
atio
n of
safe
ty st
ock
polic
ies;
vi
sual
izat
ion
of in
terd
epen
denc
ies
betw
een
safe
ty st
ocks
for d
iffer
ent
com
pone
nts,
prod
ucts
, and
loca
tions
.
It is
nec
essa
ry to
dec
ide
to w
hat e
xten
t saf
ety
stoc
ks in
w
areh
ouse
A c
an b
e us
ed w
hen
ther
e is
an
urge
nt
dem
and
in w
areh
ouse
B, a
nd v
ice
vers
a.
Adv
anta
ges o
f low
er sa
fety
stoc
ks h
ave
to b
e co
mpa
red
with
dis
adva
ntag
es o
f sto
ck tr
ansf
ers b
etw
een
war
ehou
ses.
Cf.
Sect
ion
4.4.
4.B
.
d)
Sim
ulat
ion
mod
els.
May
be
help
ful f
or a
naly
zing
safe
ty st
ock
polic
ies;
cf.
item
c) a
bove
. C
f. Se
ctio
n 4.
2.
Des
irabl
e Fe
atur
es
Com
men
ts
Cov
erag
e by
SA
P SC
M™
a)
Cal
l for
tend
ers o
n B
2B p
latfo
rms;
or
gani
zatio
n of
(rev
erse
) auc
tions
. Fo
r com
pone
nts w
ith u
ncrit
ical
pro
perti
es it
is a
lso
impo
rtant
in su
pply
cha
ins t
o se
lect
the
best
off
ers.
Not
in sc
ope
of S
AP
SCM™
.
b)
Pegg
ing.
A
ssig
nmen
t of c
usto
mer
ord
ers t
o pr
oduc
tion
orde
rs,
proc
urem
ent o
rder
s, tra
nspo
rtatio
n or
ders
, and
oth
er
sour
ces.
Cf.
Sect
ion
4.2.
4.A
.
2.3.
5 P
rod
uct
ion
Pla
nn
ing
2.3.
5.1
Stra
tegi
c Pr
oduc
tion
plan
ning
2.3 Desirable Features of SCM Systems 45
Des
irabl
e Fe
atur
es
Com
men
ts
Cov
erag
e by
SA
P SC
M™
c)
Col
lect
ion
of tr
acki
ng d
ata,
co
nsid
erin
g tra
nspo
rts o
n th
eir w
ay
for p
lann
ing,
sche
dulin
g, a
nd
acco
untin
g.
Rea
l-tim
e da
ta a
bout
the
loca
tion
of m
ater
ials
is
impo
rtant
for s
hort-
term
pla
nnin
g an
d sc
hedu
ling.
N
o di
rect
link
from
trac
king
dat
a ou
tsid
e th
e bo
unda
ry o
f the
cor
pora
te
grou
p to
pla
nnin
g.
Des
irabl
e Fe
atur
es
Com
men
ts
Cov
erag
e by
SA
P SC
M™
a)
Coo
rdin
atio
n of
the
prod
uctio
n ca
paci
ties b
etw
een
the
partn
ers i
n th
e su
pply
cha
in, e
spec
ially
bet
wee
n fa
ctor
ies t
hat c
an p
rodu
ce id
entic
al
item
s and
thus
supp
ort e
ach
othe
r in
th
e ca
se o
f bot
tlene
cks.
In so
me
case
s the
coo
rdin
atio
n is
org
aniz
ed a
s an
inte
rnal
mar
ket o
n w
hich
the
plan
ts o
ffer
thei
r pro
duct
s. N
ot in
scop
e of
SA
P SC
M™
.
b)
Con
side
ring
subc
ontra
ctin
g an
d
outs
ourc
ing
as w
ay o
ut o
f cap
acity
bo
ttlen
ecks
.
If th
e so
ftwar
e do
es n
ot su
ppor
t suc
h de
cisi
ons d
irect
ly,
the
user
mig
ht in
clud
e th
e ad
ditio
nal t
rans
ports
as s
et-
up o
pera
tions
/cos
ts.
Cf.
Sect
ion
4.2.
4.G
for o
pera
tive
subc
ontra
ctin
g.
c)
Man
ifold
sim
ulat
ions
to e
valu
ate
al
tern
ativ
e ac
tions
. Si
mul
atio
ns m
ay su
ppor
t the
cho
ice
of th
e al
tern
ativ
es;
cf. i
tem
s a) a
nd b
) abo
ve.
Cf.
Sect
ion
4.2.
2.3.
5.2
Tac
tical
Pro
duct
ion
Plan
ning
2 The Scope of Supply Chain Management 46
Des
irabl
e Fe
atur
es
Com
men
ts
Cov
erag
e by
SA
P SC
M™
a)
Cro
ss-p
lant
pla
nnin
g.
In su
pply
cha
ins w
ith ti
ght s
uppl
ier-
cust
omer
rela
tions
it
is w
orth
whi
le to
pla
n an
d sc
hedu
le th
e ca
paci
ties o
f pl
ants
in a
sim
ilar w
ay to
thos
e of
mac
hine
s and
w
orkp
lace
s in
an in
tra-p
lant
MR
P sy
stem
. Tr
ansp
orta
tion
times
bet
wee
n th
e pl
ants
wou
ld th
en
corr
espo
nd to
set-u
p tim
es in
an
MR
P sy
stem
.
Cf.
Sect
ion
4.2.
2.
b)
Rul
es fo
r acc
ess t
o sa
fety
stoc
ks a
nd
for s
tock
tran
sfer
of s
emi-f
inis
hed
prod
ucts
whe
n sh
orta
ges o
ccur
.
Agr
eem
ents
bet
wee
n th
e pa
rtner
s in
a su
pply
cha
in
shou
ld in
clud
e su
ch ru
les t
o av
oid
com
plic
ated
ne
gotia
tions
in c
ritic
al si
tuat
ions
.
Ava
ilabl
e w
ithin
com
pany
. N
ot a
vaila
ble
betw
een
diff
eren
t co
mpa
nies
; cf.
Sect
ion
4.4.
4.
c)
Coo
rdin
ated
pro
duct
ion
and
di
strib
utio
n pl
anni
ng.
Espe
cial
ly in
glo
bal s
uppl
y ch
ains
, if p
rodu
cts h
ave
a sh
ort l
ife c
ycle
and
dis
tinct
seas
onal
pea
ks, i
t is
chal
leng
ing
to ta
ke in
to a
ccou
nt th
e re
stric
tions
(tim
e an
d qu
antit
y) fo
r the
dow
nstre
am d
istri
butio
n. In
this
ca
se th
e pr
oduc
tion
plan
is d
eriv
ed fr
om th
e di
strib
utio
n pl
an. T
he th
eore
tical
opt
imum
wou
ld b
e ac
hiev
ed b
y si
mul
tane
ous p
lann
ing,
but
in p
ract
ice
this
is to
o co
mpl
ex in
man
y ca
ses.
Cf.
Sect
ion
4.2.
2.
d)
Flex
ible
def
initi
on o
f res
ourc
es, e
.g.,
min
imal
and
max
imal
load
, cal
enda
r-de
pend
ent c
apac
ities
.
Typi
cal e
xam
ples
for c
alen
dar-
depe
nden
t cap
aciti
es a
re
redu
ced
open
ings
bec
ause
of v
acat
ion
clos
edow
ns o
r sc
hedu
led
mai
nten
ance
task
s.
Can
be
defin
ed in
mas
ter d
ata;
cf
. Sec
tion
4.7.
3.
2.3 Desirable Features of SCM Systems 47
Des
irabl
e Fe
atur
es
Com
men
ts
Cov
erag
e by
SA
P SC
M™
e)
Cal
cula
tions
of a
dditi
onal
cos
ts fo
r a
shor
t-ter
m e
nlar
gem
ent o
f cap
aciti
es,
e.g.
, by
runn
ing
over
time.
Easi
ng o
f a b
ottle
neck
in o
ne fa
ctor
y m
ay re
sult
in
bene
fits f
or se
vera
l par
tner
s. Th
eref
ore
the
cont
ribut
ion
of e
ach
of th
e pa
rtner
s sho
uld
be c
alcu
late
d w
ith
met
hods
that
are
stan
dard
ized
in th
e su
pply
cha
in to
av
oid
recu
rren
t neg
otia
tions
.
Cf.
Sect
ion
4.2.
2.E.
f)
Plan
ning
with
out f
inal
ass
embl
y.
Ofte
n th
e fin
al a
ssem
bly
is n
ot in
itiat
ed u
ntil
afte
r an
orde
r com
es in
from
the
cust
omer
. How
ever
, “vi
rtual
in
term
edia
te p
rodu
cts”
may
be
prod
uced
and
stor
ed
with
out o
rder
bec
ause
they
are
use
d in
seve
ral f
inal
pr
oduc
ts a
nd w
ill re
duce
the
thro
ughp
ut-ti
me.
Cf.
Sect
ion
4.2.
1.G
.
g)
Suba
ssem
bly
plan
ning
. Th
e as
sem
bly
of th
e co
mpo
nent
s is p
lann
ed a
ccor
ding
to
con
sum
ptio
n. W
hen
cust
omer
s’ o
rder
s arr
ive,
the
com
pone
nts a
re “
cons
umed
.” In
con
trast
to it
em f)
, one
do
es n
ot p
lan
prod
uctio
n of
the
com
pone
nts o
nly,
but
al
so th
e as
sem
bly.
Cf.
Sect
ion
4.2.
1.G
.
h)
Def
initi
on a
nd a
pplic
atio
n of
diff
eren
t pr
iorit
y ru
les f
or C
apab
le-to
-Mat
ch
(CTM
).
Seve
ral p
rodu
ctio
n or
ders
may
com
pete
for s
carc
e re
sour
ces.
Whe
n a
CTM
ana
lysi
s is a
pplie
d, p
riorit
y ru
les a
re n
eces
sary
to d
eter
min
e re
alis
tic d
eliv
ery
date
s.
Cf.
Sect
ion
4.2.
2.F.
i) M
anifo
ld si
mul
atio
ns to
eva
luat
e al
tern
ativ
e de
cisi
ons.
Sim
ulat
ion
may
supp
ort t
he d
ecis
ions
men
tione
d in
ite
ms b
), c)
, and
h) a
bove
. C
f. Se
ctio
n 4.
2.
2.3.
5.3
Ope
ratio
nal P
rodu
ctio
n Pl
anni
ng a
nd S
ched
ulin
g
2 The Scope of Supply Chain Management 48
Des
irabl
e Fe
atur
es
Com
men
ts
Cov
erag
e by
SA
P SC
M™
a)
Prod
uctio
n sc
hedu
ling
agre
emen
ts.
Thes
e ag
reem
ents
are
ver
y im
porta
nt in
indu
strie
s w
here
set-u
p tim
es a
re lo
ng a
nd se
t-up
cost
s hig
h. If
the
prod
uctio
n pl
ans a
re n
ot h
arm
oniz
ed a
nd JI
T de
liver
y is
ag
reed
on,
it m
ay h
appe
n th
at th
e su
pplie
r has
to
prod
uce
a bi
g lo
t whe
n it
does
not
fit i
nto
the
set-u
p cy
cle
beca
use
the
cust
omer
urg
ently
nee
ds th
e co
mpo
nent
for i
ts o
wn
prod
uctio
n pr
oces
s.
Exch
ange
rega
rdin
g ne
t req
uire
men
ts
as a
resu
lt of
MR
P; c
f. Se
ctio
ns
4.2.
3.C
, 4.2
.3.D
, 4.3
.1.B
, and
4.3
.1.C
.
b)
Heu
ristic
s for
lot s
izin
g an
d fo
r pr
iorit
y ru
les,
cons
ider
ing
bottl
enec
ks
and
impa
ct o
n su
pplie
rs a
nd
cust
omer
s.
In ta
ctic
al p
rodu
ctio
n pl
anni
ng lo
t siz
es a
re d
eter
min
ed
on a
roug
h ba
sis.
Thes
e lo
t siz
es m
ay b
e m
odifi
ed in
de
taile
d pl
anni
ng a
nd sc
hedu
ling
to ta
ke th
e ac
tual
si
tuat
ion
in th
e pr
oduc
tion
envi
ronm
ent i
nto
acco
unt.
Lot s
izes
are
rega
rded
as m
aste
r dat
a;
cf. S
ectio
n 4.
7.3.
Heu
ristic
s for
de
term
inin
g lo
t siz
es a
re a
lso
avai
labl
e.
c)
Ale
rt if
the
sync
hron
izat
ion
of
proc
esse
s is v
iola
ted.
A
lerts
whe
n pr
oduc
tion
and
dist
ribut
ion
proc
esse
s w
hich
orig
inal
ly h
ad b
een
plan
ned
colla
bora
tivel
y ar
e no
mor
e sy
nchr
oniz
ed b
ecau
se o
f res
ched
ulin
g m
easu
res,
dist
urba
nces
, or i
nter
rupt
ions
; the
ale
rts h
ave
to b
e se
nt to
all
depa
rtmen
ts in
volv
ed, e
.g.,
by a
n in
ter-
com
pany
wor
kflo
w.
Cf.
Sect
ion
4.6.
2.
2.3 Desirable Features of SCM Systems 49
Des
irabl
e Fe
atur
es
Com
men
ts
Cov
erag
e by
SA
P SC
M™
d)
Con
side
ring
aggr
egat
ed sc
rap.
Th
e sc
rap
accr
ued
with
in th
e su
pply
cha
in m
ust b
e co
nsid
ered
in p
rodu
ctio
n an
d di
strib
utio
n pl
anni
ng.
Can
be
defin
ed in
mas
ter d
ata;
cf
. Sec
tion
4.7.
3.
e)
Bac
kord
er p
roce
ssin
g, e
spec
ially
ad
min
istra
tion
of p
riorit
ies f
or
cust
omer
s and
ord
ers.
Det
erm
ine
mos
t urg
ent b
acko
rder
s for
ear
lier
proc
essi
ng. B
acko
rder
s mus
t be
cons
ider
ed in
ATP
and
C
TM.
Cf.
Sect
ions
4.2
.4.C
and
4.2
.5.G
.
f)
Net
cha
nge
plan
ning
. B
ecau
se o
f the
tigh
t cou
plin
g of
the
proc
urem
ent,
prod
uctio
n, a
nd d
istri
butio
n pl
ans w
ithin
the
supp
ly
chai
n, d
eter
min
ing
a ne
w p
lan
afte
r eac
h m
odifi
catio
n ty
pica
lly is
une
cono
mic
al. T
here
fore
met
hods
of n
et
chan
ge p
lann
ing
and
sche
dulin
g, re
gard
ing
only
the
mod
ified
dat
a, a
re im
porta
nt so
that
pro
visi
onal
resu
lts
can
be o
btai
ned.
How
ever
, cer
tain
(mos
tly te
mpo
ral)
even
ts tr
igge
r the
tota
l upd
ate
of a
ll pl
ans i
n a
new
pl
anni
ng ru
n.
SAP
syst
ems a
pply
net
cha
nge
plan
ning
in m
ost c
ases
.
2.3.
6 D
istr
ibu
tio
n P
lan
nin
g
2.3.
6.1
Stra
tegi
c D
istr
ibut
ion
Plan
ning
2 The Scope of Supply Chain Management 50
Des
irabl
e Fe
atur
es
Com
men
ts
Cov
erag
e by
SA
P SC
M™
a)
D
efin
ition
of r
ules
for b
acko
rder
pr
oces
sing
. B
acko
rder
s may
resu
lt fr
om d
istu
rban
ces o
n th
e se
ll-si
de (e
.g.,
beca
use
an u
rgen
t ord
er h
as to
be
serv
ed),
from
pro
duct
ion
(e.g
., be
caus
e of
inte
rrup
tion
of a
pr
oduc
tion
line
or u
nexp
ecte
d sc
rap)
, or f
rom
the
buy-
side
(e.g
., de
lay
in d
eliv
ery)
. Dis
tribu
tion
stra
tegi
es
shou
ld b
e de
fined
to a
llow
rush
tran
spor
ts in
cas
e of
ur
gent
del
iver
y ne
eds t
o pa
rtial
ly c
ompe
nsat
e fo
r the
de
lays
that
resu
lted
in e
arlie
r sta
ges.
SAP
SCM
™ a
llow
s to
mod
el th
e ru
les
in B
acko
rder
Pro
cess
ing;
cf.
Sect
ion
4.2.
5.G
.
b)
Mak
e-or
-buy
dec
isio
ns fo
r tra
nspo
rtatio
n se
rvic
es.
Use
of o
wn
truck
flee
t vs.
cont
ract
ing
prof
essi
onal
sh
ippe
rs.
Not
in sc
ope
of S
AP
SCM™
.
c)
Deg
ree
in w
hich
val
ue-a
dded
se
rvic
es o
f ser
vice
pro
vide
rs a
re
acce
pted
.
Dec
isio
ns a
bout
buy
ing
serv
ices
off
ered
as “
Four
th-
Party
Log
istic
s.”
Not
in sc
ope
of S
AP
SCM™
.
d)
Impl
emen
tatio
n of
trac
k-an
d-tra
cing
fu
nctio
nalit
ies.
May
impl
y us
e of
RFI
D in
stea
d of
bar
code
. N
ot in
scop
e of
SA
P SC
M™
.
2.3.
6.2
Tac
tical
Dis
trib
utio
n Pl
anni
ng
2.3 Desirable Features of SCM Systems 51
Des
irabl
e Fe
atur
es
Com
men
ts
Cov
erag
e by
SA
P SC
M™
a)
Pack
age
plan
ning
coo
rdin
ated
with
cl
ient
s and
supp
liers
. Pa
ckag
e pl
anni
ng h
as to
con
side
r, e.
g., t
he tr
ansp
ort
equi
pmen
t. C
lient
-spe
cific
pac
kage
s can
be
nece
ssar
y in
add
ition
to th
e st
anda
rd p
acka
ge. P
acka
ge p
lann
ing
may
be
inte
grat
ed w
ith p
rodu
ct d
esig
n an
d m
eans
of
trans
port
deci
sion
s, e.
g., a
dapt
atio
n of
box
es to
via
ls
and
tube
s in
the
cosm
etic
s ind
ustry
, bic
ycle
s with
out
over
hang
ing
parts
so th
at th
e st
orag
e sp
ace
in th
e m
eans
of
tran
spor
tatio
n is
wel
l util
ized
.
Not
in sc
ope
of S
AP
SCM™
.
b)
Adm
inis
tratio
n of
del
iver
y w
indo
ws.
Del
iver
y w
indo
ws a
t the
cus
tom
er’s
site
are
as
impo
rtant
as p
ick-
up w
indo
ws a
t the
supp
lier’
s site
. Ti
me
slot
s may
var
y, e
.g.,
durin
g th
e ho
liday
seas
on.
Cf.
Sect
ion
4.2.
6.A
.
c)
Supp
ly d
istri
butio
n; p
ush
with
out
dem
and.
So
met
imes
a fa
ctor
y ha
s the
pow
er to
pus
h pr
oduc
ts to
th
e po
int o
f sal
e ev
en if
ther
e is
no
imm
edia
te d
eman
d.
Onl
y in
the
inte
rnal
supp
ly n
etw
ork;
cf
. Sec
tion
4.2.
2.F.
d)
Pr
oced
ures
for d
eplo
ymen
t;
agre
emen
t of d
eplo
ymen
t rul
es.
Dep
loym
ent b
ecom
es re
leva
nt if
dem
and
exce
eds
prod
uctio
n ca
paci
ty o
r sca
rce
stoc
ks h
ave
to b
e al
loca
ted.
In th
is c
ase
diff
eren
t dep
loym
ent p
roce
dure
s an
d pr
iorit
y ru
les m
ust b
e ap
plie
d, e
.g.,
agre
ed q
uota
s, pr
eced
ence
for f
illin
g sa
fety
stoc
ks, a
lloca
tion
prop
ortio
nal t
o pa
st d
eplo
ymen
t, an
d pr
o ra
ta
fulfi
llmen
t of o
pen
orde
rs. I
n re
fined
ver
sion
s tra
nspo
rts a
nd th
eir c
osts
will
als
o be
con
side
red,
so
that
(e.g
.) a
full
ship
load
is a
ccom
plis
hed.
Cf.
Sect
ions
4.2
.2.I
and
4.4.
4.A
.
2 The Scope of Supply Chain Management 52
Des
irabl
e Fe
atur
es
Com
men
ts
Cov
erag
e by
SA
P SC
M™
e)
Tran
spor
t ATP
and
CTP
. B
y an
alog
y w
ith p
lann
ing
of d
eliv
ery
date
s for
pr
oduc
tion
ther
e is
als
o a
need
to o
rgan
ize
deliv
ery
date
s for
dis
tribu
tion.
In d
evel
opin
g di
strib
utio
n pl
ans
the
avai
labi
lity
of m
eans
of t
rans
port
or th
e tim
e an
d co
sts f
or d
eliv
ery
from
oth
er w
areh
ouse
s (e.
g., f
or
impo
rtant
spar
e pa
rts) h
ave
to b
e co
nsid
ered
.
Cf.
Sect
ion
4.4.
4.B
.
f)
Pres
enta
tion
of a
ltern
ativ
es a
nd/o
r su
bstit
ute
solu
tions
. Ex
ampl
es a
re c
argo
flig
hts w
hen
wat
erw
ays a
re
tem
pora
rily
impa
ssab
le. U
sage
of f
aste
r mea
ns o
f
parts
is u
rgen
t.
Cf.
Sect
ions
4.2
.2.E
and
4.4
.4.A
.
g)
Det
erm
inat
ion
of tr
ansp
ort l
ot si
zes.
Tran
spor
t lot
size
s can
stro
ngly
influ
ence
the
prod
uctio
n an
d de
liver
y pl
anni
ng o
f par
tner
s whe
n go
ods h
ave
high
car
riage
cos
ts.
Not
in sc
ope
of S
AP
SCM™
.
h)
Rel
ocat
ion
of st
ocks
. In
som
e ca
ses i
t may
be
nece
ssar
y to
mod
ify e
arlie
r di
strib
utio
n de
cisi
ons a
nd to
cha
nge
the
loca
tion
of
Cf.
Sect
ion
4.4.
4.B
.
i) C
oord
inat
ion
of in
term
edia
ries.
Logi
stic
s ser
vice
pro
vide
rs a
re o
ften
empl
oyed
for
som
e or
all
dist
ribut
ion
task
s. Th
ese
com
pani
es o
ften
belo
ng to
the
clas
s of S
mal
l and
Med
ium
Ent
erpr
ises
soph
istic
ated
IT sy
stem
s for
seam
less
col
labo
ratio
n w
ith th
eir s
uppl
y ch
ain
partn
ers.
Cf.
Sect
ion
4.6.
1.
j) M
anifo
ld si
mul
atio
ns fo
r eva
luat
ion
of a
ltern
ativ
e pr
oced
ures
. Si
mul
atio
ns c
an b
e he
lpfu
l, e.
g., f
or it
ems f
) and
h)
abov
e.
Cf.
Sect
ion
4.2.
to p
rovi
de su
ffic
ient
safe
ty st
ocks
.
trans
port
in c
ase
of d
elay
s or w
hen
deliv
ery
of sp
are
certa
in st
ocks
to fi
ll ur
gent
ord
ers f
rom
cus
tom
ers o
r
(SM
E), f
or w
hich
it m
ay b
e di
ffic
ult t
o im
plem
ent
2.3.
6.3
Ope
ratio
nal D
istr
ibut
ion
Plan
ning
and
Sch
edul
ing
2.3 Desirable Features of SCM Systems 53
Des
irabl
e Fe
atur
es
Com
men
ts
Cov
erag
e by
SA
P SC
M™
a)
Shel
f-lif
e m
onito
ring.
Th
e su
pplie
r may
be
resp
onsi
ble
for s
helf-
life
man
age-
men
t, in
clud
ing
the
plac
emen
t of a
rticl
es in
the
shel
ves
and
obse
rvin
g da
tes o
f exp
iry, n
otab
ly fo
r foo
d,
cosm
etic
s, an
d ph
arm
aceu
tical
s. D
estru
ctio
n of
exp
ired
prod
ucts
can
resu
lt in
urg
ent d
istri
butio
n ac
tiviti
es.
In V
MI r
elat
ions
hips
the
supp
lier m
ay h
ave
to c
onsi
der
POS
data
for f
orec
astin
g di
strib
utio
n ne
eds.
Onl
y w
ithin
com
pany
; cf
. Sec
tion
4.2.
4.E.
b)
Con
side
ratio
n of
trac
king
dat
es a
nd
of st
ocks
on
thei
r way
in a
ccou
ntin
g an
d pl
anni
ng.
At a
ccou
ntin
g da
tes (
e.g.
, for
qua
rterly
repo
rting
) st
ocks
on
thei
r way
hav
e to
be
docu
men
ted
and
valu
ed.
Rul
es a
re n
eede
d on
whe
ther
stoc
ks a
re to
be
com
mitt
ed a
s ass
ets o
f the
supp
lier o
r of t
he c
usto
mer
w
hen
they
are
en
rout
e.
Stoc
ks in
tran
sit a
re c
onsi
dere
d in
the
plan
ning
mod
ules
. Acc
ount
ing
is n
ot
in th
e sc
ope
of S
AP
SCM™
.
c)
Con
side
ratio
n of
stor
age
and
hand
ling
rest
rictio
ns.
Exam
ples
are
spec
ial p
roce
dure
s for
tran
spor
ting
dang
erou
s goo
ds o
r spe
cial
cra
nes i
n ha
rbor
s. W
ith li
mita
tions
, cf.
Sect
ions
4.2
.2
and
4.2.
4.F.
d)
Tr
ansp
ort l
eits
tand
. Si
mila
r to
cont
rol u
nits
(“le
itsta
nds”
) em
ploy
ed in
pr
oduc
tion
sche
dulin
g, tr
ansp
ort l
eits
tand
s may
vi
sual
ize
the
use
of tr
ansp
orta
tion
reso
urce
s and
the
depe
nden
cies
bet
wee
n co
nsec
utiv
e tra
nspo
rt ac
tiviti
es.
Cf.
Sect
ions
4.2
.2.C
and
4.2
.6.A
.
e)
Use
of p
revi
ousl
y ag
reed
dep
loym
ent
rule
s. R
ules
def
ined
at t
he ta
ctic
al le
vel a
re a
pplie
d in
the
case
of
shor
tage
s. C
f. Se
ctio
ns 4
.2.2
.I an
d 4.
4.4.
A.
2.3.
7 R
etu
rn a
nd
Aft
er-S
ales
Pro
cess
es
2 The Scope of Supply Chain Management 54
Des
irabl
e Fe
atur
es
Com
men
ts
Cov
erag
e by
SA
P SC
M™
f)
Veh
icle
sche
dulin
g re
gard
ing
inco
mpa
tibili
ties.
For e
xam
ple,
secu
rity
regu
latio
ns d
icta
te th
at th
e tra
nspo
rt of
hyd
roge
n an
d ox
ygen
tank
s on
the
sam
e ve
hicl
e m
ust b
e av
oide
d.
Cf.
Sect
ion
4.2.
6.A
.
g)
Tran
spor
t loa
d bu
ilder
. Se
vera
l stra
tegi
es sh
ould
be
repr
esen
ted
in th
e so
ftwar
e,
e.g.
, loa
ding
of t
ruck
s with
the
sam
e go
ods
inde
pend
ently
of t
he ta
rget
loca
tion
or lo
adin
g of
truc
ks
that
driv
e to
one
targ
et lo
catio
n w
ith g
oods
of d
iffer
ent
type
s and
with
diff
eren
t del
iver
y da
tes.
Cf.
Sect
ion
4.2.
2.J.
Des
irabl
e Fe
atur
es
Com
men
ts
Cov
erag
e by
SA
P SC
M™
a)
Espe
cial
ly in
mak
e-to
-ord
er
prod
uctio
n it
is v
ery
impo
rtant
for t
he
serv
ice-
pers
on to
kno
w w
hich
co
mpo
nent
s hav
e be
en u
sed
in
prod
ucin
g a
prod
uct w
hich
is o
ut o
f or
der.
Det
aile
d do
cum
enta
tion
of p
rodu
ct p
rope
rties
in P
DM
sy
stem
s is i
mpo
rtant
. The
serv
ice-
pers
on sh
ould
hav
e ea
sy a
cces
s to
this
info
rmat
ion.
Ofte
n th
e af
ter-
sale
s se
rvic
e is
pro
vide
d by
a d
iffer
ent c
ompa
ny; i
n th
is c
ase
shar
ing
the
data
is a
n im
porta
nt is
sue
for e
ffic
ient
afte
r-sa
les s
ervi
ces.
Not
in sc
ope
of S
AP
SCM™
.
b)
Cus
tom
er c
are
shou
ld b
e su
ppor
ted
beyo
nd th
e pu
rcha
sing
act
. Fo
r pro
duct
s with
a ty
pica
l usa
ge ti
me
it is
impo
rtant
to
cont
act t
he c
usto
mer
in ti
me
to in
fluen
ce h
is
repl
acem
ent p
urch
ase.
A c
lose
coo
rdin
atio
n w
ith C
RM
sy
stem
s is n
eces
sary
.
Not
in sc
ope
of S
AP
SCM™
.
2.3.
8 C
on
tro
llin
g a
nd
Su
pp
ort
Pro
cess
es
2.3.
8.1
Supp
ly C
hain
Eve
nt M
anag
emen
t (SC
EM
)
2.3 Desirable Features of SCM Systems 55
Des
irabl
e Fe
atur
es
Com
men
ts
Cov
erag
e by
SA
P SC
M™
c)
Rec
yclin
g ca
n be
supp
orte
d by
des
ign
proc
esse
s and
det
aile
d do
cum
enta
tion
of p
rodu
ct p
rope
rties
in P
DM
sy
stem
s.
The
limite
d av
aila
bilit
y of
nat
ural
reso
urce
s mak
es
recy
clin
g of
com
pone
nts a
t the
end
of t
he li
fe c
ycle
of
the
asso
ciat
ed p
rodu
ct a
hig
h pr
iorit
y. T
his i
nfor
mat
ion
shou
ld b
e sh
ared
with
com
pani
es th
at a
re a
ctiv
e in
the
recy
clin
g pr
oces
s.
Not
in sc
ope
of S
AP
SCM™
.
d)
Ret
urni
ng h
andl
ing
units
. Sp
ecia
l con
tain
ers,
bins
, pal
lets
, etc
. may
hav
e to
be
retu
rned
to th
e su
pplie
r and
a “
Rev
erse
Sup
ply
Cha
in”
ha
s to
be o
rgan
ized
usi
ng si
mila
r pla
nnin
g an
d sc
hedu
ling
met
hods
as i
n th
e “F
orw
ard
Supp
ly C
hain
.”
Not
in sc
ope
of S
AP
SCM™
.
Des
irabl
e Fe
atur
es
Com
men
ts
Cov
erag
e by
SA
P SC
M™
a)
The
mor
e de
tails
IT sy
stem
s are
reco
gniz
ing,
the
high
er
the
pote
ntia
l for
def
inin
g an
d de
tect
ing
even
ts th
at m
ay
be re
leva
nt in
tern
ally
and
for s
uppl
y ch
ain
partn
ers.
Cf.
Sect
ion
4.6.
1.
b)
Rul
e-ba
sed
filte
ring
of d
etec
ted
info
rmat
ion
over
load
s. C
f. Se
ctio
n 4.
6.1.
ev
ents
usi
ng a
flex
ible
, par
amet
er-
cont
rolle
d de
finiti
on o
f wha
t sho
uld
Det
ectio
n of
eve
nts.
be c
onsi
dere
d a
rele
vant
exc
eptio
n.
Filte
ring
mec
hani
sms a
re h
ighl
y re
leva
nt to
avo
id
2 The Scope of Supply Chain Management 56
Des
irabl
e Fe
atur
es
Com
men
ts
Cov
erag
e by
SA
P SC
M™
c)
Ass
ignm
ents
of e
vent
s/de
viat
ions
to
inst
itutio
ns a
nd b
eare
rs o
f rol
es, w
ho
have
to b
e in
form
ed. I
nfor
mat
ion
of
thes
e ad
dres
sees
insi
de a
nd o
utsi
de
the
firm
(wor
kflo
w m
anag
emen
t).
Even
ts th
at a
re re
leva
nt in
tern
ally
may
not
be
of in
tere
st
for o
ther
par
tner
s in
the
supp
ly c
hain
. Diff
eren
t filt
erin
g pa
ram
eter
s can
be
appl
ied
for d
iffer
ent p
artn
ers i
n th
e
supp
ly c
hain
.
Cf.
Sect
ion
4.6.
1.
d)
Sim
ulat
ion
of th
e im
pact
of e
vent
s on
the
buy-
side
(ups
tream
sim
ulat
ion)
an
d on
the
sell-
side
(dow
nstre
am
sim
ulat
ion)
(dia
gnos
is).
Som
e si
tuat
ions
that
shou
ld b
e si
mul
ated
are
: ups
tream
, th
e lo
adin
g/ov
erlo
adin
g of
war
ehou
ses i
f the
supp
liers
ca
nnot
stop
thei
r pro
duct
ion
proc
esse
s whi
le th
ere
are
dist
ribut
ion
prob
lem
s; d
owns
tream
, the
impa
irmen
t of
cust
omer
s’ re
adin
ess f
or d
eliv
ery
if sa
fety
stoc
ks a
re
viol
ated
.
Not
in sc
ope
of S
AP
SCM™
.
e)
Sele
ctio
n of
stan
dard
ized
rem
edia
l ac
tions
usi
ng p
riorit
y ru
les
(pro
posa
l of t
hera
py).
Not
all
poss
ible
act
ions
can
be
prop
osed
by
the
IT
syst
em, b
ut o
nly
thos
e th
at a
re p
redi
ctab
le o
r st
anda
rdiz
ed.
Not
in sc
ope
of S
AP
SCM™
.
f)
Sim
ulat
ion
of im
pact
of r
emed
ial
actio
ns o
n th
e su
pply
cha
in a
s a
who
le (f
orec
ast o
f eff
ects
of t
hera
py).
Exam
ple:
Par
ts re
serv
ed fo
r cus
tom
ers B
and
C c
ould
be
sent
to th
e pr
iori
tized
cus
tom
er A
bec
ause
of a
n ac
cide
nt d
urin
g tr
ansp
ort t
o A.
The
sim
ulat
ion
trie
s to
dete
rmin
e w
hen
the
prod
uctio
n at
pla
nts B
and
C m
ay
have
to st
op b
ecau
se o
f mis
sing
mat
eria
ls. T
he im
pact
on
B’s
and
C’s
cus
tom
ers m
ay a
lso
be c
onsi
dere
d.
Wha
t wou
ld b
e th
e ef
fect
if A
wer
e se
rved
late
r and
the
orde
rs fr
om B
and
C w
ere
fulfi
lled
in ti
me?
Not
in sc
ope
of S
AP
SCM™
.
2.3 Desirable Features of SCM Systems 57
2.3.
8.2
Man
agem
ent I
nfor
mat
ion/
Perf
orm
ance
Man
agem
ent
Des
irabl
e Fe
atur
es
Com
men
ts
Cov
erag
e by
SA
P SC
M™
a)
Vis
ualiz
atio
n of
act
ual s
tate
s by
activ
atin
g no
des a
nd a
rcs.
This
feat
ure
allo
ws t
he se
lect
ion
of d
etai
led
data
w
ithou
t sho
win
g th
e sa
me
leve
l of d
etai
l in
othe
r, cu
rren
tly le
ss re
leva
nt a
reas
. Ex
ampl
es a
re c
apac
ity u
sage
, fre
quen
cy o
f di
stur
banc
es, o
r del
ays.
Cf.
Sect
ion
4.6.
2.
b)
Trac
ing
proc
urem
ent p
roce
sses
. U
pstre
am tr
acin
g ov
er se
vera
l par
tner
s in
the
supp
ly
chai
n is
esp
ecia
lly im
porta
nt in
indu
strie
s whe
re c
erta
in
prob
lem
s hav
e to
be
dete
cted
imm
edia
tely
(e.g
., co
ntam
inat
ion
in th
e fo
od in
dust
ry o
r mec
hani
cal
rupt
ures
in th
e co
nstru
ctio
n in
dust
ry).
SAP
Even
t Man
ager™
(cf.
Sect
ion
4.6.
1) m
ight
cov
er th
is to
som
e ex
tent
.
c)
Met
hods
for e
valu
atin
g cu
stom
ers.
Met
hods
to c
alcu
late
the
cust
omer
life
cycl
e va
lues
are
ne
eded
to d
efin
e pr
iorit
ies w
ithin
dep
loym
ent.
Not
in sc
ope
of S
AP
SCM™
.
d)
Gen
erat
or fo
r per
form
ance
m
easu
rem
ent s
yste
ms (
e.g.
, DuP
ont
sche
me,
Val
ue d
river
tree
s, B
alan
ced
Scor
ecar
ds).
Flex
ible
gen
erat
ion
of re
ports
on
KPI
s sho
uld
be
prov
ided
. N
ot in
scop
e of
SA
P SC
M™
.
e)
Ada
ptat
ion
of th
e m
etric
s pro
vide
d in
th
e SC
OR
® m
odel
to a
KPI
syst
em
that
is su
itabl
e fo
r the
supp
ly c
hain
.
For t
he S
CO
R®
mod
el a
nd th
e m
etric
s pro
pose
d in
it c
f. Se
ctio
n 2.
2.2.
N
ot in
scop
e of
SA
P SC
M™
, but
of
SAP
BI™
.
f)
Del
iver
y of
bus
ines
s con
tent
, e.g
., av
erag
e va
lues
or b
ench
mar
k da
ta fo
r ce
rtain
indu
strie
s.
The
use
of su
ch d
ata,
pro
vide
d by
ass
ocia
tions
like
the
SCC
, con
sulta
ncie
s, or
the
prod
ucer
of S
CM
softw
are
can
cont
ribut
e to
con
tinuo
us im
prov
emen
t of t
he su
pply
ch
ain.
Not
in sc
ope
of S
AP
SCM™
, but
of
SAP
BI™
.
Des
irabl
e Fe
atur
es
Com
men
ts
Cov
erag
e by
SA
P SC
M™
g)
Exch
ange
of i
ndic
ator
s with
the
supp
ly c
hain
par
tner
s in
a st
anda
rdiz
ed fo
rmat
.
Exam
ples
: By
usin
g XM
L or
the
Exte
nsib
le B
usin
ess
Repo
rtin
g La
ngua
ge X
BRL.
N
ot in
scop
e of
SA
P SC
M™
.
h)
Bal
ance
d Sc
orec
ard
for S
CM
. C
oord
inat
ion
of th
e SC
M S
core
card
w
ith o
ther
Sco
reca
rds w
ithin
the
firm
an
d w
ith th
ose
of su
pply
cha
in
partn
ers.
If th
e go
als a
nd th
e in
dica
tors
in th
e B
alan
ced
Scor
ecar
d of
one
firm
are
coo
rdin
ated
with
thos
e in
the
Bal
ance
d Sc
orec
ards
of t
he p
artn
ers a
kin
d of
co
mpe
titio
n w
ithin
the
supp
ly c
hain
may
resu
lt. T
his i
s im
porta
nt w
hen
supp
liers
of s
imila
r pro
duct
s, co
mpo
nent
s, or
raw
mat
eria
ls m
ust b
e co
mpa
red.
Th
e Sc
orec
ards
of d
iffer
ent p
artn
ers i
n th
e su
pply
cha
in
may
look
qui
te d
iffer
ent o
win
g to
indu
stry
spec
ifics
. An
SCM
syst
em sh
ould
pro
vide
supp
ort i
n ag
greg
atin
g an
d co
ordi
natin
g th
e di
ffer
ent S
core
card
s. Th
e va
lues
can
be
com
pare
d ov
er ti
me
and,
if re
leva
nt b
ench
mar
king
da
ta fo
r sim
ilar s
uppl
y ch
ains
is a
vaila
ble,
als
o w
ith th
is
data
.
Not
in sc
ope
of S
AP
SCM™
.
2 The Scope of Supply Chain Management 58