In simpler B2B days, supply chains only had to grapple with forecasting demand and then tweaking supply to meet it. Now volatility is end to end, and supply chain planning extends beyond order fulfillment to sustainability and resiliency.
The Association for Supply Chain Management (ASCM) was in the middle of a three-year review and update of its Supply Chain Operations Reference (SCOR) planning model to reflect the global supply chain of 2030, when COVID-19 struck. In some ways the timing was opportune, given the supply-demand dislocation that followed, the stay-at-home economy, the emergence of new digital technologies and the shift in market power from seller to consumer. Almost overnight, 80% of the Plan-Source-Make-Deliver model initially developed in 1996 was re-imagined. The new SCOR Digital Standard (SCOR-DS) model focuses on collaborative orchestration of supply chain functions among partners. Fulfillment is now bi-directional to manage supply and demand disruption and address reverse logistics issues with returns, leases and service contracts, and circularity. Broader sustainability initiatives are synchronized with commercial objectives. ASCM’s standards, best practices, certification and training programs and scoring system are extended to assess both technology and process advances.
In The Supply Chain Has a New Paradigm, we examine the SCOR-DS evolution and what it means for supply chain professionals grappling with transformation at various stages of the process, with ASCM executive vice president Peter Bolstorff and with a loyal user Allen Jacques, with Ottawa-based supply chain planning platform and app developer Kinaxis. “Specifically, we examine the use of digital twins for “concurrent planning” among fully connected partners receiving and sharing granular end-to-end operational data in real time.
The structural transformation of supply chains in the past decade has been nothing short of startling. Globalization and the internet have stretched supply networks across continents, to serve infinite addressable markets of anyone with a smartphone. The rise of e-commerce has revolutionized — and complicated — the way goods are distributed and delivered worldwide. COVID-19 in some ways felt perfectly timed for e-commerce and a stayat-home economy. But when it came to delivery of physical goods, from supplier’s supplier to customer’s customer, market distortions from COVID lockdowns and reopenings, as well as new variants, testing and vaccine challenges, and conflicting information, constantly threw supply and demand out of alignment. While COVID has receded, new disruptions persist. Severe climate events keep coming with greater frequency; geopolitical and trade tensions intertwine; headline inflation, interest rates and recession fears drive wild demand swings, and changing regulations across many jurisdictions add cost and complexity.
The visibility, data processing, analytics and connectivity among partners required to keep a global or regional supply chain operating efficiently are today becoming less and less recognizable in relation to the traditional B2B model. It isn’t your dad’s Plan, Source, Make, Deliver anymore.
Everything, Everywhere, All at Once
“It’s no longer just ‘Build it and they’ll come,’ or ‘Just give me a forecast and I’ll make sure the supply is there,” says Peter Bolstorff, executive vice president for innovation and business intelligence with the Chicago-based non-profit Association for Supply Chain Management (ASCM). “Now there are constraints and disruptions on either side of the equation that need to be reconciled and orchestrated in the middle, so the question becomes how you orchestrate that bi-directionally.”
Bottom line: Demand is less predictable and supply is less reliable, in a market dictated in real time by constantly evolving customer sentiment and headlines. Have a nice day herding cats.
Nor is supply chain management and planning just about order fulfillment. Customers and regulators are putting increasing pressure on companies to reduce carbon emissions and materials waste, and to monitor supply networks for metrics previously outside the scope of traditional commercial procurement or fulfillment activity, such as the use of forced labor or conflict minerals in the supply network. “The other big change we’re seeing is around things like climate and circularity, and how we orchestrate the synchronicity of a regenerative supply chain,” Bolstorff adds. “And that’s not just supply chain. It’s product development, how we change materials. It’s transportation and finding the most efficient routing. It’s inventory and how do we not throw so much stuff away.”
This Year’s Model
ASCM maintains and updates the Supply Chain Operations Reference (SCOR) model developed in 1996 by management consulting firms PRTM and AMR Research, the latter now part of Gartner, as the definitive cross-industry standard diagnostic tool for developing strategy, managing performance and improving processes. SCOR lays out hierarchical supply chain processes and associated metrics as discrete building blocks which provide a template of commonly defined best practices. The original model had four main process components: plan, source, make and deliver. By 2017 it was expanded to include return and enable, respectively addressing reverse logistics and the growing importance of business rules and intangibles like facilities and data capabilities, contracts, compliance and risk management. Work began in 2019 on a SCOR Digital Standard (SCOR-DS) and a Digital Capabilities Model (DCM), to integrate digital technology capabilities with business practices, The Supply Chain Has a New Paradigm Sponsored by Kinaxis In simpler B2B days, supply chains only had to grapple with forecasting demand and then tweaking supply to meet it.
Now volatility is end to end, and supply chain planning extends beyond order fulfillment to sustainability and resiliency. The good news: They’ve updated the operator’s manual. processes and metrics. The goal: to build a new map reflecting the supply chain’s evolution from a B2B “sequential chain” to a dynamic, omnichannel network. Bolstorff, who began his career in the 1990s as a product manager and then a plant manager with 3M, helped oversee the three-year effort, which involved 70 subject matter experts worldwide and partners. It was originally an exercise to envision supply chain operating structure in 2030, and to update ASCM’s 1,000-page static guide as an interactive, publicly accessible online resource. In the process, 80% of the model changed.
What emerged in September 2022 was SCOR-DS, a model structured as a pair of infinity loops reflecting a multi-dimensional, continuous flow of data and communication: one horizontal but bidirectional around traditional and e-commerce fulfillment, from supplier’s supplier to customer’s customer; the other vertical, reflecting the dynamic network using digital technology to address non-traditional commercial activities. Both are linked by a more decentralized, less top-down orchestration approach. Post-COVID metrics now emphasize resiliency, profitability and sustainability. “The idea was that too many things were happening all at the same time,” Bolstorff recalls. “The old linear way of thinking that you do this first, this second, this third, was born out of technology in the 1990s that could only do one thing at a time. That’s no longer the case.” Consider, for example, the challenge of integrating a circularity strategy with order fulfillment. “It means evaluating every bill of material for every product and asking if each is reusable, if it can be re-purposed, if its life can be extended through maintenance,” he says. “That’s a really big deal, and it’s just one dimension of sustainability.”
Along similar lines, the “deliver” function was broken apart into “order” and “fulfillment” to reflect the range of omnichannel options through which a customer receives goods. “Make” became “transform” and then “enable” to reflect after-sale service, product support or lease/ subscription revenue streams. “Source” had been limited in a basic fulfillment context, and is now expanded to include strategic and operational sourcing, direct and indirect procurement and returns. And all the above need to meet the resilience, economic and sustainability metrics.
Finally, SCOR-DS allows for different levels of digital transformation maturity within companies, offering three levels at which they can engage with the standards, depending on their specific capabilities and limitations.
This article was originally posted by: SUPPLYCHAINBRAIN