Supply Chain Transformation In Services Sector Commerce Essay

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Supply chain transformation is an emerging service area in the market area which is offered to optimize supply chain performance while reducing cost to deal with the radical global competition. End-to-end supply chain transformation includes intricate changes and improvements for several aspects in multiply levels.

To enable growth, improve profitability, enhance customer service, and build discrete competitive advantages, organizations must change and evolve over time. Often, Supply Chain Leaders are responsible for delivering on the business case for organizational transformations.

Recently, significant importance has been given to understanding and experimenting enterprise management control solutions - efforts that integration of products , procedure and processes and the flow of information within and across cross functional boundaries.

In global competitive business environment there is a rapid change in customer demands which has in turn forced the enterprises to look for efficiencies in their internal operations due to advancement in information systems and hence has helped coordinated operations with their suppliers, third party partners and customers. The challenge has been, and still is, how to effectively use information technologies to identify, communicate and consistently enhance internal and supported organizational processes. This paper introduces the Supply Chain Operations Reference (SCOR) model as a transformation tool for process management.

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In order to achieve the full benefits from SCOR as a method for Supply Chain Management (SCM) initiatives, effective business process management and agile enterprise software applications must be implemented.

The importance of performance management in supply chains has long been recognized from a variety of functional disciplines. But much of the work has focused on designing performance measures with less concern for the other stages of the entire performance management process. The supply chain operations reference (SCOR) model, developed by the Supply-Chain Council (SCC), is widely accepted as the only cross-industry standard for supply chain management, which not only provides a standard description of supply chain processes, but standard metrics to measure supply chain performance. Based on the SCOR model, a comprehensive framework for supply chain performance management is presented in this paper, which includes all aspects of performance management from performance measurement to performance improvement. The methods for performance model design and performance analysis are mainly discussed.

Introduction

The importance of performance management in supply chains has long been recognized from a various issues faced by variety of functional disciplines. Its been more focused on designing performance measures with less concern for the remaining stages of the entire performance management process. The supply chain operations reference (SCOR) model, developed by the Supply-Chain Council (SCC), is widely accepted as the only cross-industry standard for supply chain management, which not only provides a standard description of supply chain processes, but standard metrics to measure supply chain performance. Based on the SCOR model, a broad framework for supply chain performance management is presented in this paper, which includes all aspects of performance management from performance measurement to performance improvement causing transformation in organizational processes. Hence SCOR model helps in transformation of business processes more efficiently and effectively.

Supply Chain Operations Reference model

The SCOR model is a process reference model, which is intended to be an industrial standard that enables next-generation supply chain management. It provides a common supply chain framework and standard terminology for evaluating, positioning and implementing supply chain improvements. SCOR integrates the well-known concepts of business process reengineering, benchmarking, and process measurement into a cross-functional framework. More concretely, the structural framework of the SCOR model is composed of the following elements:

Standardization of the individual elements that make up the supply chain processes.

Standard definitions of key performance measures.

Descriptions of best practices associated with each of the process elements.

Identification of software functionality that enables best practices.

Problem statement:.

supply chain programs are not immune to the challenges where major business transformations are notorious for not delivering on the original intent of the change. This leads to unreliable delivery results, cost concerns and schedule overruns, pessimistically impacts service, and directly affects profits. This paper delves into the specific approaches, issues, and challenges of two companies (IBM and INFOSYS) that implemented large-scale, business transforming programs and provided solutions also.

Purpose of the study

The purpose of this paper is to look at the state of High -Tech companies like IBM and Infosys efforts relating to the integration and providing transformation solutions thereby inculcating the same prcatices in their supply chain management.

Significance of Study

The significance is to study the analytics involved in supply chain transformation & integration and its impact on various aspects of supply chain in services sector. This has helped to enhance productivity, gained efficient supply chain at lower cost.

Methodology:

The entire data used throughout the research is secondary data obtained from various sources.

Official Company website: Most of the data which is used, is obtained from the company website in the form of case studies and white papers published by the company.

Research is limited to only two companies: IBM and INFOSYS

LITERATURE REVIEW

The intent of this literature review is to document and analyse literature relating to the supply chain transformations, integration and implementation of supply chain management practices. As such, it is organized into the following sub-sections:

Supply chain Transformation:

To sustain in today's global market, organizations need to develop integrated supply chain model and should adapt to new processes in order to reduce cost and time to market.

Supply chain integration- Mainly includes integration of core processes across organizational boundaries through improved communication, alliances, better partnerships, and cooperation. Also focuses on the application of new technologies to improve information flows and coordinate the efficiency of flow of physical goods between trading partners.

Strategies used

Implementation issues: will include the critical factors which cause barrier to the successful implementation of integration or transformation of processes.

Supply Chain Transformation

Chidambaram et al. (2007) proposed a five-step methodology for transformation which defines the scope of the supply chain and establish customer-integrated decision making, to develop supply chain wide strategy and adopt supply chain wide key performance measures. Baramichai et al. (2007) integrated the QFD (quality function deployment) and AHP (analytical hierarchy process) techniques to create a new tool called Agile Supply Chain Transformation Matrix, which could enable a supply chain to create and improve its agility. Supply chain transformation relies heavily on key business processes rationalizations. Hammer and Champy (2003) stated that a business process is "a collection of activities that takes one or more kinds of input and creates an output that is of value to the customer".

In Apr 2010 INFOSYS provided Business intelligence Analytics implementation during supply chain Transformation program of a leading manufacturer of contact lenses and lens care.This led to increased efficiency and significant reduction in cost delivering improved ROI.

Infosys conducted a research to analyse various Business and technical challenges. The various determinants which led to inefficient supply chain and posed a barrier to transformation included

No standardization of key performance metrics, production planning and execution processes.

High inventory cost due to inefficient handling of inventory.

Non automated and synchronized intercompany transfer and billing processes leading to backorder issues.

Data redundancies and inconsistencies due to poor design of data warehouse.

Supply Chain Integration

Supply chain transformation at IBM began in 1993 and has played a key role in the company's overall shift to an On Demand enterprise. Today IBM's Integrated Supply Chain (ISC) is a core strategic business unit(and their core competency) that touches every aspect of operations and is a source of value, innovation and competitive advantage.

Creation of the ISC in 2003 as a single business unit for global supply chain management operations was an important objective in this journey. ISC helps in improving productivity and eeficiency.

STRATEGIES USED

Infosys used its supply chain BI analytics framework to design and implement solution.The BI team worked with process teams and business to understand business processes and strategic objectives. Infosys used SCOR (Supply Chain Operations reference) model to identify KPI's (Key Performance Indicators) for improving supply chain efficiency and reducing cost, thereby implementing a scalable architecture.

IBM used On Demand Supply chain Analytics Resource(SCAR) strategy to support develop Integrated Supply Chain from a process centric point of view, it mainly focused on six functional principal to make most efficient delivery and most responsive supply chain in the industry for its customers and suppliers

The following aspects are-

Customer realization

Customer through Supplier e-business Enablement

Global Logistics

Manufacturing

Operations and Strategy

Procurement

Gap Analysis

Since the research is mainly focusing on adapting the processes and integrating them, there can be some aspects which could be ignorant and cause a barrier to the successful implementation of supply chain, the various aspects which can cause this are-

Lack of understanding of transition management.

Lack of program management structure

Multiple consulting firms engaged which can increase complexity.

Lack of determining key issues.

Research Question

What is the impact of Performance attributes on implementation SCOR model during transformation process?

How beneficial the SCOR model post implementation for the business performance?

Hypothesis

H0 - There is no significant impact on the Performance attributes on the post implementation of SCOR model

H1- There is significant impact on the Performance attributes on the post implementation of SCOR model

H0 - There is no significant benefit in implementing SCOR model.

H1- There is significant benefit in implementing SCOR model.

METHODOLOGY

OBJECTIVE

This primary research on 'accessing the impact of performance attributes on implementing SCOR model for transforming the supply chain' deals with current scenario and acceptance of technology in general. The gap between current demand and forecasted demand due dynamic changes in market is of utmost important. The target audience knows the requirement and they are focused on only from HP company in India since they are having the industry's largest supply chain and have implemented SCOR model.

Objective is to access the factors affecting the decision of accepting or rejecting

Implementation of SCOR Model to help in achieving more flexible, efficient and reliable supply chain and hence results in improved profits. The impact of various performance variables and increased advantages of implementing SCOR model are also tracked. The Survey would be seen in the following section.

PARTICIPANTS

Target Audience: Librarians

Type of Data: Primary

Mode of Data: Survey

Answers: Binary Form [Yes or No]

Total Population: 10

Location; Specific (Only Hp across divisions)

Area of Education: Engineering and MBA

The target company was only HP and hence people from cross functional teams were contacted who are involved in implementation of SCOR model and involved in handling the supply chain operations on broader perspective. Some of the companies have already deployed it while rest of the

Companies are still deciding to deploy of reject it in India.

Has this implementation helped in improving availability and reach ability to provide anything anywhere at any time desired by the customer?

Yes

No

Has this implementation helped in making speedy deliveries to its customer?

Yes

No

Has the implementation helped in adapting to the changing need of the market demand?

Yes

No

Does this have an impact on reduction of cost associated with operating the supply chain?

Yes

No

Has this implementation helped in reducing the risk associated with inability of meeting market demand?

Yes

No

Has this implementation helped in maintaining or achieving competitive advantage over other competitors in the market?

Yes

No

Has this implementation helped in achieving a significant growth in profits?

Yes

No

Has this implementation helped in improving quality by managing cost?

Yes

No

Has this implementation helped in enhancing reliability and improving efficiency?

Yes

No

Does this require restructuring of existing SCM model completely?

Yes

No

Does this have an impact on Enhancing internal communication?

Yes

No

Does this have an impact on maintaining better relations with the suppliers?

Yes

No

Is this implementation suitable for managing demand in India?

Yes

No

Was the implementation of SCOR model useful in terms of enhancing the business growth?

Yes

No

These questions gave answers in relative terms as participants did not have absolute figures

of monetary values. Further, they were not comfortable disclosing the same even they had it.

To further analyse and study the impact of performance attributes on implementing SCOR model and hence inferring whether its beneficial for managing demand in Indian Market

, Multiple Regression Technique is used. This regression helps in explaining the relationship between the various independent variables and the dependent variable mentioned later. The Regression is performed on various data received from the participants to analyse the impact of these variables on due to which implementation of SCOR model has gained importance..

Performance attributes Variables are analysed To perform Multiple Regression excel is Used.

Multiple Regression

Y = b0 + b1x1 + b2x2 + b3x3…

Where

Y is the dependent variable that is Implementation of SCOR in India

B0 = Intercept

X1,x2,x3 = Independent Variables that are to be determined using primary data analysis.

Through Regression Statistical Summary output is produced which includes R square,

multiple Regression, Residuals, t statistics for b, F statistics for significance and relevance of

the test.

R square is known as the coefficient of determination. It lays between the values 0 and 1.

It predicts the future outcomes on the basis of the related information. A high R square

means that the regression line fits the data well. A high R square does not mean the model is

effective it also has to be significant and relevant in terms of F statistics. Lower the value of F

highly significant is the Test.

Disadvantage of Multiple Regressions - The major disadvantage is Multicolinearity. It occurs

when the X variables are correlated themselves. Together they produce a significant effect on

the cost, but individually the impact is hardly significant.

All these matters are to be looked upon while regressing.

Data Collection Method

This research includes both primary.

Primary Data

To extract the variables for regression, primary data is used. Through a questionnaire(survey) beingprepared and would be targeted toonly the employees of HP. They would be

ticking out the various options that they think are have major impact on implementing SCOR model. These factors would include performance attributes and profits and other factors which are resulted or impacted positively due to this implementation

. The questionnaire was made available personally and mailed to the respective representatives. The target focused on 20 responses. On the basis of this the variables given with maximum 'yes' responses would be selected for further research and regression.

Questionnaire would contain about 14 Questions. Out of which 6 would be Close ended

questions (binary form).

Theoretical Framework

Variables

The variables which can be used in our study can broadly be classified into two categories, viz.

Dependent and independent variables. Since, the topic of concern related to the impact of performance attributes on implementing SCOR model for transforming the supply chain.

, our dependent variable here is the implementation of SCOR model in India .

Figure

Dependent Variable

1. Implementation of SCOR model in India

It focuses on performance attributes which are enhanced my implementing SCOR model and hence beneficial for managing demand in Indian Market).

2. Independent Variables

Reliability

Focused on improving availability and reach ability to provide anything anywhere at any time desired by the customer

Flexibility

Focused on adapting to the changing need of the market demand

Cost

Focused on cost associated with operating the supply chain

Responsiveness

Focused on providing speedy services to its customer.

Profits

Focuses on whether there is an increase in profits due to implementation of SCOR model.

Enhanced Relationship with suppliers

Focuses on whether there its helping in maintaining good relations with suppliers as a result of implementation of SCOR model.

Implementation beneficial

To check upto what extent implementing SCOR model is beneficial for the performance of the business

Data Analysis

As per the regression analysis done through SPSS tool its been found that the goodness of fit ie R square is very high hence its a flexible model.

Since all the variables have an positive impact on implementing SCOR model ,It is suggested that even it should be implemented in India as well since it will prove to be beneficial and will help in enhancing profits.

Each metric is associated with exactly one out of five performance attributes (Assets, Costs,

Responsiveness, Flexibility and Reliability).

Conclusion

From our literature review, we can observe the possibility of SCOR model adaptation to different environment and context even far from SCOR model scope area. There is no question that in adapting SCOR model, which has proven to be effective. In Developing countries has a better alternative for their organization local environment and operating condition than investing limited and scarce resources in efforts, which do not amount to much

more than 'reinventing the wheel'. The state-of-the-art techniques and practices currently in operation in developed countries organizations can undoubtedly be of great benefit to organizations in developing countries.The SCOR model has emerged as a quasi-standard business reference model across a range of industries. Global manufacturing and distribution activities are demanded more integration of the supply chain in the recent years,

including developing countries. To make more effective and efficient supply chain operation and integration, developing countries must be involved as part and parcel of the business activities. For this effect, developing countries should find new or adapt the existing techniques for their supply chain modeling and improvement.This paper has presented a literature review for the adapting SCOR model literature.An analysis of the research methods across literature confirms that research is predominantly case or conceptual based research. More testing is required in the future research of the SCOR model adaptation.

Future Prospects

Extension of research in RFID based SCOR model where the model is integrated RFID powered

supply chain allowed to correct real-time information

sharing between the partners, to reduce the total lead time, also resulting in better traceability and lower operation costs. In all the phases where RFID technology is suggested to be used, the supply chain enjoyed the following advantages:

• Data can be read very fast minimizing handling time.

• No paperwork and less people involved.

• Less manual error. Data accuracy is very high.

• Automatic inventory update and location update.

• Correct sequence always ensured. The Fourth International Conference on Software, Knowledge, Information Management and Applications

• Immediate printing of documents.

• Data acquisition costs are reduced.

• New data can be added in the same tag and tags can be reused erasing the previous data

Conclusion

From our literature review, we can observe the possibility of SCOR model adaptation to different environment and context even far from SCOR model scope area. There is no question that in adapting SCOR model, which has proven to be effective. In Developing countries has a better alternative for their organization local environment and operating condition than investing limited and scarce resources in efforts, which do not amount to much

more than 'reinventing the wheel'. The state-of-the-art techniques and practices currently in operation in developed countries organizations can undoubtedly be of great benefit to organizations in developing countries.The SCOR model has emerged as a quasi-standard business reference model across a range of industries. Global manufacturing and distribution activities are demanded more integration of the supply chain in the recent years,

including developing countries. To make more effective and efficient supply chain operation and integration, developing countries must be involved as part and parcel of the business activities. For this effect, developing countries should find new or adapt the existing techniques for their supply chain modeling and improvement.This paper has presented a literature review for the adapting SCOR model literature.An analysis of the research methods across literature confirms that research is predominantly case or conceptual based research. More testing is required in the future research of the SCOR model adaptation.

Future Prospects

Extension of research in RFID based SCOR model where the model is integrated RFID powered

supply chain allowed to correct real-time information

sharing between the partners, to reduce the total lead time, also resulting in better traceability and lower operation costs. In all the phases where RFID technology is suggested to be used, the supply chain enjoyed the following advantages:

• Data can be read very fast minimizing handling time.

• No paperwork and less people involved.

• Less manual error. Data accuracy is very high.

• Automatic inventory update and location update.

• Correct sequence always ensured. The Fourth International Conference on Software, Knowledge, Information Management and Applications

• Immediate printing of documents.

• Data acquisition costs are reduced.

• New data can be added in the same tag and tags can be reused erasing the previous data

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