Supply Chain Networks and Business Process Orientation: Advanced Strategies and Best Practices (Apics Series on Resource Management)

241 Pages·2002·3.62 MB·English

by  Kevin P. McCormack

SUPPLY CHAIN
NETWORKS
and
BUSINESS PROCESS
ORIENTATION
Advanced Strategies
and Best Practices
The St. Lucie Press/APICS Series on Resource Management
Titles in the Series
Applying Manufacturing Inventory Classification
Execution Systems Innovation: Paving the Way
by Michael McClellan for Electronic Commerce and
Vendor Managed Inventory
Back to Basics: by Russell G. Broeckelmann
Your Guide to
Manufacturing Excellence Lean Manufacturing:
by Steven A. Melnyk Tools, Techniques,
and R.T. “Chris” Christensen and How To Use Them
by William M. Feld
Enterprise Resources
Planning and Beyond: Macrologistics Management:
Integrating Your Entire A Catalyst for
Organization Organizational Change
by Gary A. Langenwalter by Martin Stein
and Frank Voehl
ERP: Tools, Techniques,
and Applications for Restructuring the
Integrating the Supply Chain Manufacturing Process:
by Carol A. Ptak Applying the Matrix Method
with Eli Schragenheim by Gideon Halevi
Integrated Learning Basics of Supply Chain
for ERP Success: Management
A Learning Requirements by Lawrence D. Fredendall
Planning Approach and Ed Hill
by Karl M. Kapp,
with William F. Latham Supply Chain Management:
and Hester N. Ford-Latham The Basics and Beyond
by William C. Copacino
Integral Logistics Management:
Planning and Control of Handbook of
Comprehensive Business Processes Supply Chain Management
by Paul Schönsleben by Jim Ayers

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Library of Congress Cataloging-in-Publication Data
McCormack, Kevin (Kevin P.)
Supply chain networks and business process orientation : advanced strategies and best
practices / Kevin McCormack, William Johnson ; with William T. Walker.
p. cm. — (APICS series on resource management)
Includes bibliographical references and index.
ISBN 1-57444-327-5
1. Business logistics. 2. Business networks. I. Johnson, William C. (William Charles),
1954- II. Walker, William T. III. Title. IV. Series.
HD38.5 .M395 2002
658.7¢2—dc21 2002068207
This book contains information obtained from authentic and highly regarded sources. Reprinted material
is quoted with permission, and sources are indicated. A wide variety of references are listed. Reasonable
efforts have been made to publish reliable data and information, but the author and the publisher cannot
assume responsibility for the validity of all materials or for the consequences of their use.
Neither this book nor any part may be reproduced or transmitted in any form or by any means, electronic
or mechanical, including photocopying, microfilming, and recording, or by any information storage or
retrieval system, without prior permission in writing from the publisher.
The consent of CRC Press LLC does not extend to copying for general distribution, for promotion, for
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Direct all inquiries to CRC Press LLC, 2000 N.W. Corporate Blvd., Boca Raton, Florida 33431.
Trademark Notice: Product or corporate names may be trademarks or registered trademarks, and are
used only for identification and explanation, without intent to infringe.
Visit the CRC Press Web site at www.crcpress.com
© 2003 by CRC Press LLC
No claim to original U.S. Government works
International Standard Book Number 1-57444-327-5
Library of Congress Card Number 2002068207
Printed in the United States of America 1 2 3 4 5 6 7 8 9 0
Printed on acid-free paper
SL3275_frame_MASTER.book Page v Friday, October 18, 2002 9:36 AM
DEDICATIONS
To Susan, the angel, from the dreamer.
Kevin McCormack
To my late mother, who left a legacy of benediction
by the giving of herself to her children.
Bill Johnson
v
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CONTENTS
1 Introduction..................................................................................1
Summary............................................................................................................5
References..........................................................................................................7
2 Business Process Orientation — From Vertical Integration
to Networked Communities........................................................9
An Overview of the BPO Concept...............................................................10
Functional Orientation: How Did We Get Here?.........................................12
Process and Value Creation...........................................................................13
Business Process Orientation in the 1990s — Technology Enablement...16
Business Process Orientation in the 1990s — Organizational Design.......19
BPO: From Concept to Measurement...........................................................21
The Impacts of BPO.......................................................................................23
Business Process Orientation and the Networked Corporation..................26
Summary..........................................................................................................28
References........................................................................................................29
3 BPO and the Supply Chain Performance.................................31
Supply Chain Management and BPO...........................................................31
Data Collection................................................................................................34
Finding the Relationships...............................................................................35
Relating BPO to Supply Chain Performance................................................40
Summary..........................................................................................................42
4 BPO and Supply Chain Management Maturity........................45
Process Maturity and SCM..............................................................................45
Process Maturity Concepts and Foundations........................................45
Assessing Supply Chain Network Maturity using BPO........................48
SCM Maturity Levels.........................................................................50
BPO Components in the SCM Maturity Model..............................52
Using the SCM Maturity Model......................................................................56
vii
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viii (cid:2) Supply Chain Networks and Business Process Orientation
Case 1: Ad Hoc — “Shore Up the Chassis Before You Race
the Car”....................................................................................................57
Basic Process Documentation.........................................................59
Basic SCM Best Practices.................................................................59
Basic SCM.........................................................................................60
Basic Process Jobs............................................................................60
Basic SCM Measures.........................................................................60
Basic Operations Strategy................................................................60
Conclusion........................................................................................61
Case 2: Defined — “Expand the Chassis and Turbocharge the
Engine with Advanced Measurements”.................................................61
Basic Process Structure....................................................................61
Basic Operation Strategy.................................................................62
Balance is a Problem.......................................................................62
Case 3: Integrated — “Patch a Few Holes in the Chassis and
Push to the Next Level”..........................................................................63
Basic SCM Jobs.................................................................................64
Basic SCM Measures.........................................................................64
Advanced Process Structure............................................................64
SCM Maturity and Business Performance.....................................................64
Conclusion and the Extended Supply Chain — The Next Frontier...........66
References........................................................................................................67
5 The Extended Supply Chain and the Internet — The Bridge
to a Supply Chain Network.......................................................69
Introduction.....................................................................................................69
Background.....................................................................................................70
Scope and Organization of Our Study..........................................................72
Defining the Concepts and Measures...........................................................73
Internet Technology Usage.....................................................................73
Integrating Practices................................................................................73
Measures...................................................................................................74
Data Gathering and Results...........................................................................77
Sample......................................................................................................77
Analysis of Data.......................................................................................77
Results and Findings.......................................................................................81
Conclusions and Implications........................................................................83
References........................................................................................................84
6 Interactions and Relationships in the Networked
Economy......................................................................................87
Introduction.....................................................................................................87
Interaction Costs — Unbundling the Corporation.......................................88
More Than Just Communication....................................................................91
Information Exchange and Network Alignment...........................................94
Building Stronger Network Bonds — The Ties that Bind..........................96
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Contents (cid:2) ix
Trust..........................................................................................................96
Commitment.............................................................................................97
Cooperation..............................................................................................98
Dependence.............................................................................................98
Summary..........................................................................................................99
References......................................................................................................101
7 Unbundling the Corporation: A Blueprint for Supply Chain
Networks...................................................................................103
Understanding Supply Chain Networks......................................................103
Identifying the Main Thread and Business Strategy Alignment........104
Classifying the Supply Chain Players...................................................107
Tracing the Flows through the Network — Physical, Information,
and Cash.................................................................................................109
Network Dynamics — Static, Switched, and Chaotic.........................112
Building BPO within a Supply Chain Network.........................................114
The APICS SCM Principles and BPO...................................................115
Integrating BPO with Network Design.......................................................117
Build a Competitive Infrastructure.......................................................117
Leverage Worldwide Logistics...............................................................119
Integrating BPO with Network Operations................................................122
Synchronize Supply with Demand.......................................................122
Measure Performance Globally............................................................125
Driving Value through High BPO Maturity................................................127
Summary........................................................................................................128
References......................................................................................................129
8 The Challenges of Building a Networked Supply Chain......131
Introduction...................................................................................................132
The SC Network Model................................................................................132
Building the Model.......................................................................................134
Concepts and Components...................................................................134
Measuring SC Network Performance...................................................135
Situational Factors..................................................................................137
SC Network Situational Factors — Internal.................................137
SC Network Situational Factors — External (Environmental)....140
Applying the Model to an SC Network......................................................141
The Focus of the Model.......................................................................141
Using the Model to Create Alignment within the SC Network.........142
Conclusions...................................................................................................144
References......................................................................................................145
Case 1: Herding Cats across the Supply Chain....................147
Ram Reddy and William C. Johnson
Background...................................................................................................147
Defining the Problem...................................................................................148