=Paper=
{{Paper
|id=Vol-1408/paper4
|storemode=property
|title=A Reference Model Based Design of Supply Chain Management Capabilities
|pdfUrl=https://ceur-ws.org/Vol-1408/paper1-cobi.pdf
|volume=Vol-1408
}}
==A Reference Model Based Design of Supply Chain Management Capabilities==
https://ceur-ws.org/Vol-1408/paper1-cobi.pdf
A Reference Model Based Design of Supply Chain
Management Capabilities
Jānis Grabis, Solvita Bērziša
Information Technology Institute, Riga Technical University, Kalku 1, Riga, Latvia
{grabis, solvita.berzisa}@rtu.lv
Abstract. Capabilities define competitive advantages an organization possesses,
and attaining desired capabilities is a challenging task. This paper proposes to
use reference models as a basis for the capability design, and it focuses on usage
of the SCOR model for designing supply chain management capabilities. The
paper outlines a method for the reference model based capability design. The
method relies on the correspondence among concepts used in capability modeling
and concepts used in the SCOR model. The capability is designed by selecting
and combining appropriate process categories and metrics from the reference
model. Best practices defined in the referenced model are packaged as capability
delivery patterns and are also used in capability design as reusable process
fragments. The reference model provides sound foundations for the capability
design while capability-oriented view of the reference model enriches it with
contextual information.
Key words: Capability, reference model, supply chain, context
1 Introduction
Capabilities describe abilities possessed by an organization [1]. UPDM [2] specifically
emphasizes that this ability should be achieved under specified performance
requirements and operating conditions. This way capability delivery differs from
traditional business services by explicitly taking into account delivery objectives and
delivery circumstances. Capabilities can be designed to account for variations in the
delivery circumstances and adjusted to improve their delivery performance [3].
Reference models provide a common framework for exploring some phenomena [4].
The SCOR model used in supply chain management [5] is one of the most widely
investigated reference models. This model defines core supply chain management
processes along with performance measure for supply chain evaluation and best
practices for improving the supply chain processes.
There are several investigations on using the SCOR model in enterprise design. The
SCOR process models have been used as building blocks for supply chain design [6].
In order to analyze alignment of business processes and information systems, the SCOR
model is extended to improve representation of information flows [7]. Medini and
Bourey [8] elaborate a methodology for SCOR-based enterprise architecting. The
methodology includes steps of IT alignment, As-is analysis, Target top level modeling,
Target sub-level modeling and optimization. The enterprise architecture is created by
combing capability maps with the reference model. Applicability of the reference
models is hindered by lack of formality [9]. The authors also show that a formalized
reference model can be used for rapid supply chain configuration. The SCOR model is
also useful for developing supply chain integration solutions [10].
In this paper, it is argued that the reference models and the SCOR model in particular
also could be useful source of information for designing capabilities because the
reference processes provide an overall solution for achieving the desired capability. The
capability design involves specification of the desired organizational capability as well
as identification of means for capability delivery in various context situations. Reuse
of existing solutions is essential to reduce complexity and control variability. In order
to use the reference model in capability design, semantic difference between the SCOR
model and capability representation should be addressed and a method for selection of
design artifacts from the reference model should be elaborated.
The paper describes an initial proposal for using the SCOR reference model in
capability design. The objective of the paper is to identify communalities among the
reference model and capability design and to outline the reference model based
capability design. The paper contributes both to the fields of capability management
and SCOR model development. The SCOR model provides a well-formed basis for
designing capabilities. The capability management view of the SCOR model enriches
supply chain processes with contextual information.
The rest of the paper is organized as follows. Section 2 briefly discusses capability
modeling and structure of the SCOR meta-model. The correspondence between both
models is established in Section 3. Steps of the reference-model based capability design
are described in Section 4. The capability design example is discussed in Section 5.
Section 6 concludes.
2 Analysis Framework
The reference model based capability design is based on an observation that the SCOR
model definition template share many similarities with the way capabilities are defined.
In order to established foundations for further investigation, this section recaps the
capability modeling meta-model adopted from [11] and general structure of the SCOR
model.
2.1 Capability Modeling
The capabilities are modeled using concepts defined in the capability model. The
simplified version of the capability meta-model is given in Fig. 1. Every capability has
goals and achievement of these goals is measured by indicators. The indictors actually
can be used as feedback to influence the way capabilities are delivered. The context
defines circumstance affecting capability delivery. While the context can assume
possibly an infinite set of values, it is assumed that the capability is designed for
delivery for a limited range of specific context values, i.e., an organization does not
claim of being able to deliver the capability in all circumstance but only those
prescribed in the capability delivery context. Nevertheless, the capabilities are designed
to cover as many context situations are possible and reasonable. The capability delivery
is supported by a process, which is elaborated more specifically using process variants.
The process variants can be constructed for dealing with specific capability delivery
context situations. Designing capabilities for various context situations might be a
laborious task, and patterns are used as one of the means for reducing design efforts
and complexity. The patterns provide reusable solutions for capability delivery. They
are also characterized by their context, which defines situation when this pattern is
applicable.
class Capability
0..* 1..*
Context Capability Goal Indicator
1..* 1..*
1..* 0..* * 1..*
0..*
1 0..*
0..* 1..*
Pattern 0..* Process Process Variant
1..* 1
Fig. 1. A simplified capability modeling meta-model
2.2 Structure of the reference models
The SCOR model is widely analyzed [12, 13]. It identifies the key supply chain
management processes and elaborates these at several levels of abstraction. This paper
focuses on the process element level. At this level, the key supply chain management
processes are defined as a sequence of activities. The description of every process is
provided. This description includes process category definition, performance attributes
and their evaluation metrics, best practices and their features as well as process inputs
and outputs. Fig. 2 provides a simplified definition of concepts used in describing the
third level processes.
The performance attributes are common for all processes and generally characterize
the key dimensions used for supply chain evaluation. These include reliability,
responsiveness, flexibility, cost and assets. Every attribute has process specific metrics.
The best practices describe suggestions for improving the process and their features
specify technologies contributing to successful adoption of the best practices. The input
and output elements link together different processes.
class Asdenca2
Input Process Performance Metric
Attribute
1..* 0..* 1..* 1..* 1..* 0..*
0..* 1..*
0..*
Output 1..* Best Practice Feature
1..* 0..*
Fig. 2. Concepts used in defining process at the element level
3 Model Mapping
The SCOR model defines the key supply chain management processes to deliver value
to supply chain customers. These processes can be expressed in terms of the capability
meta-model (Table 1). The capability encompasses a goal-oriented and contextualized
top level process. The top level process itself corresponds to the Process concept in the
capability meta-model. Elaboration of this process into process categories is mapped to
the Process variant concept. That implies that the main underlying process can be
executed in differently for every process variant. Performance attributes and metrics
are mapped into goals and indicators, respectively.
The best practices defined in the SCOR model are expressed as patterns in the
capability model (the guidance for describing capability delivery patterns can be found
in [14]). From the perspective of this paper, the most important aspects are that every
pattern has its applicability context and the best practice solution is expressed a process
fragment. The applicability context defines a range of circumstances this pattern was
found to be useful. It is compared with the context of capability to be designed to
identify suitable patterns. The patterns are stored in a searchable repository. The
repository can contain other patterns beside those derived from the SCOR model.
Table 1. Correspondence between the SCOR model and capability model
SCOR concepts Capability concepts
Level 1 process Process
Level 3 process Process variant
Best practice Pattern
Performance attribute Goal
Metric Indicator
The SCOR model does not describe supply chain management context and there is
little work on supply chain contextualization. The related research on risk averse supply
chain management [15] suggests that the common high level context factors are
location, compliance, weather, traffic, socio-economic and competition data. These
context factors can be measured using various sources and the capability delivery
depends on these factors. For instance, many countries maintain important/export
restrictions and the process execution depends on origin of materials or destination of
products.
4 Capability Design
The capability design involves three main aspects: 1) specification of the desired
capability; 2) identification of contextual factors affecting the capability; and 3)
elaboration of the capability delivery solution. The reference model primarily addresses
the latter concern though it is also helpful in specification of the desired capability. The
reference model based capability design includes the following main steps:
1. Naming of the desired capability and definition of the capability goals;
2. Identification of contextual factors affecting the capability collectively referred as to
context;
3. Selection of the appropriate process supporting the capability;
4. Selection of the process variants;
5. Specification of capability indicators;
6. Search for appropriate patterns in the pattern repository;
7. Insertion of the selected patterns in the process variants.
The capability is named in high level terms. This name relates to the first level
processes in the SCOR model. The capability goals are derived from the SCOR model’s
performance attributes. The supporting process is selected as one of the SCOR’s major
processes though it is possible that a single capability might combine several of the
major processes (e.g., deliver and plan processes are supporting one capability). The
process categories are selected from the SCOR model to become process variants. The
organization selects only the categories it considers necessary for attaining the
capability (e.g., Engineer-to order is not selected if only make-to-order and make-to-
stock policies are considered). The context dependency is indicated for the selected
processes. The capability indicators are selected from the metrics defined in the SCOR
model for the selected process categories.
The patterns in the pattern repository are searched by comparing the capability
context with the pattern applicability definition also expressed as context. A suitability
rank is computed for every pattern. The ranking is based on similarity between the
capability context definition and the pattern context definition what can be evaluated
using measures described in [16]. The final selection of the patterns is performed by a
human decision-maker and the solution procedure defined in the pattern is incorporated
in the overall process design.
5 Example
The capability design is illustrated using the demand fulfillment capability. The
capability is developed on the basis of the Deliver process (Fig. 3). The overall
capability goals are defined according to the performance attributes. In this case,
reliability, responsiveness and costs are selected as relevant. The organization also
chooses to support only Deliver Stocked Product and Deliver Make-to-Order policies
and the corresponding process variants are added to the capability design from the
SCOR model. The indicators measuring capability delivery goals (not shown in the
figure) are derived from metrics associated with the selected process variants. Sample
indicators are Order entry and maintenance costs and Percentage of call back of total
class Example
inquiries.
Customer location : To improv e reliability :
Context Goal
Demand fulfillment :Capability
Destination To increase
conditions :Context responsiv eness :Goal
Inquiry source :
To reduce costs :Goal
Context
Customer Deliv er :Process Deliv er Stocked Product :
creditw orthiness : Process Variant
Context
Deliv er Make-to-Order
Product :Process Variant
Fig. 3. The key elements of the demand fulfillment capability
The context elements identified for the demand fulfillment capability are customer
location, destination conditions, inquiry source and customer creditworthiness. The
Customer location context element captures region the customer is from (e.g., regions
one to six typically used by many e-commerce companies). The particular capability is
designed to support deliveries to regions one to five (i.e., the organization does not
possess the capability of delivering to region six) and not all products are delivered to
all regions. The destination conditions are classified as normal and hazardous what
might be caused by extra-ordinary events taking place at the destination (this
information can be aggregated from various web sources). The inquiry source defines
the channel customer uses to make an inquiry (e.g., mobile, web, e-mail). The customer
creditworthiness can be retrieved from internet-based credit agencies and the
organization classifies customer as trusted, trusted with advance payment and non-
trusted. The capability is purposely designed to support only trusted and advanced
payment customers and support for these two types is provided in the processes while
non-trusted customers are rejected or treated by some other capabilities.
It is assumed that the pattern repository contains three patterns described in Table 2.
These patterns are derived from the best practices in the SCOR model with addition of
contextual information and the process describing the solution as well as from other
sources.
Table 2. Patterns defined in the repository
Name Description Process fragment
Single point of Problem: Customer requests
Route Display
contact received through various request products
channels get lost Multi-channel
request is
Context: Customer profile, received
Inquiry source
Select Create
Solution: All request are products quotation
routed for processing in a
single view
Tailor offering Problem: Customers should
not be offered products, which Filter list
cannot be delivered
Context: Customer location,
Destination, Product type
Solution: Filter products
according the context values
Extra insurance Problem: Some shipments are
dangerous and require extra Take extra
precautionary measures insurance
Context: Customer
location={R1- R5},
Destination
conditions={Normal,
Hazardous}
Solution: Insure high risk
shipments
Fig. 4 shows the Deliver stocked products process variant, and the context dependencies
are indicated using data objects. In order to elaborate this process, the pattern repository
is queried to find solutions for dealing with various context situations. In the case of
D1.1 Process Inquiry & Quote, two patterns are found in the repository, and they are
used to refine the process (inserted patterns are shown in the expanded sub-process in
Fig. 4). D1.2 depends on customer creditworthiness, and there is no corresponding
pattern available. Nevertheless, the activity needs to be refined to represent process
variability to deal with different types of customers.
Ctx: Customer location Ctx: Customer creditworthiness
Inquiry source
D1.3 Reserve
D1.1 Process Inquiry D1.2 Receive, Enter Inventory & D1.4 Consolidate D1.5 Plan & Build D1.6 Route
& Quote & Validate Order Determine Delivery Orders Loads Shipments
Date
Customer inquiry
received
D1.1 Process inquiry & Quote
D1.10 Load Vehicle
CTx: Request source CTx: Customer location Generate Ship docs, D1.11 Receive &
D1.7 Select Carriers D1.12 Install
D1.9 Pick Product Verify Credit & Ship Verify Product at
& Rate Shipments Product
Route Filter Display Product Customer Site
request product list products
Select Create
products quote
Fig. 4. Deliver stocked products process variant
D1.8 Receive
product at D1.13 Invoice
warehouse
Ctx: Destination
conditions
The Extra insurance pattern is found to be suitable for D1.10 and is used to provide
a solution for dealing with hazardous conditions at the delivery destination. In the
example, there is a direct correspondence between the capability context and the pattern
context what would not be a case in more realistic cases. That would require using
appropriate similarity measurements.
6 Conclusion
The paper reports an initial proposal of the method for the SCOR model based
capability design. It allows for quick development of new capabilities using established
best practices. The SCOR model is used in two ways. Its process categories and metrics
are used to specify process variants and indicators in the capability model. Its best
practices are used to populate the repository of capability delivery patterns, which are
used to refine processes supporting the capability delivery. The SCOR model also
benefits from its combination with capability modeling by introducing the context
dimension.
The feasibility and practicality of the proposed method depends upon availability of
appropriate patterns and ability to contextualize supply chain management processes.
Identification of relevant supply chain context factors and describing their impact on
supply chain management processes in an important area for further investigations. The
further elaboration of pattern selection and process refinement mechanisms is also
required along with guidelines describing usage of the method.
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