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Gordon Stewart: Gordon Stewart is at Pittiglio Rabin Todd & McGrath, Abingdon, Oxon, UK
ACKNOWLEDGMENT: [copyright] Pittiglio Rabin Todd & McGrath
Introduction: the importance of supply-chain integration
Managing supply-chain operations is critical to any company's ability to compete effectively. The supply chain has traditionally been managed as a series of simple, compartmentalized business functions. It was driven by manufacturers who managed and controlled the pace at which products were developed, manufactured and distributed. In recent years, however, customers have forced increasing demands on manufacturers for options/styles/features, quick order fulfilment and fast delivery. With the long-time competitive differentiator of manufacturing quality approaching parity across the board, meeting these customer demands has emerged as the next critical opportunity for competitive advantage.
Maintaining competitive advantage likewise forces constant redirection and enhancement of product features, quality, cost, options and services. Supply-chain effectiveness has therefore joined product quality and time-to-market as a key competitive differentiator. Success for many companies now depends on their ability to balance a stream of product and process changes with meeting customer demands for delivery and flexibility. Optimally managing supply-chain operations has therefore become critical to companies' ability to compete effectively in the global marketplace.
Data from Pittiglio Rabin Todd & McGrath's (PRTM's) 1996 integrated supply-chain benchmarking study shows that the performance gap between best-in-class and average companies is widening, and that companies unable to leverage effectively the outcome of an efficiently run supply chain are rapidly falling behind. Concurrent with the increased importance of the supply chain to a company's competitiveness has been a shift from traditional function-based (vertical) management to process-based (horizontal) management. As a result, the tight integration of management processes is increasingly important, and complex operations processes must be clearly defined and effectively implemented.
Release of SCOR
To assist companies in increasing the effectiveness of their supply chain, and to support the move to process-based management, two consulting firms - PRTM and Advanced Manufacturing Research (AMR) - set out to consolidate within a process reference model their experience along with that of a group of senior operations, manufacturing and supply-chain managers from many of the leading companies. This group of companies, together with other leading US and multinational firms, joined together in 1996 to form the Supply-Chain Council (SCC). The SCC took...