Integral Logistics Management — Operations Management and Supply Chain Management Within and Across Companies

1.1.5 The Role of Planning and Control and the SCOR Model

Intended learning outcomes: Produce an overview on planning, in partcular on supply chain planning. Differentiate between production planning and control (PPC) and a PPC system. Present the Supply Chain Operations Reference (SCOR) model. Describe levels 1 and 2 of the actual SCOR model.



Planning (in an enterprise) is the process of setting goals for the organization and choosing various ways to use the organization’s resources to achieve the goals [APIC16]. 
Supply chain planning is the determination of a set of policies and proce­dures that govern the operation of a supply chain. It includes the determi­nation of marketing channels, promo­tions, respective quantities and tim­ing, inventory and replenishment policies, and production policies. Plan­ning establishes the parameters within which the supply chain will operate [APIC16]. 

Supply chain planning aims at having the right item in the right quantity at the right time at the right place for the right price in the right condition for the right customer — every time. This task must include the entire supply chain. Once the weighing of the entrepreneurial objectives is done (Section 1.3.1), supply chain planning entails a number of principles, methods, and procedures in order to accomplish the following subtasks:

  • Evaluate the various possibilities of distribution, production, and procure­ment that may be utilized to achieve set objectives.
  • Create a program in suitable detail, i.e., determine salable products, their quantities, and deadlines. Revise the plans periodically in response to changing constraints.
  • Elaborate and realize distribution, production, and procurement plans derived from the program, in suitable detail and in consideration of objectives and constraints.

Planning decisions thus concern logistics issues, such as: When, how, and in what quantities will goods be procured, produced, or distributed? Will inventory be inserted between storehouse, factories, and the supply chain community? Which services will be performed, when, where and how? What personnel and what assets will be used? When will delivery to customers and subsidiaries take place?

The suitable information logistics for this task can be put into a system for planning & control.[note 106] In the manufacturing stage within the product life cycle, such a system is frequently called PPC, or production planning and controlMPC (manufacturing planning and control) is another classic abbreviation. See [VoBe18]. The term PPC sometimes leads to misunderstandings, because the term PPC system is used to refer to both the logistics task and the computer software supporting the task. These two meanings are often mixed deliberately. Upon the background of misplaced optimism with regard to PPC software, demagogues — when the use of PPC software fails — tend to declare that the entire scientific body of knowledge on planning & control is “useless.” They overlook the fact that the primary responsibility for understanding methods and their practical application always falls upon the people in the company. Chapter 9 examines these issues in more detail.

Figure 1.1.5.1 shows the planning of the comprehensive supply chain as an ongoing synch­ronization of supply with demand in the comprehensive supply chain. The organizational units involved can be independent companies, or profit or cost centers within a company.

Fig. 1.1.5.1        Ongoing synchronization of supply with demand in the comprehensive supply chain.

This task is based on the internal chain of “source,” “make,” and “deliver” in each of the organizational units involved. All demand and capabilities of fulfilling them are carried by the network as a whole and reconciled jointly. Based on this idea, the Supply Chain Council (SCC), founded in 1996, published the Supply Chain Operations Reference model (SCOR®) (see also www.supply-chain.org).

SCOR, the Supply Chain Operations Reference model, is an aid to standardization of process chains within and across companies.

Figure 1.1.5.2 shows level 1 of the actual SCOR model.

Fig. 1.1.5.2        The SCOR model, version 12.0, level 1.

The aim of SCOR is to foster a common understanding of processes in the various companies participating in a supply chain. Figure 1.1.5.3 shows the six process categories and 30 reference processes defined by level 2 of the actual SCOR model.

Fig. 1.1.5.3        The 6 process categories and 32 reference processes of SCOR version 12.0, Level 2, toolkit.




Course section 1.1: Subsections and their intended learning outcomes

  • 1.1 Basic Definitions, Issues, and Challenges

    Intended learning outcomes: Produce an overview on terms of the working environment and of business life. Explain service orientation in the classical industry, product orientation in the service industry, and the industrial product-service system. Disclose the product life cycle, the synchronization of supply and demand, and the role of inventories. Produce an overview on supply chain management, the role of planning and control as well as the SCOR model.

  • 1.1.1 Important Terms of the Working Environment and of Business Life

    Intended learning outcomes: Produce an overview on terms of the working environment, such as work, task, process, method, object, etc. Explain terms of business life, such as value-added, business process, material, product, service, classical (or conventional) industry, etc. Present terms of the service domain such as customer service, service in the originary sense, service industry, etc.

  • 1.1.2 Service Orientation in the Classical Industry, Product Orientation in the Service Industry, and the Industrial Product-Service System (IPSS)

    Intended learning outcomes: Differentiate between a (primary, ore core) product, a product in a broad sense, and a product in the most comprehensive sense. Produce an overview on industrialization of service. Present the industrial product-service system. Explain product-oriented, use-oriented, and result-oriented services as well as their degree of intangibility.

  • 1.1.3 The Product Life Cycle, Logistics and Operations Management, the Synchronization of Supply and Demand, and the Role of Inventories

    Intended learning outcomes: Produce an overview on the product life-cycle. Differentiate between terms such as logistics, operations, logistic management, operations management, and value-added management. Describe supply, demand, lead time, and costomer tolerance time. Explain the problem of temporal synchronization between supply and demand as well as the role of various kinds of inventories in solving this problem.

  • 1.1.4 The Supply Chain, Supply Chain Management, and Integral Logistics Management

    Intended learning outcomes: Differentiate between a logistics network, a production network, a procurement network, a distribution network, and a service network. Describe the concept of the supply chain. Produce an overview on supply chain management and on integral logistics management.

  • 1.1.5 The Role of Planning and Control and the SCOR Model

    Intended learning outcomes: Produce an overview on planning, in partcular on supply chain planning. Differentiate between production planning and control (PPC) and a PPC system. Present the Supply Chain Operations Reference (SCOR) model. Describe levels 1 and 2 of the actual SCOR model.