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AN EVALUATION OF PROCESS-ORIENTED SUPPLY CHAIN
MANAGEMENT FRAMEWORKS
by
Douglas M. Lambert
The Ohio State University
Sebastián J. García-Dastugue
Universidad de San Andrés
and
Keely L. Croxton
The Ohio State University
Supply chain management (SCM) is implemented by integrating corporate functions using
business processes within and across companies (Council of Logistics Management 2003). Supply
chain management encompasses more than the activities of any individual corporate function.
However, frequently it is seen as a synonym for logistics (Simchi-Levi, Kaminsky, and Simchi-Levi
2000), operations management (APICS 2001), procurement (Monczka, Trent, and Handfield 1998),
or a combination of the three (Wisner, Leong, and Tan 2004). Many regard the “supply chain” as
being composed of inbound materials, raw material inventories, manufacturing, finished goods
inventories and distribution and view these activities within the purview of a single firm; others view
the supply chain as these activities from point-of-origin to point-of-consumption. Another
perspective of supply chain management is based on the management of relationships both between
corporate functions and across companies (Ellram and Cooper 1993).
Given that a supply chain is the network of companies, or independent business units, from original supplier to end-customers, management of this network is a broad and challenging task. Increasingly, one goal of managers is to implement cross-functional business processes and integrate them
with other key members of the supply chain. A business process is a structured set of activities
with specified business outcomes for customers (Davenport and Beers 1995). Initially, business
processes were viewed as a means to integrate corporate functions within the firm. Now, business
processes are used to structure the activities between members of a supply chain. Hammer (2001)
asserts that it is in the integration of business processes across firms in the supply chain where the
real “gold” can be found (Quinn 2001). It is key in the realm of supply chain management that
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these business processes are cross-functional. Firms that seek to be market-driven need to implement cross-functional business processes (Day 1997).
In this article, we identify five supply chain management frameworks that recognize the need
to implement business processes across corporate functions and across firms. From the five, we select
two for evaluation because they are the only frameworks with processes that are described in
sufficient detail to be implemented, and therefore can be thoroughly evaluated. One objective in
evaluating these frameworks is to provide managers interested in implementation with an
understanding of the strengths and weaknesses of each approach. A second objective is to provide
educators with a better understanding of process-oriented supply chain management frameworks
and to identify opportunities for further research.
The article is organized as follows. First, a brief literature review on business process management
is provided. Second, the five supply chain management frameworks identified in the literature are
presented and two are selected for comparison. Third, criteria are identified to compare the frameworks. Fourth, the frameworks are evaluated using the selected criteria. Fifth, strengths and weaknesses are identified. Finally, opportunities for future research and conclusions are presented.
BUSINESS PROCESS MANAGEMENT
The concept of organizing the activities of a firm as business processes was introduced in the
late 1980s (Davenport, Hammer, and Metsisto 1989; Hammer and Mangurian 1987) and became
popular in the early 1990s, after the publication of books by Hammer and Champy (1993), and
Davenport (1993). The motivation for implementing business processes within and across members
of the supply chain might be to make transactions efficient and effective, or to structure inter-firm
relationships in the supply chain. Both approaches to implementing business processes are customer
oriented. The first focuses on meeting the customer’s expectations for each transaction, the other on
achieving longer term mutual fulfillment of promises.
The transactional view of business process management is rooted in advances in information
and communication technology which enabled time compression and availability of information
throughout the organization (Hammer and Mangurian 1987). This transactional view of business
processes refers to the workflows within and between organizations (Davenport and Short 1990) and
is based on Taylor’s principles of scientific management which aim to increase organizational efficiency and effectiveness using engineering principles from manufacturing operations (Taylor 1911).
Combining business process (workflow) thinking with information and communication technology leads to cost reduction, time reduction, output quality (uniformity, variability, or no defects),
and empowerment by enabling individuals to have greater control over their output (Davenport
and Short 1990). The focus is not on automating the established business processes, but on redesigning businesses to improve outcomes for customers by making transactions more efficient and
accurate (Hammer 1990; Hammer and Mangurian 1987).
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The second view of business process management focuses on managing relationships in the
supply chain and is based on an evolving view from the field of marketing. In the 1990s, the
concept of relationship marketing was introduced. The goal of relationship marketing “…is to
establish, maintain, and enhance…relationships with customers and other partners, at a profit, so that
the objectives of the parties involved are met. This is achieved by mutual exchange and fulfillment
of promises” (Grönroos 1994, p. 355). Thus, the focus of developing and maintaining relationships in the supply chain is beyond the fulfillment of one or a set of transactions. Obtaining repeat
business from the same customer, that is to conduct multiple transactions, is more cost efficient
than obtaining a new customer (Kotler 1991).
While the field of relationship marketing is focused on the customer-side, looking downstream in the supply chain, the development and maintenance of relationships with key suppliers
should be based on the same pillars, mutuality and fulfillment of promises, in order for suppliers to
be profitable. Management needs the support of the firm’s key suppliers to fulfill the promises
made to customers and meet financial goals. In other words, corporate success is based on relationship
management with both suppliers and customers. The management of inter-organizational relationships with members of the supply chain involves people, organizations, and processes (Webster
1992). In fact, the ability to manage inter-organizational relationships “… may define the core
competence of some organizations as links between their vendors and customers in the value
chain” (Webster 1992, p. 14).
Several authors have suggested implementing business processes in the context of supply
chain management, but there is not yet an “industry standard” on what these processes should be.
The value of having standard business processes in place is that managers from organizations in
the supply chain can use a common language and can link-up their firms’ processes with other
members of the supply chain, as appropriate.
SUPPLY CHAIN MANAGEMENT FRAMEWORKS
Since the mid-1990s, academics in the fields of logistics, marketing, and operations management have attempted to describe supply chain management. Based on the literature, we identified
five supply chain management frameworks that recognize the need to implement business processes
in the literature (Bowersox, Closs, and Stank 1999; Cooper, Lambert, and Pagh 1997; Mentzer
2001; Srivastava, Shervani, and Fahey 1999; Supply-Chain Council 1996); each has distinctive
characteristics and objectives.
In 1994, executives from a group of multi-national companies, later to become The Global Supply Chain Forum (GSCF), developed a definition of supply chain management. In February 1996
the GSCF framework was presented in a 3-day executive seminar co-sponsored by the Council of
Logistics Management, and was later presented in the literature (Cooper, Lambert, and Pagh 1997;
Lambert 2004; Lambert, Cooper, and Pagh 1998).
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The GSCF defines supply chain management as “the integration of key business processes from
end user through original suppliers that provides products, services, and information that add value
for customers and other stakeholders” (Lambert, Cooper, and Pagh 1998, p.1). Implementation is
carried out through three primary elements: the supply chain network structure, the supply chain
business processes, and the management components. The supply chain network structure is
comprised of the member firms with whom key processes will be linked. The following eight
supply chain management processes are included in the GSCF framework:
• Customer Relationship Management - provides the structure for how relationships with
customers are developed and maintained. Cross-functional customer teams tailor product
and service agreements to meet the needs of key accounts, and segments of other customers
(Croxton et al. 2001).
• Customer Service Management - provides the firm’s face to the customer, a single source of
customer information, and the key point of contact for administering the product service
agreements (Bolumole, Knemeyer, and Lambert 2003).
• Demand Management – provides the structure for balancing the customers’ requirements
with supply chain capabilities, including reducing demand variability and increasing supply
chain flexibility (Croxton et al. 2002).
• Order Fulfillment – includes all activities necessary to define customer requirements,
design a network, and enable the firm to meet customer requests while minimizing the total
delivered cost (Croxton 2003).
• Manufacturing Flow Management - includes all activities necessary to obtain, implement and
manage manufacturing flexibility and move products through the plants in the supply chain
(Goldsby and García-Dastugue 2003).
• Supplier Relationship Management - provides the structure for how relationships with
suppliers are developed and maintained. Cross-functional teams tailor product and service
agreements with key suppliers (Croxton et al. 2001).
• Product Development and Commercialization – provides the structure for developing and
bringing to market new products jointly with customers and suppliers (Rogers, Lambert,
and Knemeyer 2004).
• Returns Management – includes all activities related to returns, reverse logistics, gatekeeping, and avoidance (Rogers et al. 2002).
Customer relationship management and supplier relationship management form the critical links
in the supply chain and the other six processes are coordinated through them. Each of the eight
processes is cross-functional and cross-firm. Each is broken down into a sequence of strategic subprocesses, where the blueprint for managing the process is defined, and a sequence of operational
sub-processes, where the process is actualized. Every sub-process is described by a set of activities.
Cross-functional teams are used to define the structure for managing the process at the strategic level
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and implementation at the operational level. The GSCF framework includes the following management
components that support the processes (Cooper, Lambert, and Pagh 1997): planning and control, work
structure, organization structure, product flow facility structure, information flow, management
methods, power and leadership structure, risk and reward structure, and culture and attitude.
The second framework identified in the literature was developed by the Supply-Chain
Council (SCC), a nonprofit organization founded by Pittiglio, Rabin, Todd, and McGrath (PRTM),
a consulting company, and AMR Research in 1996. The SCC originally had 69 member companies
and developed the Supply-Chain Operations References (SCOR) framework. Initially, SCOR
included four business processes: plan, source, make, and deliver (Supply-Chain Council 1996), which
are to be implemented within the firm and eventually connected across firms in the supply chain.
Return, the fifth process, was added in 2001 (Supply-Chain Council 2001). By 2004, the SCC had
over 750 members, and held conferences, meetings, and retreats in many countries.
The objectives of the five SCOR processes are (Supply-Chain Council 2003, p. 7):
• Plan – balances aggregate demand and supply to develop a course of action which best meets
sourcing, production, and delivery requirements.
• Source – includes activities related to procuring goods and services to meet planned and
actual demand.
• Make – includes activities related to transforming products into a finished state to meet
planned or actual demand.
• Deliver – provides finished goods and services to meet planned or actual demand, typically
including order management, transportation management, and distribution management.
• Return – deals with returning or receiving returned products for any reason and extends into
post-delivery customer support.
Each of these processes is implemented in four levels of detail (Bolstorff and Rosenbaum
2003; Supply-Chain Council 2003). Level One defines the number of supply chains as well as
what metrics will be used. Level Two defines the planning and execution processes in material
flow. Level Three defines the inputs, outputs, and flow of each transactional element. Finally, at Level
Four the implementation details of the supply chain management processes are defined.
Each process is analyzed and implemented around three components: business process reengineering, benchmarking, and best practices analysis (Supply-Chain Council 2003, p. 1). SCOR prescribes the use of business process reengineering techniques to capture the current state of a process
and then determine the “to-be” state based on business process templates for plan, source, make,
deliver, and return. Benchmarking is used to determine target values for operational performance
metrics for the “to-be” state of the processes. The third component, best practices analysis, aims to
identify management practices and software solutions used successfully by similar companies that
are considered top performers. The identification of the best business practices needed to support
the “to-be” state of the processes becomes the roadmap for implementation.
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The third framework found in the literature includes three business processes: customer relationship management, product development management, and supply chain management (Srivastava, Shervani, and Fahey 1999). The description of customer relationship management includes many
of the activities that traditionally are performed by the marketing and sales functions such as developing and executing advertising programs. In their description, product development management
is the process where the need for cross-functional interfaces is the most explicit. In fact, their
description includes a sub-process called “identifying and managing internal functional/departmental relationships” (Srivastava, Shervani, and Fahey 1999, p. 170). The third process, supply chain
management, focuses on the product flow from acquisition of materials from suppliers to manufacturing, to order processing, to distribution to customer service management. This process includes
many of the activities that are part of the Council of Logistics Management’s definition of logistics.
Srivastava and his colleagues focused on the role of the marketing function in the three processes
and did not address the role of other corporate functions. However, the authors asserted that the
proposed sub-processes represented “sample sub-processes within the three core processes”
(Srivastava, Shervani, and Fahey 1999, p. 170). Consequently, the framework, as presented, does
not have sufficient level of detail to be included in our evaluation.
Also in 1999, Bowersox, Closs, and Stank (1999) published a supply chain management
framework based on three “contexts”: operational, planning and control, and behavioral. This
framework was further developed (Melnyk, Stank, and Closs 2000) to include eight business
processes: plan, acquire, make, deliver, product design/redesign, capacity management, process
design/redesign, and measurement. However, a detailed description of these processes was not
provided, thus, it cannot be considered in the evaluation. Nevertheless, the definitions of four of the
eight business processes (plan, acquire, make, and deliver) resemble those included in the SCOR
framework (plan, source, make, and deliver, respectively).
Mentzer and his colleagues presented a supply chain management framework that focuses on
the cross-functional interaction within a firm and on the relationships developed with other supply
chain members (Mentzer 2004; Mentzer 2001; Mentzer et al. 2001). Although business processes
are mentioned in the literature review supporting the framework, the processes that need to be
implemented are not delineated. For this reason, it is not included in our evaluation.
The authors of four of the five supply chain management frameworks suggest the implementation of standard cross-functional business processes. However, only the GSCF and SCOR frameworks include business processes that could be used by management to achieve cross-functional
integration and are described in the literature with enough detail to draw meaningful comparisons.
The GSCF and SCOR frameworks are based on the implementation of business processes that are
meant to connect customers and suppliers, and integrate activities across corporate functions. In addition, they are both supported by major corporations, providing face validity. However, they represent different approaches to supply chain management. An evaluation of these frameworks will
offer insight into ways to implement supply chain management and will provide managers and
educators with perspectives on each approach.
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CRITERIA FOR COMPARING THE TWO FRAMEWORKS
Based on the literature, we identified the following four criteria that are used to compare the
supply chain management frameworks: scope, intra-company connectedness, inter-company connectedness, and drivers of value generation. We selected these criteria because they are supported
in the literature as being important to achieving corporate success. The scope of a framework is the
extent to which it supports the achievement of the corporate strategy. Intra-company connectedness
refers to the extent to which corporate functions share information and work together toward
common corporate objectives. In addition to integration within the firm, managing the supply
chain involves inter-company connectedness, and thus, a supply chain management framework
should prescribe or influence the way in which these interfaces are managed. The last criterion is
drivers of value generation which refers to the ultimate goals and metrics used to measure outputs
that result from implementing each framework.
Scope
The scope of a supply chain management framework refers to the extent to which it supports
the achievement of the corporate strategy, which determines the company’s direction. Research
suggests that in most environments, strategy has a major impact on corporate performance (Lenz
1981). Therefore, it is important that the firm’s resources are aligned to achieve the strategic objectives. To implement strategy at the business level, organizations must integrate the functions of
several different organizational areas (Barney and Griffin 1992). Furthermore, improved performance
is achieved by focusing all functional activities on the market (Day 1999). Synergy should be
sought across product markets and across functional departments in the business (Walker, Boyd, and
Larréché 1996). In order to align all functional activities to the corporate strategy, management
needs to generate organization-wide market intelligence, disseminate it, and make the organization
responsive to the market intelligence (Jaworski and Kohli 1993). The supply chain management
framework should help align the resources so that the entire supply chain can be responsive to
market intelligence.
The strategy which is used to set the objectives for the implementation of supply chain management provides an indication of the type of issues that will be addressed with the framework. The
breadth of activities included in the framework is an indication of the resources that will be used to
fulfill the strategic objectives. Therefore, the scope of a framework is determined by the corporate
strategy or functional strategies that provide the direction for implementing supply chain management, and the breadth of the activities included.
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Intra-company Connectedness
Intra-company connectedness “refers to the degree of formal and informal direct contact
among employees across departments” (Jaworski and Kohli 1993, p. 56). There is agreement
that corporate functions need to be connected (Kahn and Mentzer 1998; Krohmer, Homburg, and
Workman 2002; Walker, Boyd, and Larréché 1996). The management of inter-departmental connectedness, across corporate functions, is necessary for the successful implementation of business
processes (Day 1997; Gunasekaran and Nath 1997) and this is the case regardless of whether it is
focused on transactional efficiency or relationship management. For transaction oriented business
processes, inter-departmental connectivity is needed to ensure that transactions flow seamlessly
through the corporate functions. Without this connectivity, managers might face delayed transactions and/or bottlenecks. In the case of business processes focused on structuring inter-firm relationships, inter-departmental connectedness is required to establish relationships between firms at
multiple levels within each organization. The closer the relationship, the more corporate functions
will be actively involved in the inter-firm relationship (Lambert, Emmelhainz, and Gardner 1996).
Kahn and Mentzer (1998) differentiate between cross-functional interaction and integration.
Cross-functional interaction refers to information dissemination (sharing), to increase information
flow among corporate functions in an interactive process through, for example, meetings and written reports. Cross-functional integration includes functional interaction but also incorporates interdepartmental collaboration, which is characterized by shared goals, mutual respect, and
cross-functional teams.
Intra-company connectedness may be achieved by focusing on information dissemination
across corporate functions or by pursuing organization-wide cross-functional integration. Information dissemination is the first step in achieving cross-functional integration. It is important to recognize that business processes will not replace traditional business functions because it is in the
corporate functions where activities are performed and functional knowledge is developed, systematized and deployed throughout the organization (Womack and Jones 1994).
Inter-company Connectedness
The purpose of a for-profit organization is to conduct business transactions in the markets
that management is targeting. Consequently, managers should be concerned about transactional
efficiency. Transactional efficiency refers to the efficiency of workflow such as order entry, purchaseorder generation, delivery, and payment of invoices.
When a buyer and a seller perform a series of transactions, a relationship is developed. Initially,
this is an arm’s-length relationship and the focus of both parties is on each transaction. An arm’slength relationship can be maintained for long periods of time. Eventually, the buyer and seller
may decide to work more closely by tailoring the relationship. The decision to strengthen the relationship should be based on the value that both parties perceive from working closer by jointly
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managing some activities. The benefits from maintaining long-term relationships are for both customers (Janda, Murray, and Burton 2002) and suppliers (Kalwani and Narayandas 1995).
Extensive management time and commitment is required to develop and maintain long-term
relationships (Blois 1997). Management needs to be selective when deciding which relationships
should be developed into partnership-style relationships and which ones should be considered
transactional-based relationships (Lambert, Emmelhainz, and Gardner 1999).
In summary, the literature prescribes two approaches to managing inter-company connectedness. One is based on transactional efficiency and the other is based on relationship management.
However, these two approaches are not mutually exclusive because transactional efficiency should
be an outcome of good relationship management.
Drivers of Value Generation
The value of any firm can be measured in terms of economic value added (EVA) (Stern 1990).
The detailed steps in the calculation of EVA are documented by Stewart (1991). A firm’s value can
be increased in four ways: increasing revenue, reducing operating cost, reducing working capital,
and increasing asset efficiency.
In general, initiatives based on cost reductions and efficiency improvements are easier to
support. For example, if an initiative focuses on reducing inventories and the same level of sales
is achieved with less inventory, then the benefits from that initiative are easy to measure. It is more
difficult to demonstrate the extent to which profit is affected by service improvements such as
increased responsiveness, accuracy, or product availability. However, long-term growth requires revenue enhancement and managers need to focus on all four ways to increase value. The two supply
chain management frameworks are assessed to identify the drivers that each include as sources
of value generation.
COMPARING GSCF AND SCOR
In this section, we evaluate the GSCF and SCOR frameworks using the previously described
criteria: scope, intra-company connectedness, inter-company connectedness, and drivers of value
generation. Our assessment is based on a thorough reading of published material on each framework
and was validated with business executives familiar with both.
Scope
As described, the scope of a supply chain management framework is indicated by the extent
to which it helps the achievement of the strategic objectives. To achieve the strategic objectives,
organizations must integrate the activities performed by the many corporate functions. Therefore,
a framework can be evaluated by how it is linked to the corporate strategy (the strategic driver),
and by the breadth of activities it includes.
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In terms of the strategic driver, each of the GSCF processes is linked to the corporate strategy
and the functional strategies that have the greatest impact either directly or indirectly through the
customer relationship and supplier relationship management processes (Croxton et al. 2001). For
example, Appendix A shows that the manufacturing flow management process starts by reviewing
the corporate, manufacturing, sourcing, marketing, and logistics strategies. This link between the
processes, and the corporate and functional strategies is needed in order to make functional activities responsive to the available market intelligence (Day 1999).
SCOR processes are developed based on the operations strategy (Bolstorff and Rosenbaum
2003). While the operations strategy should be developed based on the corporate strategy and be
aligned with the other functional strategies (Berry, Hill, and Klompmaker 1995), SCOR does not
explicitly consider these other strategies.
The second dimension of scope is the breadth of activities covered. The GSCF framework
includes activities such as product development, demand generation, relationship management,
and returns avoidance. Since the focus of the framework is to provide a structure to maintain stable relationships in the supply chain, the frameworks provides direction on all the activities that need
to be managed in order to identify, develop, and maintain key relationships with both customers and
suppliers (Lambert, Cooper, and Pagh 1998). This breadth is why it is so critical in the GSCF
framework to have participation of all the functional areas. The activities included in the eight
processes will touch all aspects of managing the business (Croxton et al. 2001).
The objective of SCOR is to prescribe the activities that are related to the product flow. According to the Overview of SCOR Version 6.0, “SCOR does not attempt to describe every business
process or activity, including: sales and marketing (demand generation), research and technology
development, product development, and some elements of post-delivery customer support. Links
can be made to processes not included within the model’s scope, such as product development,
and some are noted in SCOR” (Supply Chain Council 2003, p. 3). The activities that are included
are those related to the forward and backward movement of the products, and the required planning
to efficiently manage these flows. Appendix B presents a description of the activities included in the
SCOR processes.
Intra-company Connectedness
SCOR and GSCF are similar in the fact that they both advocate cross-functional connectedness and recognize that business processes will not replace corporate functions. However, the number of corporate functions included in each framework is different and the type of cross-functional
connectedness differs as well.
For the implementation of GSCF, each process management team should include representation from all incumbent functions including, but not limited to, marketing, production, finance,
purchasing, and logistics. The cross-functional team members provide their functional expertise and
assure that the decisions are the right ones for the whole firm. The intra-company connectedness is
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also materialized by not relying on a salesperson-purchaser interaction but by implementing crossfunctional integration. All the touches between companies are managed, which enables, for example, research and development functional experts from the seller organization to meet with their
counterparts in the buyer organization to jointly identify opportunities. The type of relationship
that management wants to achieve will determine the degree of intra-company integration that is
necessary. That is, management has to identify the level of involvement of each corporate function
for each process.
In the case of SCOR, the intra-company connectedness is pursued within three functions:
purchasing, manufacturing, and logistics. The aim of intra-company connectedness with SCOR is
modeled after the reengineering of work-flows. It follows the view of Hammer and Mangurian
(1987) in which information and communications technology are used to achieve time compression
of business processes and information is made available at the right time. Consequently, SCOR focuses
on information sharing; that is, intra-company interaction. This is achieved by mapping the transactional processes (deliver, make, and buy), identifying the time that each step should require as well
as the task performance which will result in the identification of bottlenecks, and the evaluation of
reengineering opportunities.
In summary, referring to Kahn and Mentzer’s (1998) distinction between interaction and integration, the SCOR framework is focused on interaction among a few key functions, while GSCF
is focused on integration across all corporate functions.
Inter-company Connectedness
A key component of a business process approach is the degree of connectivity with other companies in the supply chain. The GSCF and SCOR frameworks represent examples of the two
approaches to implementing business processes. While GSCF focuses on managing relationships
in the supply chain, SCOR focuses on the achievement of transactional efficiency.
In the case of GSCF, the inter-company connectedness of all processes is coordinated through
the customer relationship management and supplier relationship management processes (Lambert
and Pohlen 2001). The interfaces between these two processes and the other six not only fulfill the
role of information dissemination between firms in the supply chain, but also, and more importantly,
they facilitate the identification of improvement opportunities in efficiency, or service and product
offerings (Croxton et al. 2001).
Within SCOR, the seller is connected to the buyer through the deliver process of the seller and
the source process of the buyer (a seller and a buyer are also connected through the source-return
process of the buyer and the deliver-return of the seller). The transactional orientation of SCOR is
manifest in the activities comprising each process. As shown in Appendix B, the activities are primarily transactional in nature. This can be compared to Appendix A which shows the sub-processes
of the GSCF framework. For instance, SCOR’s Make process is comprised of transactional activities such as scheduling and packaging, where as GSCF’s Manufacturing Flow Management process
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includes things like determining the degree of flexibility required and determining push/pull boundaries.
In summary, SCOR connects with other members of the supply chain through transactional
activities related to the source, deliver, and returns processes. In contrast, the GSCF framework
links firms in terms of customer-supplier relationships where all the processes are coordinated
through the customer relationship management and supplier relationship management processes.
Drivers of Value Generation
Managers have four ways to generate value: increasing revenue, reducing operating cost,
reducing working capital, and increasing asset efficiency. The two frameworks use different
approaches to measuring how the efforts of supply chain management can be used to create value.
In the GSCF framework, operational measures are tied to the firm’s EVA and to profitability
reports for customers and for suppliers. Therefore, central to the successful implementation of
GSCF is the identification of the revenue implications associated with all activities performed
within the firm and by the firm’s supply chain members. This will enable the development of profitability reports which provide information about the value that each key supplier provides to the customer as well as the value that the customer provides to each of the key suppliers (Lambert and Pohlen
2001). GSCF is intended not only to measure cost reduction and increased asset utilization but also
to identify the revenue implications from more closely managing relationships with key suppliers
and customers. For example, including customers in the product development and commercialization process should shorten time to market and yield products that better meet customer requirements,
generating more profit for the firm (Rogers, Lambert, and Knemeyer 2004).
Because the objective of SCOR is operational efficiency, the drivers of value generation are
centered on cost reductions and improvements in asset utilization. This makes the task of measurement easier because it tends to be less subjective to determine how much will be saved by a particular program than to estimate how a segment of customers will respond to a service improvement,
a new marketing effort, or a new product. Also, cost reductions will yield large savings when inefficiencies are present. However, when efficiency levels are high, incremental improvements tend
to be smaller. Thus, managers of firms with lower levels of efficiency may find bigger and more immediate benefits from the implementation of SCOR.
In summary, evaluating the frameworks using the four criteria provides insight into the different
approaches to supply chain management that each one takes. As shown in Table 1, there are key differences in the ties to corporate strategy, the breadth of the activities involved, the degree of intracompany and inter-company connectedness, and the drivers of value generation.
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TABLE 1
SUMMARY OF COMPARISON OF SUPPLY CHAIN
MANAGEMENT FRAMEWORKS
Criteria
GSCF
SCOR
Strategic Driver
Corporate and
functional strategies
Operations strategy
Breath of
Activities
All activities related
to the successful
implementation of the
8 business processes
All transactional
activities related to
demand-supply
planning, sourcing,
production, distribution
and reverse logistics
Intra-company
Connectedness
Organization-wide
cross-functional
integration
Cross-functional
interaction and
information sharing
Inter-company
Connectedness
Relationship
management
Transactional
efficiency
Drivers of Value
Generation
Economic Value
Added
Cost reduction and
asset utilization
Scope
STRENGTHS AND WEAKNESSES OF THE TWO FRAMEWORKS
Each framework has its strengths and weaknesses. Delineating these will help managers
understand the value that each can bring to their firms.
The GSCF framework is very broad in its scope. In some respects, this might be both its
biggest strength and its biggest weakness. Some respond to the framework with comments like, “It
includes everything.” This breadth is intentional. In the words of George Gecowets, former Executive Director of the Council of Logistics Management, the chief supply chain officer in a company
should be the CEO (Gecowets 1997). This breadth is a strength because it increases the opportunities for supply chain management to provide value. For instance, if managers implement the returns
process as it is suggested in SCOR, since it is focused on reverse logistics, they might miss opportunities to improve the product and reduce the number of returns. In contrast, the GSCF’s returns
management process includes activities aimed at reducing the number of returns; for example,
identifying ways to improve the quality of the product (Rogers et al. 2002).
However, this breadth provides some implementation challenges. For some people, the concept of supply chain management has grown out of the logistics or purchasing function and it is difficult for them to shift to the broad view indicated by the GSCF framework. The breadth also makes
38
LAMBERT, GARCÍA-DASTUGUE, AND CROXTON
it challenging to start small because all functions are involved and interfaces exist among the eight
processes. If management decides to implement one process at a time, sub-optimization might
occur because the other processes are not in place and the integration between processes cannot be
fully developed. It might also be difficult to manage the processes across firms, if key suppliers and
customers are adverse to a process orientation and/or are not committed to cross-functional teams.
While the full value of these processes can not be achieved without including customers and suppliers in the implementation, it is possible to improve the performance of the firm by implementing some of the activities and internal interfaces before implementing the full framework.
The breadth of the GSCF framework can also be measured by the cross-functional involvement.
Because the framework touches all aspects of the business, it is critical that all the business functions are involved, including marketing, finance, and research and development. Effective inter-company connectedness requires successful intra-company integration in order to align organization-wide
resources with the customers’ requirements. This cross-functional involvement requires a more
significant level of management commitment and a change in the compensation system for a successful implementation. While advocates have preached for years about breaking down “silo walls”,
working in cross-functional teams can be difficult to accomplish (Webber 2002). It is possible that
functional executives view implementation of cross-functional teams as an erosion of their power.
The SCOR framework, on the other hand, focuses on activities in the purchasing, logistics, and
manufacturing functional areas. This might make SCOR easier to implement since in many firms
these activities are more likely to be somewhat integrated within the corporate structure. The tradeoff is that one is attempting to manage the supply chain without critical input from marketing,
finance, and research and development. This limited functional involvement might result in lower
levels of performance and failed initiatives. For example, a manufacturer of consumer durable
goods implemented a rapid delivery system that provided retailers with deliveries in 24 to 48 hours
anywhere in the United States. The rapid delivery system was designed to enable the retailers to
improve service while holding less inventory. Six years later, after implementing economic value
added (EVA) measures, the company had not seen the inventory reductions and reduced the service
promise to 48 to 72 hours. The rapid delivery system never achieved its full potential because the
marketing organization still provided the customers with incentives to buy in large volumes (Lambert and Burduroglu 2000). This example should make it clear that failure to manage all the touches
might diminish the impact of supply chain initiatives. Using the GSCF framework will increase the
likelihood of success because all functions will be involved in the planning and implementation of
the initiative.
If a firm is pursuing a market orientation, GSCF is better positioned to assure all resources are
aligned to deliver full dissemination of market intelligence and achieve responsiveness to it. This
is due to its breadth (both of activities and of functional involvement) and its use of the corporate
strategy as its strategic driver. In order for management to achieve a market orientation, it needs to
identify new opportunities, and better serve existing customers who contribute the most to corporate success (Day 1999). To achieve these goals, a broad set of activities should be included, all
JOURNAL OF BUSINESS LOGISTICS, Vol. 26, No. 1, 2005
39
functional activities should be coordinated to respond to the market intelligence, and the corporate
strategy should drive supply chain activities. These are three features of the GSCF framework that
will help assure that the firm will adequately respond to the needs of the market.
SCOR’s lack of explicit connections between functional strategies and corporate strategies might
jeopardize the organization-wide alignment of resources (Barney and Griffin 1992). Management
pursuing the implementation of SCOR and interested in having the framework provide the broadest impact should focus on positioning SCOR within the overall corporate strategy. This will help
to align resources and goals, and prioritize implementation initiatives that result from the use of the
framework.
The history of the implementation of Collaborative Planning, Forecasting and Replenishment
(CPFR), for example, shows that the same management technique implemented as a functional
solution or as a strategic tool may produce different results. In an interview, Ralph Drayer, former
Vice President of Customer Service at Procter and Gamble, described how CPFR was first implemented with K-mart and then with Wal-Mart. In his view, CPFR at K-mart was considered just a distribution concept to drive down the cost of diapers; while at Wal-Mart it was considered a strategic
project that fundamentally changed the relationship between the two companies (Koch 2002).
In conversations with users of SCOR, a perceived strength is the set of benchmarking tools. The
concept of benchmarking has received considerable attention in both the management and research
communities (Dattakumar and Jagadeesh 2003). Most consider two types of benchmarking: performance and process benchmarking (Bhutta and Huq 1999). Performance benchmarking is about
learning how competitors or firms in comparable industries are performing on key operational metrics such as inventory turns or fill rates, while process benchmarking, or what SCOR calls best-practice analysis, is concerned with learning about and duplicating best practices.
To offer assistance with performance benchmarking, the Supply-Chain Council, the organization
that leads the development of SCOR, provides a source of data and information compiled from its
members. While there are issues related to the accuracy and use of benchmarking data (Campbell
1999; Cox and Thompson 1998; Hammer and Champy 1993; Longbottom 2000), some managers
have found the Supply-Chain Council’s data to be useful in their benchmarking efforts.
SCOR users also find value in the best-practice analysis that Supply-Chain Council offers. In
line with the focus of SCOR, this list of best practices includes tools primarily aimed at improving
transactional efficiency in the supply chain, such as activity-based costing, advanced-shipping notification, Kanban, and supplier certification programs. Further information on how to implement these
practices can be obtained through the SCC. In this way, the SCC could provide value to those
implementing the GSCF framework, as the teams could evaluate these best practices in the context
of the eight processes. For example, CPFR might be a practice implemented in the context of the
demand management process.
40
LAMBERT, GARCÍA-DASTUGUE, AND CROXTON
Several of the companies that have helped to develop the GSCF framework are also using
SCOR1. Some managers that we interviewed are finding that SCOR is a useful tool for identifying
areas of improvement to achieve quick pay-back opportunities and satisfy top-management’s desire
for cost reductions and asset efficiency. These findings are consistent with those found in the
literature (Bolstorff and Rosenbaum 2003). Identifying quick-hits is possible because the SCOR
framework involves functions that are more easily integrated, and because the focus is on cost
reduction and improved asset utilization. For many companies, opportunities still exist to make
transactional process improvements that might be found during the implementation of SCOR.
The GSCF framework is more strategic and focuses on increasing long-term shareholder value
through closer cross-functional relationships with key members of the supply chain. The business
settings that will tend to favor the implementation of the GSCF framework are those in which the
capability to identify, build and maintain business relationships is considered to be a competitive advantage. In many businesses, management has begun to recognize the importance of intangibles in
the marketing of products and that to succeed, interactivity, connectivity and ongoing relationships
are needed (Vargo and Lusch 2004).
FUTURE RESEARCH
We believe the comparison of these two cross-functional process-oriented frameworks for
supply chain management provides insight for managers, and provides academics with additional
research opportunities, including:
• Documenting the costs and benefits derived from an implementation of each framework.
There is evidence that each of these frameworks is being used at companies, but the bottomline benefits need to be documented.
• Further defining the role of the functional areas in each framework. Each framework relies
on cross-functional connectedness, but the exact role of each functional area needs to be
further delineated and developed.
• Documenting the benefits of having all functional areas included. We have suggested that
sub-par performance might result from not including all functional areas in supply chain
management. While this notion is supported by anecdotal evidence and theory in the literature, there is a need to fully understand the costs and benefits of this holistic approach.
• Assessing the performance benchmarking data offered by The Supply-Chain Council. Managers report that they gain value from the performance benchmarking data. However researchers
have expressed skepticism in the value of benchmarking data collected by survey. There is
a need to assess its accuracy and applicability.
1The lists of members for both groups are available through the web.
The list of members for GSCF: http://fisher.osu.edu/scm/members/index.html
and for SCC: http://www.supply-chain.org/public/membercompanies.asp
JOURNAL OF BUSINESS LOGISTICS, Vol. 26, No. 1, 2005
41
• Developing an assessment tool. An assessment tool would help managers evaluate the
current level of supply chain management implementation and determine where they should
focus their energy.
• Further developing the metrics identified in the GSCF framework. Thus far, only high-level
drivers of EVA are identified in the literature, but these need to be developed further to provide detail on how performance at the activity level contributes to corporate success.
• Exploring the opportunities for researchers in other fields of business to further impact the
development of supply chain management. The cross-functional process-oriented view of supply chain management has implications on other academic research areas, such as relationship marketing, organizational structure and behavior, change management, and business
strategy. These connections need to be fully understood.
CONCLUSIONS
In this paper, we identified five approaches to supply chain management. From these, two
were selected to be compared using four criteria: scope, intra-company connectedness, inter-company connectedness, and drivers of value generation. The two frameworks selected for the comparison
were developed by The Global Supply Chain Forum and the Supply-Chain Council. Both frameworks acknowledge that the supply chain is a network of companies, or independent business units,
from original supplier to end-customer, and are based on the implementation of cross-functional business processes. However, the approach to business process implementation prescribed by SCOR and
GSCF differ and they represent distinct ways of organizing business. Our assessment provides
insight for managers examining the role of supply chain management in their firm and provides a
basis for further research.
The GSCF framework includes all business functions in each of the eight supply chain management processes. It starts with the corporate strategy and connect the operational aspects of the
business to that strategy. The key processes for linking the supply chain are customer relationship
management and supplier relationship management, making the framework relationship-oriented.
In the GSCF framework, process metrics are related to EVA.
The SCOR framework integrates aspects of purchasing, operations, and logistics in its five supply chain management processes. SCOR does not include functions such as marketing, finance or
R&D which might make implementation more straightforward but also is a limitation. SCOR
focuses on transactional efficiency rather than relationships with customers and suppliers which is
the focus of the GSCF framework. SCOR includes benchmarking data that may be used to improve
operational efficiency, which is appealing to many executives.
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LAMBERT, GARCÍA-DASTUGUE, AND CROXTON
An executive summarized his experience working with both frameworks as follows:
The difference between the SCOR and GSCF approaches lies in the fact that SCOR
addresses symptoms through tactics. The GSCF framework provides a strategic approach
to address supply chain management processes incorporating the knowledge, expertise and
objectives of all functions. (Retired Rear Admiral Ernie Elliot, VP Supply Chain, Xpedx
an International Paper Company)
These two frameworks represent different ways of doing business. While our analysis highlights
the similarities and differences between the two, managers will have to decide which framework best
meets the need of their firms’ supply chain.
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Manufacturing
Flow
Management
Order Fulfillment
Demand
Management
Customer
Service
Management
Process
Customer
Relationship
Management
1. Review Manufacturing, Sourcing, Marketing, and
Logistics Strategies
2. Determine Degree of Manufacturing Flexibility
Requirement
3. Determine Push/Pull Boundaries
4. Identify Manufacturing Constraints and Determine
Capabilities
5. Development Framework of Metrics
Strategic Sub-Processes
1. Review Corporate and Marketing Strategy
2. Identify Criteria for Categorizing Customers
3. Provide Guidelines for the Degree of Differentiation
in the Product/Service Agreement
4. Develop Framework of Metrics
5. Develop Guidelines for Sharing Process Improvement
Benefits with Customers
1. Develop Customer Service Strategy
2. Develop Response Procedures
3. Develop Infrastructure for Implementing Responses
Procedures
4. Develop Framework for Metrics
1. Determine Demand Management Goals and Strategy
2. Determine Forecasting Procedures
3. Plan Information Flow
4. Determine Synchronization Procedures
5. Develop Contingency Management System
6. Develop Framework of Metrics
1. Review Marketing Strategy, Supply Chain Structure
and Customer Service Goals
2. Define Requirements for Order Fulfillment
3. Evaluate Logistics Network
4. Define Plan for Order Fulfillment
5. Development Framework of Metrics
1. Generate and Communicate Order
2. Enter Order
3. Process Order
4. Handle Documentation
5. Fill Order
6. Deliver Order
7. Perform Post Delivery Activities and Measure Performance
1. Determine Routing and Velocity through Manufacturing
2. Manufacturing and Materials Planning
3. Execute Capacity and Demand
4. Measure Performance
1. Collect Data/Information
2. Forecast
3. Synchronize
4. Reduce Variability and Increase Flexibility
5. Measure Performance
Operational Sub-Processes
1. Differentiate Customers
2. Prepare the Account/Segment Management Team
3. Internally Review the Accounts
4. Identify Opportunities with the Accounts
5. Develop the Product/Service Agreement
6. Implement the Product/Service Agreement
7. Measure Performance and Generate Profitability Reports
1. Recognize Event
2. Evaluate Situation and Alternatives
3. Implement Solution
4. Monitor and Report
THE SUB-PROCESSES OF THE GSCF FRAMEWORK
APPENDIX A
48
LAMBERT, GARCÍA-DASTUGUE, AND CROXTON
1. Determine Returns Management Goals and Strategy
2. Develop Avoidance, Gatekeeping and
Disposition Guidelines
3. Develop Returns Network and Flow Options
4. Develop Credit Rules
5. Determine Secondary Markets
6. Develop Framework of Metrics
Returns
Management
Supplier
Relationship
Management
Strategic Sub-Processes
1. Review Corporate, Marketing, Manufacturing
and Sourcing Strategies
2. Develop Idea Generation and Screening Processes
3. Establish Guidelines for Cross-functional
Product Development Team Membership
4. Identify Product Rollout Issues and Constraints
5. Establish New Product Project Guidelines
6. Develop Framework of Metrics
1. Review Corporate, Marketing, Manufacturing
and Sourcing Strategies
2. Identify Criteria for Categorizing Suppliers
3. Provide Guidelines for the Degree of Customization
in the Product/Service Agreement
4. Develop Framework of Metrics
5. Develop Guidelines for Sharing Process
Improvement Benefits with Suppliers
Process
Product
Development and
Commercialization
Operational Sub-Processes
1. Define New Products and Assess Fit
2. Establish Cross-functional Product Development Team
3. Formalize New Product Development Project
4. Design and Build Prototypes
5. Make/Buy Decision
6. Determine Channels
7. Product Rollout
8. Measure Process Performance
1. Differentiate Customers
2. Prepare the Supplier/Segment Management Team
3. Internally Review the Supplier/Supplier Segment
4. Identify Opportunities with the Suppliers
5. Develop the Product/Service Agreement and
Communication Plan
6. Implement the Product/Service Agreement
7. Measure Performance and Generate Supplier
Cost/Profitability Reports
1. Receive Return Request
2. Determine Routing
3. Receive Returns
4. Select Disposition
5. Credit Consumer/Supplier
6. Analyze Returns and Measure Performance
THE SUB-PROCESSES OF THE GSCF FRAMEWORK
APPENDIX A (CONT.)
JOURNAL OF BUSINESS LOGISTICS, Vol. 26, No. 1, 2005
49
Return
Deliver
Make
Source
Process
Plan
Sub-Processes and Activities
Demand/Supply Planning and Management
• Balance resources with requirements and establish/communicate plans for the whole supply chain, including Return, and the
execution processes of Source, Make, and Deliver.
• Management of business rules, supply chain performance, data collection, inventory, capital assets, transportation, planning
configuration, and regulatory requirements and compliance.
• Align the supply chain unit plan with the financial plan.
Sourcing Stocked, Make-to-Order, and Engineering-to-Order Product
• Schedule deliveries; receive, verify, and transfer product; and authorize supplier payments.
• Identify and select supply sources when not predetermined, as for engineer-to-order product.
• Manage business rules, assess supplier performance, and maintain data.
• Manage inventory, capital assets, incoming product, supplier network, import/export requirements, and supplier agreements.
Make-to-Stock, Make-to-Order, and Engineer-to-Order Production Execution
• Schedule production activities, issue product, produce and test, package, stage product, and release product to deliver.
• Finalize engineering for engineer-to-order product.
• Manage rules, performance, data, in-process products (WIP), equipment and facilities, transportation, production network,
and regulatory compliance for production.
Order, Warehouse, Transportation, and Installation Management for Stocked, Make-to-Order, Engineer-to-Order,
and Retail Product
• All order management steps from processing customer inquires and quotes to routing shipments and selecting carriers.
• Warehouse management from receiving and picking product to load and ship product.
• Receive and verify product at customer site and install, if necessary.
• Invoicing customer.
• Manage Deliver business rules, performance, information, finished product inventories, capital assets, transportation, product life
cycle, and import/export requirement.
Return of Raw Materials (to Supplier) and Receipt of Returns of Finished Goods (from Customer), including
Defective Products, MRO Products, and Excess Products
• All return defective product steps from authorizing return; scheduling product return; receiving, verifying, and disposition of
defective product; and return replacement or credit.
• Return MRO product steps from authorizing and scheduling return, determining product condition, transferring product, verifying
product condition, disposition, and request return authorization.
• Return excess product steps including identifying excess inventory, scheduling shipment, receiving returns, approving request
authorization, receiving excess product return in Source, verifying excess, and recover and disposition of excess product.
• Manage Return business rules, performance, data collection, return inventory, capital assets, transportation, network configuration,
and regulatory requirements and compliance.
THE SUB-PROCESSES AND ACTIVITIES OF THE SCOR FRAMEWORK
APPENDIX B
50
LAMBERT, GARCÍA-DASTUGUE, AND CROXTON
JOURNAL OF BUSINESS LOGISTICS, Vol. 26, No. 1, 2005
51
ABOUT THE AUTHORS
Douglas M. Lambert is the Raymond E. Mason Chair in Transportation and Logistics, and
Director of The Global Supply Chain Forum, Fisher College of Business, The Ohio State University. Dr. Lambert has served as a faculty member for over 500 executive development programs in
North and South America, Europe, Asia, Australia, and New Zealand. His publications include
seven books and more than 100 articles. In 1986, Dr. Lambert received the CLM Distinguished Service Award for his contributions to logistics management. He holds an honors BA and MBA from
the Ivey School of Business at the University of Western Ontario and a Ph.D. from The Ohio State
University.
Sebastián J. García-Dastugue, Universidad de San Andrés in Buenos Aires, Argentina, has
research interests in the use of information technology in supply chain management and logistics.
His research has been published in The International Journal of Logistics Management and Industrial Marketing Management. He has more than 10 years of experience in industry. He worked for
Ryder Argentina, Cementos Avellaneda, Solutions Informatiques Françaises, and Sud America
Seguros. Dr. García-Dastugue holds a BA in MIS from Universidad CAECE, an MBA from IAE –
Universidad Austral, and a Ph.D. from The Ohio State University.
Keely L. Croxton is an Assistant Professor of Logistics in the Department of Marketing and
Logistics at The Ohio State University. Her research interests are in logistics optimization and supply chain management, and she has been published in the Journal of Business Logistics, Transportation
Science, Management Science, and The International Journal of Logistics Management. She has
worked in the automotive, paper and packaging, and third-party logistics industries. Dr. Croxton holds
a BS in Industrial Engineering from Northwestern University and a Ph.D. in Operations Research
from MIT.