A FRAMEWORK FOR DEFINING ORGANIZATIONAL ROLES IN SUPPLY CHAIN BASED ON SCOR MODEL

J. Razmi, B. Hezarkhani, F. Jolai, and S.A. Torabi Department of Industrial Engineering, Faculty of Engineering University of Tehran

Abstract: The different tasks in the Supply Chain should be accomplished by collaboration of the members and functional sections in the organizations. This collaboration must be well defined in order to ensure achieving the goals of Supply Chain management such as tiny cycle times and high competitiveness. For this purpose defining roles and responsibilities for several Supply Chain processes is critical. Defining roles and responsibilities in Supply Chain could be considered as a part of broader concept called Enterprise Architecture. Different methodologies have been raised for Enterprise Architecture. SCC`s Supply Chain Operations Reference (SCOR) model can be used for constructing a Supply Chain focused Enterprise Architecture. One important issue in Enterprise Architecture is the relations between different levels of organization. Roles and responsibilities are essential concept for relating missions, processes and people and systems that must perform certain processes. This paper proposed a framework for defining organizational roles and responsibilities according to SCOR model. Keywords : Supply Chain Management, Supply Chain Operational Reference model (SCOR), Enterprise Architecture, Roles and Responsibilities

1. Introduction A supply chain is ‘‘an integrated process wherein a number of various business entities (i.e., suppliers, manufacturers, distributors, and retailers) work together in an effort to: (1) acquire raw materials/components, (2) convert these raw materials/ components into specified final products, and (3) deliver these final products to retailers’’ (Beamon, 1998). Supply chain management philosophy is really about getting people to work together better. Whether the problem is people in different functional areas within a company who are working at cross-purposes to each other or people in different companies along the supply chain who don't coordinate well with each other, the underlying point is the same. How people are organized, how their performance is measured, and how they are rewarded are major factors in overall supply chain performance. Behind all the benchmarking, process mapping, reengineering, scenario planning, software design, and related activities that receive so much attention today in supply chain management, there is another fundamental issue: How should all of us who are part of a supply chain be organized to best support achieving the lofty goals of lower costs, faster cycle times, and higher levels of customer service? Lots of barriers in achieving these goals are about unclear and not proper definition of organizational roles and responsibilities, communication, and management within and between organizations in a supply chain network. Since the late 1980s, researchers in various fields have been concerned with developing an understanding of organizations’ abilities to manage, and management in networks of organizations linked by economic exchange (see, for example, Ha°kansson and Snehota 1995; Harland 1996a and 1996b; Jarillo 1987; Johanson and Mattsson 1992; Verwaal and Hesselmans 2004). Much of this body of work focuses on one or both of: (a) creating and sustaining relationships with specific actors in the wider network (Ha°kansson and Snehota 1995; Johnsen et al., 2000); (b) networks of closely bonded actors, often termed ‘strategic networks’ (Jarillo 1988). From the other hand, in current business practice, an integrated approach to business and IT is indispensable. The most important reason for the increasing attention and practice of supply chain management are the possibilities that technology enhancements (especially IT) have generated. Transferring new information technology to practice requires that a company has a clear, integrated vision on the relation between its business and IT. Without such a vision, the IT infrastructure will never adequately support the business, and vice versa, the business will not optimally profit from IT developments (Lankhorst, 2005). Achieving alignment between business and IT requires an integrated approach to all aspects of the enterprise. Organizational effectiveness is not obtained by local optimization, but is realized by well-orchestrated interaction of organizational components (Nadler et al., 1992). Enterprise architecture is an important instrument to address this company-wide integration. It is a coherent whole of principles, methods and models that are used in the design and realization of the enterprise’s organizational structure, business processes, information systems, and infrastructure (Bernus et al., 2003). There is a lot of methods and tools for enterprise architecture (e.g. Mertins and Jochem, 2005). In organizational science, the role concept has been introduced by several researchers. Eriksson et al. defined role concept as a description that tells the actor how to function in a particular context (Erikkson et al., 2000). Ould (Ould, 1995) also uses the organizational role concept. He defined it as an area of responsibility that ranges from concrete things such as organizational posts and functional units (e.g. finance director and finance department) through job titles (e.g. senior engineer) to abstractions such as responsible chemist, customer, expense claimant, and approval of large claims. Marshall (Marshall, 2002) considers organizational roles as decomposition criteria of organizational units from which to define process steps. In the WFMC glossary, the organizational role is as a synergistic collection of defined attributes, qualifications, and/or skills that can be assumed or performed by a workflow participant for the purpose of achieving organizational objectives. Defining roles and responsibilities could be discussed in concept of role in enterprise architecture. This paper proposed a framework for defining certain organizational roles and responsibilities according to supply chain operations reference (SCOR) model, so it can be used in different issues like enterprise architecture, organizational structure or other related fields of interest.

2. Supply Chain Factors Despite management actions in a supply chain, supply chains also needed to be engineered. In other words, total life cycle of that supply chain needs to be considered (Naim et al., 2002). Supply chain engineering includes the conceptualization, design (in steady-state and dynamic terms), implementation, operation and re-engineering of the supply chain (Naim et al., 2000). There are three basic factors of supply chain performance that affect all companies: Supply Chain Goals-Strategy, Supply Chain Design, and Supply Chain Measurement. To complicate matters there are also 5 influencers of performance in supply chain including Your Trading Partners, Your Organization, Your Processes, Your People, and Your Technology. Influencers and Factors can be combined to form a 5 by 3 matrix. (Fig. 1) (Peter Bolstrof, 2003). It is obvious that with synchronization of the matrix's cells, the organizations will be more successful in managing their supply chains.

Measurement- Goals - Strategy Design Management

Trading Partners 1 2 3 Your Organization 4 5 6

Processes 7 8 9

People - Jobs 10 11 12

Technology 13 14 15

Primary Usage of Proposed Framework in SCM Secondary Usage of Proposed Framework in SCM

Fig. 1- SCM Factors Matrix

According to this table, the framework for defining roles and responsibilities in organization supply chains can synchronize different cells in this matrix. A framework that helps defining roles and responsibilities in a supply chain, can also helps designing the structural architecture of the organization (cell no. 5). It also helps to better design the processes and people in their jobs (cells no. 8 and 11). Designing the software technologies for supply chain also needs a clear definition of processes and roles of different units in organization, so this framework can helps designing the technologies (cell no.14) this framework can also be a guide for managing and measuring the different aspects of a supply chain (partners, organization, …) and it can be interpreted as the second usage of such framework (cells no. 3, 6, 9, 12 and 15).

3. Supply Chain Operations Reference Model (SCOR) The Supply Chain Operations Reference (SCOR) model is a process reference model that has been developed by the Supply Chain Council (SCC) (www.supplychain.org), a global, not-for-profit trade association with membership open to all organizations interested in applying and advancing state-of-the-art SCM systems and practices. SCOR is one of the best- known guidelines used by companies to examine the configuration of their supply chains, identify and measure metrics in the chain, determine weak links and achieve best practices (SCC 2005). As a cross-industry standard for SCM, the model provides a common supply chain framework, standard terminology, common metrics with associated benchmarks and best practices. SCOR can be used as a common model for evaluating, positioning and implementing supply chain application software. It can also be used by SCC members, suppliers and customers to build inter-enterprise integrated supply chains. Process reference models such as SCOR integrate the well- known concepts of business process reengineering, benchmarking and process measurement into a cross-functional framework (SCC 2005).

Fig. 2 - SCOR Model

Specifically, a process reference model can: • Capture the "as-is" state of a process and derive the desired "to-be" future state • Quantify the operational performance of similar companies and establish internal targets based on best-in-class results • Characterize the management practices and software solutions that result in best-in-class performance

A process reference model contains: • Standard descriptions of management processes • A framework of relationships among the standard processes • Standard metrics to measure process performance • Management practices that produce best-in-class performance • Standard alignment to software features and functionality Once a complex management process is captured in standard process reference model form, it can be: • Implemented purposefully to achieve competitive advantage • Described unambiguously and communicated • Measured, managed and controlled • Tuned and retuned to a specific purpose 4. SCOR as the Business Process Reference Model

The SCOR model compiles all business processes, performance measurement and best practices associated with all phases of satisfying customer demand. At its highest level, the SCOR model is organized along five business process types: Plan, Source, Make, Deliver and Return (SCC 2005). • Plan involves demand/supply planning and management. • Source relates to processes required in sourcing stocked, make-to-order and engineer-to-order products. • Make includes processes involved in production (scheduling production activities, testing, packaging and release for fulfillment). • Deliver consists of activities dealing with the processing of customer orders, warehouse management and inventory management. • Return, added in SCOR version 5.0, covers processes involved in the return of raw materials to the supplier and the receipt of returns of finished goods from the customer. These five processes represent the vertical-neutral abstractions from all demand/supply planning, purchasing/procurement, manufacturing, order entry and outbound logistics, and returns processing activities. (Fig. 3)

5. SCM roles and Enterprise Architecture

We associate an organization’s business process architecture with only a portion of the pyramid. Thus, it would be more accurate to refer to our pyramid as an Enterprise Architecture. It shows how all of the elements within an organization are related (Harmon 2004).

Fig. 3 - BPTrends Enterprise Architecture Pyramid

At the top of the pyramid are all the executive functions of the organization. This is where goals are set, strategy is determined, competitors are monitored, and major new opportunities are identified. The second level of the organization, in an older conception of the organization, would have focused on divisions and departments. In the process-centric company, the second level is focused on value chains and business processes that draw in supplies and deliver products and services to customers. From an architectural perspective, we can subdivide the Business Process Level into two subsections. The more abstract section focuses on how the various processes are associated with value chains, and how they are managed. The lower section focuses on specific processes and defines exactly how a specific process works. The base of the pyramid is divided and focuses on implementation details. If one considers a specific sub-process or activity, one finds that it is implemented by employees, by software systems, or by a combination of both. Employees are primarily the concern of operations managers and activity supervisors, and they are supported by the Human Resources function of the organization. If employees are to implement an activity, then their jobs must be defined. Similarly, their work must be evaluated, and activity outputs must be checked to assure that quality is maintained. If the sub-process or activity is implemented by software systems, either created to perform the entire activity or to support employees in the performance of the activity. At the very bottom of the pyramid are the physical infrastructure of the organization, its land and buildings, and the desks and machines that are needed to support the managers, the employees, and the software systems. As it can be seen the framework proposed in this paper wants to create relations between second level of above mentioned pyramid with top level and third level. In other words the framework wants to create relationship between process, strategies and people and systems roles using SCOR model. SCOR could be extended into a complete business process architecture, or even into a complete process-centric enterprise architecture. The main emphasis of SCOR is on the process architecture, and not on implementation; but SCOR does provide information on best practices, which tend to be associated with organizing employees and motivation the SCOR information extends, in some cases, to packaged software applications that can be used to implement specific sub-processes or activities. HP has extended SCOR by creating three other business process models— a Design Process for the development of new products, a Development Process that describes marketing, and a Customer Process that describes sales processes. Taken together with enabling processes, HP has developed a very detailed business process architecture. In addition, HP has related its business process architecture with its IT architecture, and is currently undertaking projects to align its various IT architectures with its business process architecture. In other words, Hewlett Packard has a true process-centric enterprise architecture (BPTrends publications, 2003).

6. Organizational Role Concept We define an organizational role as an abstraction of the behavior of an organizational unit. It describes the macro- competencies and the characteristics that an organizational unit has to fulfill in carrying out a set of activities in given context. The construct associated with the organizational role (Fig. 4) is comprised of the following attributes: name, missions, rights and obligations, and performance indicators. Name indicates the name of the organizational role. Missions represent the main activities to achieve in carrying out the organizational role. Rights and obligations are the rights and obligations associated to the organizational unit in carrying out the activities related to the organizational role. Performance indicators are variables which allow controlling the results of the activities linked to the organizational role. Macro competencies are also a characteristic of an organizational role. They are modeled through their relationships to organizational role class. (Zaidat et al., 2005)

Name Mission Rights and Obligations Performance indicators

Fig. 4- Organizational role structure

In computer science, the notion of role is used with object oriented methodologies and with multi-agents systems. Several definitions are used in both fields. For object oriented methodologies, we favored (P. Balabko, A. Wegmann, 2003) which define a role as a description of the behavior of an object. For multi-agent systems, we favored (J. Ferber, 1995) where the roles describe the function of agents within an Organization and the set of activities they have to perform so that the organization could fulfill its objectives. The advantages to use a role concept are synthesized in (C. Marchall. 2002): • Role concept controls complexity by partitioning knowledge of an entity into separate domains. • The real behavior of an entity is delegated to its roles, which is to be reusable both within and between domains. • This partitioning allows knowledge to change over time.

7. Roles and responsibilities in supply chain management In a proper supply chain management structure most activities should be accomplished according collaboration of cross functional teams. In the supply chain processes each team would engage one of the following role types: • Responsible Role • Consulted Role • Informed Role Main Roles and responsibilities in supply chain can be categorized as below: • Sales and Marketing o Sales o Customer Service o Others • Operation o Supply chain Administration o Purchasing o Production o Warehouse o Logistics o Others • Finance o Accounting o Legal o Others

Important Note to mention here is that in most Processes in Supply chain, different roles involved. In other words, collaboration between different actors with different roles fulfills the activities in supply chain management (Figure 5).

Fig. 5 - Collaboration between roles in SCM

According to the mentioned organizational role structure, each of attribute can be analyzed in SCOR framework as below: 1. Name: As it is mentioned before, many roles involve supply chain activities. It is also obvious that in every business these roles can be different. This article discussed the organizational role in the framework of organizational structure unit. It is clear that the organizational role can be discussed inside the organizational unites and smaller segments. This detailed analyzing is vital because of emerging roles in supply chain management such as CPO, Innovation facilitator, Supply chain Coordinator, Supply policy maker, Supply policy implementer, Advisor, Information broker, and supply network structuring agent (Louis knight, Christine Harland, 2005). 2. Mission: the mission of each role must be defined to fully support of the organization mission. Based upon this one can define key performance indicators for each roles. 3. Right and Obligations: rights and obligation of each role must be assigned based upon above mentioned role type (i.e. responsible, consulted, and informed). These must be defined clearly. In the following SCOR's process in level 3 including the roles involved have been presented. 4. Performance indicators: SCOR has been defined several performance indicators for all process in each levels. These performance indicators can be categorized in two classes: The indicators which represent the performance of one role in the organization and the indicators which represent the performance of more than one role in the organization.

Another important point is the communication among the roles in the organization. The suitable communication can be achieved by a fine organizational architecture.

8. The Framework Here we describe the framework for defining roles and responsibilities with focusing on supply chain processes. This framework is very straightforward. The framework consists of 4 steps: 1. Recognize the processes in supply chain based on SCOR model: Material flow and work/information flow are the two key components for defining As Is flows, uncovering disconnects in your processes, and mapping out To Be flows that eliminate these gaps. Different processes in supply chain can be derived with considering third level of SCOR model. For example here we consider P4 ( plan deliver ) Fig. 6 - Plan Deliver

2. Recognize the mission for each process and its relation with supply chain mission: every process in supply chain must have their missions and their mission must be defined in order ro most support the supply chain and organization missions. The mission of each process must be clearly defined and its relation with other process`s missions must be considered. In the P4 (plan deliver) example , the mission procees and each sub-process is: P4- Plan deliver: The development and establishment of courses of action over specified time periods that represent a projected appropriation of delivery resources to meet delivery requirements. P4.1 - Identify, Prioritize, and Aggregate Delivery Requirements: The process of identifying, prioritizing, and considering, as a whole with constituent parts, all sources of demand in the delivery of a product or service. P4.2 - Identify, Assess, and Aggregate Delivery Resources: The process of identifying, evaluating, and considering, as a whole with constituent parts, all things that add value in the delivery of a product. P4.3 - Balance Delivery Resources with Delivery Requirements: The process of developing a time-phased course of action that commits delivery resources to meet delivery requirements P4.4 - Establish Delivery Plans: The establishment of courses of action over specified time periods that represent a projected appropriation of delivery resources to meet delivery requirements.

3. Identification of inputs and outputs of each process: each process have a certain inputs and outputs. After recognizing the processes and their missions, the inputs and outputs and their origin for each input and output should be recognized. The SCOR model gives a standard for inputs and outputs for each process. Once inputs and outputs recognized it must be known that from where this inputs come and to where the outputs goes. SCOR gives the departure process for some inputs and destination process for some outputs and for some inputs and outputs suggest no departure and destination. The SCOR does not gives suggestion about the organizational roles involves in each process and this is the point of this paper.

Bach to our example for P4 ( plan deliver) Figure (7) shows the standard inputs and outputs for each process.

Fig. 7 - Plan Deliver inputs and outputs

4. Assign the roles and responsibilities that needed to fulfill each process: The last step of this framework is about assigning roles and responsibilities for each process. First we should aggregate all inputs and outputs for each process. Then decisions about assigning roles and responsibilities should be taken. Figure (8) shows a table for analyzing each input and output and categorizing it an a role group

Figure (9) shows roles and responsibilities related to each process in PLAN process category.

Fig. 8 – Roles and Responsibilities Analysis Table

Fig. 9 – Plan Processes Roles and Functional Areas

9. Conclusion

Integration in supply chains can be achieved by integrating all tools and resources. However, the important consideration for an organization is that how all organizational factors can be integrated before concerning joining with other members in the supply chain. An important issue in supply chains structure is who is really responsible for the tasks and which organizational roles are involve in various supply chain processes. A lot of factors in supply chains are influenced by this concept. Concepts like designing of organization, designing jobs, designing technologies and managing and measuring partners and organization are some of these factors. SCOR model can helps in defining and implementing enterprise architecture. One important note that has been analyzed in this paper is the linkage between processes, missions and strategies, and implementation issues. In this paper, a straightforward framework for analyzing the supply chain processes and assigning them to certain organizational roles have been proposed. The roles that could be derived according to this framework might not be unique. In other words assigning processes to different roles and responsibilities in organizations are subjective by its nature. The analysis of processes and roles can be used in wide spectrum of subjects. Among them we can mention developing software technologies like Enterprise Recourse Planning (ERP) softwares or re-engineering the organizational structure for more compatibility with supply chain management goals.

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