Continuous Improvement in the SCOR World

Supply Chain Operations Reference Model (or SCOR) is the world’s “most widely accepted framework for evaluating and comparing supply chain activities and their performance.” The model was established and is maintained by the Supply Chain Council which is a global non-profit organization made up of “all organizations interested in applying and advancing the state-of-the-art supply chain management systems and practices.”

Lean Six Sigma is recommended by the Supply Chain Council as a good fit with the continuous improvement requirements for SCOR. In fact, the Supply Chain council provides training specifically on Six Sigma and Lean using SCOR for companies and individuals. The Six Sigma and Lean training using SCOR helps companies that are using or implementing the SCOR framework “extend the benefits of continuous improvement across their extended supply chain to create overall system improvements.”

Supply chain which includes sourcing, manufacturing, storing, and delivering and returning of a physical product is one of the process areas where Lean and Six Sigma have been applied for a long time. For the last few years we also have been hearing about a new term called services supply chain. Services Supply Chain considers the value chain that produces a service for the customer.

The hotel industry, IT industry, and banking industry are a few examples of companies that have a services supply chain. Lean tools like Value Stream Analysis and Lean Opportunity Mapping can readily be applied to the supply chain and identify waste across the supply chains. Likewise Six Sigma tools like SIPOC as well as the whole DMAIC methodology fits in very well with any process improvement initiative in the supply chain delivery.

A great example would be a Lean Six Sigma project focused on increasing on-time delivery to customer requested time and reducing variability to the committed time. Dell is an example of a company that differentiates itself because of its innovative supply chain that is supported by a network of Lean manufacturers. Most of the iPads and iPhones for Apple are manufactured by Foxconn in China.

 It is no coincidence that Apple gained the top spot as the most valuable global brand in 2011, as well as the number one supply chain company by Gartner for the fourth consecutive year in 2011. Foxconn has a well-entrenched Lean Six Sigma product to ensure that Apple’s product meets the high quality requirements that customers expect.

 A good point to note here is that Apple focuses on innovation and developing products for the future and Foxconn is the supply chain partner to ensure that the products are manufactured and available on time with quality to meet customer demands. Some companies struggle with the application of Lean Six Sigma or any other structured continuous improvement concepts with the innovation process, but it can become a competitive advantage when it is applied to the design, manufacture, and supply of the product that is the output of the innovation process. However, it is important to highlight here that many companies have successfully utilized Six Sigma in the invention or innovation process as well.