Application of the

SCOR Model in
Supply Chain
Management

Rolf G. Poluha



Amherst, New York


Copyright 2007 Rolf G. Poluha
All rights reserved
Printed in the United States of America
No part of this publication may be reproduced, stored in or
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Youngstown, New York 14174-0350.
This book has been registered with the Library of Congress.
Poluha, Rolf G.
Application of the SCOR model in supply chain
management / Rolf G. Poluha.
p. cm.
Includes bibliographical references and index.
ISBN 978-1-934043-23-3 (alk. paper)
1. Business logisticsManagement.I. Title.
HD38.5.P65 2007
658.7dc22
2007012289
For my wife, Sandra, my
children, Kim, Dion and
Tia,and my parents,
Edeltraud and Alfred

IV. Foreword

Dr. Poluha presents himself with the
complex task of examining the most
commonly known reference model for
the Supply Chains of organizations,
namely the SCOR model (Supply Chains
Operations Reference Model) by the
Supply-Chain Council (SCC), within the
framework of an empirical examination
of its value for Supply Chain analyses in
and for the purpose of practical
applications.

In recent years, the SCOR model
has achieved ever-growing importance,
most importantly in the North American
field of business, but also increasingly in
Asia and Europe. The origins and aims
of the model are just as comprehensively
discussed as its strengths and
weaknesses. In addition to this,
impressive examples of application from
business practices are also represented.
It is surprising that hardly any scientific
studies are available with reference to
the model and its application. In actual
fact, its reference to realization and its
efficiency are simply taken to be a given
quantity.

Dr. Poluhas work wishes to
accomplish an exploratory contribution
to the scientific examination of the
model. For this purpose, roughly 80
empirically gained sets of data from
companies in Europe, North America
and Asia are evaluated and interpreted
by means of statistics. The analysis is
performed by means of special
performance indicators, which form a
basis for the structure of the model, and
are discussed in detail.

During the statistical evaluation, the
method of procedure orientates itself
upon a sequence, which is logically
produced and incorporates statistically-
descriptive descriptions, inferencial-
statistical evaluations, interpretative
attempts at the explanation of non-
confirmed results, as well as
comprehensive thoughts upon an
aggregated level. In addition to this, an
attempt is made to submit the model to
examination by means of a procedure for
structural analysis.

A concrete example of a theory-
based empirical research project is
suggested as a topic of possible and
subsequent research. Hypotheses
represent the basis for deliberations,
which are founded upon model-specific
performance indicators and are deduced
from a distinctly and clearly organized
depiction of the SCOR model.

Conclusions to the model are
drawn and potentials for improvement
are extricated by the comparison of
work-theses and results of the empirical
examination. Innovative initiatives for
the configuration and possibilities for
utilization of the SCOR model are
presented and consequently discussed.
The restrictions of the presently
available SCOR model are elaborated,
wherein a central role is played by the
missing dimensions of the configuration
of organization and human resources.

The work offers an exploratory and
interim result towards the scientific
research into the SCOR model and its
application. The author has benefited
from his extensive experience in the
consultation practice, and his ability to
call upon the use of relevant data and
material. Continuous studies can expand
upon the results and are urgently needed
in order to scrutinize and extend the
accumulated knowledge, as well as to
throw light upon any outcome of the
findings that may appear inconclusive. In
this manner, success can be achieved in
generating incentives for the
maintenance and further development of
the SCOR model.

Prof. Dr. Dietrich Seibt
University of Cologne, Cologne,
Germany, April 2007
V. Preface

This book is designed to provide an
overview of the SCOR model in its
present form, as well as the operational
possibilities for analysis and
measurement of the performance
potential of Supply Chains. Subsequent
to this, the examination design and the
results of an empirical study are
introduced, which were designed to
make the structure of the SCOR model
operational, and to subject it to a test
with regards to its solidity and
proximity to truth.
2

In roughly the last ten years, the
meaning of logistic processes in
companies has strongly increased.
Whilst before, logistics still
predominantly represented a vertical
company function, the functional
encroachment and integrated view of a
supply chain have stepped into the
foreground. This reflects itself, for
example, in the creation of a new
political economic discipline, Supply
Chain Management, and the increasing
anchoring of this discipline within
companies.

The work at hand moves the Supply
Chain into the focal point. For the
purpose of structuring the related Supply
Chain Processes, the so-called Supply
Chain Operations Reference Model
(SCOR) model is utilized and thoroughly
reflected upon with regards to the
possibilities pertaining to its explanation
and description. The selected research
goals can be summarized as follows:

According to investigation
conducted by the author, no
academic studies have as yet been
performed to specifically analyze
the SCOR model structure;
The SCOR model structure is
presumed to be correct and the
model is being used for application
in projects, or for subsequent
studies;
The model is increasingly
popular and used in practice,
primarily in North America and
Asia, with Europe still lagging
behind;
There is an assumption of
correctness simply because it is
applied. However, there is no
objective external assessment for
the validity of the model or its
internal measures;
This leaves the models user at
some risk that despite wide use, the
model itself may be, at least
partially, incorrect.

Due to the represented situation, the
book tries to find answers to the
following research questions (scientific
motivation):

How could the consistency, i.e.,
assumed alignment of the models
performance measurements, be
tested?
How could the SCOR model be
made operational for statistical
analysis?
What would be the implications of
inconsistency (i.e., lack of
assumed alignment of the models
performance measurements)?
Is inconsistency a SCOR
problem, or one that it inherits and
brings into clearer view due to its
framework?

The author by no means claims to
perform a generally valid and final
examination of the SCOR model. It is
obvious that such a goal would go
beyond the scope of a single and initial
research effort, if it would be possible at
all. The intention is rather to perform an
exploratory contribution to research, an
exploratory attempt to gain initial and
consequently provisional results
concerning the questions and research
goals listed above, and furthermore, to
initiate and support subsequent research
that can build upon those results.

VI. Acknowledgements

The work at hand has been created in the
context of an in-service dissertation
project over a period of time, primarily
between 2001 and 2005, at the
Department of Information Systems and
Information Management at the
University of Cologne, Germany by Prof.
Dr. Dietrich Seibt, who is presently
leading the Research Department for
Information Systems and Learning
Processes. Since then, the content has
been continuously updated and
comprises the status quo of practical
knowledge and academic research as at
the beginning of 2007.

As the author, I have been working
as a consultant and project manager with
Bearing Point (formerly KPMG
Consulting) and SAP AG on projects in
Europe and the United States during the
creation of this work. In the course of
these projects, I had ample opportunity
to acquire intensive and extended
insights into the topics of Supply Chain
Management and SCOR. The resulting
experiences are reflected in the work in
many ways.

Special thanks for the initiation,
development and execution of the work
are due to my doctoral advisor, Prof. Dr.
Dietrich Seibt. He literally took and
fulfilled the role and acted as a real
advisor. In this sense, he always gave
me the appropriate and necessary
impulses at the right time with his
suggestions, encouragement and
constructive criticism.

The second opinion was kindly
adopted by Prof. Dr. Detlef Schoder,
director of the Seminar for Information
Systems and Information Management at
the University of Cologne. The chair of
the debate was Prof. Dr. Ulrich
Thonemann, director of the Seminar for
Supply Chain Management and
Management Science at the University of
Cologne.

Further thanks go to Prof. Richard
Welke, director of the Center for
Process Innovation at J. Mack Robinson
College of Business at the Georgia State
University. Based on his experiences
with normative models in general, and
the SCOR model in particular, he
provided me with helpful references and
suggestions, which have been
incorporated into the work.

I would also like to thank the
libraries of the University of Stuttgart,
Germany, North Carolina State
University, Georgia Institute of
Technology, and Georgia State
University. They have granted me
generous access to their archives, which
allowed me to consider a broad range of
literature from authors from both the
United States and Europe. Furthermore,
Mr. Derek Hardy for his outstanding
support in translating this work from
German into English language. And
finally, Dr. Paul Richardson and
Ms.Toni Tan of Cambria Press and their
team for the excellent support in
publishing this book.

As the motto for the book, I would
like to use the guiding theme of a
scientist and researcher, Karl R. Popper,
whose work and insights have
accompanied and inspired me over the
years:

Not from the beginning did the
Gods reveal everything to the
Mortals. But over time they
will find, seeking, the Better.
3

In this sense, I wish the seeking
reader that this work will help to gain
some new and interesting insights. And I
hope that it can initiate and contribute to
extend existing knowledge and expertise.

Dr. Rolf G. Poluha
Atlanta, Georgia, April 2007

VII. Abbreviations

3PL
Third-Party Logistics Service
Provider
-error Alpha Error (Type I Error)
-error Beta-Error (Type II Error)
abbrev abbreviated
ABCActivity-based costing
AG
Aktiengesellschaft (Public
Company)
AGFI Adjusted-Goodness-of-Fit-Index
approx. approximately
ASCAdaptive Supply Chain
AMOS Analysis of Moment Structures
am. above-mentioned
AMR
Advanced Manufacturing
Research
AP Asia Pacific
APS Advanced Planning Systems
ARIS
Architecture of integrated
Information Systems
bm. below-mentioned
bn Billion
B2BBusiness-to-Business
B2CBusiness-to-Consumer
BCbefore Christ
BIAIT
Business Information Analysis
and Integration Technique
BICS
Business Information Control
Study
BKMBest Known Method
BP Business Process
BPABusiness Process Analysis
BPC
Bravais-Pearson Correlation
Coefficient
BPMBusiness Process Management
BPOBusiness Process Optimization
BPRBusiness Process Reengineering
BRE Business Rules Engine
BSCol
Balanced Scorecard
Collaborative
BSCBalanced Scorecard
ca. circa
CCCCustomer-Chain Council
Customer-Chain Operations
CCORReference Model
CEOChief Executive Officer
CFOChief Financial Officer
Chap. Chapter
CLMCouncil of Logistics Management
Co. Company
COGS Cost of goods sold
Col. Column
Corp. Corporation
cp. compare
CPACertified Public Accountant
CPFR
Collaborative Planning,
Forecasting and Replenishment
CPGConsumer Packaged Goods
CRM
Customer Relationship
Management
CSCOChief Supply Chain Officer
CSF Critical Success Factor
DBW
Die Betriebswirtschaft (The
Business Studies)
DCCDesign-Chain Council
DCOR
Design-Chain Operations
Reference Model
Desc. Description
df degree of freedom
Diag. Diagram
Diags. Diagrams
Dola Day of last access
DoDUS Department of Defense
DOS Days on stock
DP Data processing
DLAUS Defense Logistics Agency
E-Business Electronic Business
E-Commerce Electronic Commerce
E-
CRM
Electronic Customer Relationship
Management
E-
SCM
Electronic Supply Chain
Management
EBNElectronic Buyers News
ed. editor
EDI Electronic Data Interchange
EMEAEurope, Middle East and Africa
ERP Enterprise Resource Planning
e.g. exempli gratia (for example)
et al. et alii (and others)
etc. et cetera
EUREuro
f degree of freedom
FGFinished goods
Fig. Figure
fir
Forschungsinstitut fuer
Rationalisierung (Research Institute
for Rationalization)
FTE Full-Time-Equivalent
FTF Face-to-face
G2BGovernment-to-Business
G2CGovernment-to-Consumer
G2GGovernment-to-Government
GFI Goodness-of-fit-Index
Gesellschaft mit beschrnkter
GmbHHaftung (Limited Liability
Company)
GPF Geographic Product Flow
HGB
Handelsgesetzbuch (German
Commercial Code)
HP Hewlett-Packard
HRMHuman Resources Management
HWHardware
HWB
Handwrterbuch der
Betriebswirtschaft (Dictionary of
Business Studies)
i.e. id est (that is)
ibid. ibidem (at the same place)
ICT
Information and Communication
Technology
I-CIntra-Competency
I-
CP
Inter-Competency/Performance
Attribute
I-P Intra-Performance Attribute
Inc. Incorporated
ISCM
Integrated Supply Chain
Management Program
iSNGIntel Supply Network Group
IS Information System
IT Information Technology
KIM
Klner Integrationsmodell
(Cologne Integration Model)
KPI Key Performance Indicator
KRP Kostenrechnungspraxis
LALatin America
LISRELLinear Structural Relationships
LLCLimited Liability Company
Ltd. Limited Company
mMillion
MSCOR Model group
MaxMaximum
MCCMicro Compact Car AG
MES Manufacturing Execution Systems
Min Minimum
MIS Management Information System
MIT
Massachusetts Institute of
Technology
MPS Master Production Schedule
MRO
Maintenance, Repair and
Operating Equipment
nnumber (as part)
Nnumber (total)
NANorth America
NDST
Network Decision Support
Technology
No. Number
Nos. Numbers
non-signif. non-significant
NPVNet Present Value
ny no year specified
NYSE New York Stock Exchange
ODMOriginal Design Manufacturer
OEMOriginal Equipment Manufacturer
OSD
US Office of the Secretary of
Defense
p. page
pp. pages
P Probability
Para. Paragraph
Paras. Paragraphs
P() Probability of Error
PCPersonal Computer
PM-
Correlation
Product-Moment-
Correlation
PMGPerformance Measurement Group
PRTM
Pittiglio, Rabin, Todd &
McGrath
q.v. quod vide (which see)
R
Bravais Pearson Correlation
Coefficient
R&DResearch and Development
re. regarding
ROAReturn on Assets
ROE Return on Equity
ROI Return on Investment
ROS Return on Sales
s Standard deviation
SASocit Anonym
SAS Socit par actions simplifie
SCSupply Chain
SCCSupply-Chain Council
SCDM
Supply Chain Design
Management
SCMSupply Chain Management
SCOR
Supply Chain Operations
Reference Model
SCORcard
SCOR-based Supply Chain
Scorecard
Sect. Section
SEMStructural Equation Model
SFASales Force Automation
[sic!] just as that (same in copy)
SIGSpecial Interest Group
signif. significant
SIMTech
Singapore Institute of
Manufacturing Technology
SKUStock Keeping Unit
SNSupply Network
SNGSupply Network Group
SPSS
Statistical Package for Social
Sciences ?(former desc.)
SPSS
Statistical Product and Service
Solutions (current desc.)
SRM
Supplier Relationship
Management
SVShareholder Value
SWSoftware
Tbl. Table
TCP/IP
Transmission Control
Protocol/Internet Protocol
TQMTotal Quality Management
UKUnited Kingdom
UoMUnit of Measure
US United States
USAUnited States of America
USDUS-Dollar
VVariation range
VARValue-added reseller
VCValue Chain
VCGValue Chain Group
VCOR
Value Chain Operations
Reference Model
Ver. Version
VMI Vendor Managed Inventory
Vol. Volume
vs. versus
WFMWorkflow Management
WIP Work in process
WiSt
Wirtschaftswissenschaftliches
Studium (Studies of Economic
Science)
XArithmetic mean
ZfB
Zeitschrift fr Betriebswirtschaft
(Journal of Business Studies)
Zfbf
Zeitschrift fr
betriebswirtschaftliche Forschung
(Journal of Business Research)
1. Chosen conventions with regards to the structure:
On the topmost level are the chapters (abbrev. as
chap.):
Example: Chapter A (represented in bold and large
writing).
Beneath these follow the respective sections (abbrev.
as sect.):
Example: 1.1 (represented in bold and normal-sized
writing).
Allocated to a section, there may be paragraphs
(abbrev. as para.):
Example: 1.1.1 (represented in bold, normal-sized
writing and italics). If need be, there are at least
two paragraphs allocated to one section.
Sub-paragraphs may follow beneath a paragraph:
Example: 1.1.1.1 (represented in bold, normal sized
writing, italics and indented). This level
represents the lowest possible level of structure,
referred to, analogue to the previous level and
also simplifi ed with the term para., (for
example: see for this purpose para. 1.1.1.1)
2. With regards to the proximity to truth, reference is
made to the criteria of truth in the sense of
conformity of theoretical statements and the
political economic or respective corporate reality
(correspondence theory). With this, a
continued comparison of theoretical statement
and observed reality is assumed in a
hermeneutic sense. The SCOR model makes
allowances for the fact that it is, as it were, an
evolutionary model, which is adapted to the
(changed) reality in regular cycles (for more
information concerning the correspondence
theory, cp. for example (Neale, 2002) Facing
Facts).
3. Cp. (Popper, 1989) Logik der Forschung (The
Logic of Scientific Discovery), p. XXVI. The
quote is originally from Xenophanes (570 474
BC), founder of the so-called Eleatic School of
Philosophy, cp. (Encyclopedia of Philosophy,
2004) Xenophanes. For Karl Popper and his
work cp. for instance (Magee, 1986, Karl
Popper; Geier, 1994, Karl Popper; Popper,
1 9 9 5 , Objektive Erkenntnis (Objective
Knowledge))
Chapter One

Objectives,
methodology, approach
and definition of terms

Using SCOR has become a
way of life for the company,
including getting the top
executives together to make
across-the-board decisions.
() It costs nothing. All
SCOR is is [sic!] a tool that
tells you what the possible
metrics are you can use to
determine how your business
is doing. () SCOR isnt
magic. Its a good, simple
management tool, and I dont
know why everyone doesnt
use it.
1

1.1 Foundations and
Objectives of the Work
1.1.1 Arrival at and
objectives of the research
The last ten or so years have seen a
pronounced change in the level of
importance that companies attach to
logistical processes.
2
Whereas logistics
have, traditionally, been seen largely as
a vertical function of organizations, the
more recent comprehensive functional
and integrated view has become more
widespread, particularly in the guise and
the framework of a Supply Chain.
3
This
process may be discerned, for example,
in the creation of a new management
discipline, Supply Chain Management,
and the increasing emphasis on this
discipline within companies.
4

In conjunction with this change of
focus, in recent times a growing number
of companies have introduced a new
position, namely that of Chief Supply
Chain Officer (CSCO) or Supply Chain
President, who often reports directly to
the Chief Executive Officer (CEO).
5

This work moves the Supply Chain
into the center of the discussion. The
Supply Chain can, in the first instance,
be represented by means of the physical
flow of material. It can also be used to
illustrate the underlying organization or
organizational segment: procurement, for
example, or sales. Finally, the
representation is possible by use of
Supply Chain processes: the purchasing
process, for example, or the sales
process. In the course of this study, the
primary focus will be on the range of
processes within an organizations
Supply Chain.

For the purpose of the structuring of
these Supply Chain processes, the so-
c a l l e d Supply Chain Operations
Reference Model (SCOR) is utilized and
assessed with regard to the possibilities
pertaining to its clarification and
description. The SCOR model
6
was
developed by an independent, non-
profit-orientated association,
7
namely
the Supply-Chain Council (SCC).

The Supply-Chain Council was
founded in 1996 by the business
consultancy Pittiglio, Rabin, Todd &
McGrath (PRTM) and Advanced
Manufacturing Research (AMR), and
originally consisted of 69 voluntary
members.
8
Membership is open to all
companies and organizations that are
interested in the application and further
development of modern and qualified
systems and practices for the
management of the Supply Chain.
9

This study addresses primarily the
following questions:

How could the SCOR model, on the
basis of model-immanent
performance indicators, be
transposed upon a theses model and
thereby operationalized?
How could this theses-transposed
illustration of the SCOR model be
submitted to an explorative
examination based upon empirical
data?

Since its inception, the SCOR
model has been the subject of academic
research.
10
However, these studies have
traditionally been based on a given
structure of the model, and in turn been
concerned with its applicatory uses.
11
At
the time of writing, however, no study
has focused solely on the model
structure itself. Thus, the author has
chosen to address the SCOR model in
theses format and test it by means of its
operational qualities.

In this sense, the study tests the
structure of the model and asks whether
it can be considered to be suitable and
correct (entirely or partly). This is
particularly pertinent as, in the years
since the breakthrough of the models
inception, it has been greatly diffused
throughout North America and Asia,
although in this respect Europe currently
lags slightly behind. This continuously
expanding field makes such a study more
necessary than ever.

Having said that, the work in no
way wishes to lay claim to performing a
universally valid examination of the
SCOR model. It is not, moreover, an
attempt to examine the SCOR model as
such, but to strive for a respectively
compiled illustration, or model
operationalization, in order to make an
exploratory contribution to research. It
is, therefore, not primarily about the
examination, verification, or
falsification of theses, but about an
exploratory attempt at gaining initial
and consequently provisional results.
A step-by-step accumulation of
knowledge stands in the foreground that
must, under all circumstances and even
after conclusion of the work, be
continued through further focused
examinations built upon its findings.
12

Within these parameters, however,
and by use of the answers to the above-
mentioned research questions, it is
nonetheless possible to identify potential
areas for improvement, and also to make
recommendations accordingly. Such
recommendations are made on the
understanding that the accumulated
knowledge is relative to the developed
illustration of the SCOR model, whereby
factors like a possible mis-match
between theoretical model and empirical
reality or the quality of the applied data
can play a role.
13
In addition to this, it
must be borne in mind during
transposition of conclusions onto the
actual SCOR model that such a practice
can only be carried out within certain
given limitations, which will be
introduced below.
14

1.1.2 Methodical approach
to the work
The core of this study consists of an
examination
15
of the SCOR model in
respect of the Supply Chains of selected
companies. For this purpose empirical
results, accumulated via the use of
quantitative questionnaires, are used.

To preserve the anonymity of the clients,
the results of the empirical study are
presented on a neutral basis, without
mentioning the names of the respective
companies. However, the characteristics
relevant to these companies (indications
of their industry affiliations, for
example) are represented, as these are
germane to the study.

The exploratory examination of the
SCOR model is based upon the analysis
of the scientific and application-related
research already conducted in the field.
It is also based on the authors extensive
practical experience gained during a
tenure for years as a business consultant,
particularly with respect to the field of
Supply Chain Management, and
specifically the SCOR model. The
examination of the SCOR model
involves a comparison of the theses
developed during the course of the work
and their results, accumulated by
empirical examination. An evaluation, to
include recommendations for the
improvement of the model, appears at
the end of the work.

In the first stage, the study applies
scientific statistical methods in order to
test the conformity of the developed
model. The findings of the empirical
study then provide the basis for
recommendations that follow for the
improvement of the SCOR model, or for
Supply Chain analysis. The conclusion
provides modern concepts and tools for
Supply Chain formation, as well as
suggestions for further research in the
fields of Supply Chain Management and
SCOR.

The theses that are outlined,
although not yet verified, within the
work refer to the connections between
the interval-scaled model parameters of
the SCOR model.
16
The verification of
the connections advocated in the
hypotheses will succeed these by means
of additional descriptive-statistical
clarifications. Although the theses
themselves are, at this stage of research
in the field, often not completely
verified, special attention is paid to
those companies that differ from a given
basic tendency in order that such
deviational cases can be clarified.
17

The findings are thus articulated in
accordance with the submitted theses. In
the findings, the material data or the
correlation of the individual variables
(according to the thesis in question) are
primarily verified on an empirical basis.

Diag. 1-1: Research-logical course of the work
19

According to Friedrichs,
18
the research-
logical course of the empirical
examination orientates itself upon
connections to discovery, reasoning and
evaluation. Interpretations unless
relevant to the statistical durability of
the hypotheses or appraisals with
regards to concrete procedural
recommendations play no role as far as
the findings are concerned. On the
contrary, such respective conclusions
are drawn later in the study.

The following diagram represents,
in graphical form, the methodical
approach that shapes the structure of this
work.

1.2 Integration of the Subject
Matter into the Scientific and
Empirical Discussion
The methods by which companies plan,
purchase, produce, and sell their
products substantially influence their
position within the market. In the
present-day business environment,
transparency, efficiency and speed are
the key factors in determining a
companys success or failure. Efficient
monitoring of the procedures and
processes is seen as vital if the company
is to derive advantages (which apply to
all aspects of its business) from using
profit-effective acquisition potentials,
from the reduction and outsourcing of
stock, and from the improvement in
customer relations arising out of a better
delivery service.

The continuous process of
globalization in the procurement and
distribution markets, when coupled with
the modern trend towards a more
worldwide distribution of production
locations, demands not only that a
business plans and optimizes its value-
generating processes
20
and business
logistic networks as a whole, but also
that it develops greater levels of
effective customer management. This
represents a great challenge for those
responsible for such areas of a
companys life because they must both
realize operational improvements whilst
simultaneously minimizing costs, without
letting customer service suffer in the
process. As there are obviously
conflicting objectives in this case, the
implementation methods must be
perfectly balanced and all relevant
aspects included into any deliberations
on these issues.
21

As a result of increased
globalization, many companies are
confronted with the challenge of having
to plan and monitor their material and
information flows continuously and
efficiently from procurement, through
production, and up to marketing. It is
often the case, however, that marketing
plans are noted for their inexactness and
subsequent lack of verification as to
their implementation ability, and that as
a result companies are increasingly
forced into overstocking and cost-
intensive bottleneck monitoring.
22
Production and procurement can often
not react flexibly enough to fluctuations
in demand, resulting in an increasing
inability to meet scheduled delivery
times and, often, the accumulation of
cost-intensive stockpiles of goods or
resources.

It is now acknowledged by
companies involved in such fields that
success or failure is regulated by the
weakest link in the Supply Chain.
Gutenbergs Balancing Law of Planning
(Ausgleichsgesetz der Planung)
23
is of
great importance in this capacity.
Although originally formulated around
the internal structure of a business, this
law can also be applied to the complete
supply chain and therefore necessitates
increased cooperation between those
companies involved in order to displace
the supply chain bottlenecks.
Consequently, companies see themselves
facing the following questions:
24

By which means, keeping in mind
deadlines, cost and level of
service,
25
can a constant balance be
created between the supply-side
(stock, production and transport
capacity, etc.), and the demand-
side?
In which way, and at which point in
time, must the supply-side be
respectively enlarged or reduced?

Leading companies proactively
occupy themselves with these questions
and integrate their partners more closely
into the planning process. Their aim is to
constantly increase the continuity and
transparency of all the business
processes and to simultaneously
recognize and remedy bottlenecks and
missed deadlines. The main challenge
facing a company in this process is to
secure an economically favorable and
flexible integration of the business
partners data (suppliers, logistic
services, sales branches etc.) into their
own marketing, procurement,
production, distribution and transport
planning, and thereby create unified and
consistent plans.
26

These topics and requirements are
at present being intensively discussed in
economic science as well as in business
practice. One question that has become
associated with this debate is that of
whether Supply Chain Management
(SCM) is just a fashion or is poised to
developed further into a recognized
management concept in its own right.
27

This study cannot offer a definitive
answer to such a question at this time: a
number of scientific contributions
already exist for that purpose.
28
Rather,
this study stands as an empirical
contribution that answers the question
how companies Supply Chains can be
analyzed and optimized through an
ongoing process of study.

1.3 Representation of the
Supply Chain as a Business
Reference System
In order to be able to observe the Supply
Chain (SC)
29
more closely, it is
necessary to establish a definition of the
term. In literature a multitude of
definitions can be found which are
described in this chapter. As the term
was mainly developed and disseminated
in the USA, its characterization is
strongly influenced by authors from the
Anglo-Saxon speaking regions.

An understanding of the Supply
Chain is important for those involved in
the implementation of procedural
improvements to the Supply Chain. The
Supply Chain can be widely or narrowly
defined, depending upon the perspective.
At present, the tendency is for a wider
definition, as seen at the conference
carried out by the Council of Logistics
Management (CLM)
30
in the year 2002
and integrated into the definition
advocated by the CLM. In accordance
with this the Supply Chain can now be
described as the total of all activities,
procedures, etc., that are applied to a
product from beginning to end.
31

In this sense the Supply Chain may
be seen as beginning, for example, in the
mining of ore, the extraction of raw
materials from the ground, or the
planting of seeds. The chain continues
through a multitude of transformations
and distributions, which deliver the
product to the end user. It ends with the
conclusive disposal of the product and
its residues. In line with this
understanding, the Supply Chain
represents more than just the physical
movement of the goods: it also takes into
account movements of information,
finance, and knowledge.

It can therefore be taken from this
that the Supply Chain comprises all
procedures within the product life
cycle,
32
including the physical,
informative, financial and knowledge-
based procedures for the movement of
products and services (from the supplier
right up to end consumers).
33
On the
process side, a Supply Chain consists of
all organizations included in the design,
production and delivery of a product to
the market.
34

1.3.1 Definition of the
Supply Chain
The definitions that can be found in
academic and business-orientated
literature include the whole span of
perspectives from the very narrow to
the very wide demarcation of the term.
Although the Supply Chains spectrum
has expanded in the past years, more
narrowly demarcated or emphasized
definitions can still be found today. An
overview of the various approaches to
the definition of the Supply Chain
follows. An appreciation of the
differences involved in this field is a
necessary precondition for the full
comprehension of Supply Chain
Management.

A key decision in this field is that
of the side from which the Supply Chain
is viewed, i.e., from the customer or the
supplier side. In the supplier-centric
approach, the Supply Chain represents a
network of suppliers which manufacture
goods. These goods are traded amongst
each other as well as with additional
parties. The goods originate with the
supplier and arrive finally with the
target customer. Between these start and
end points, they often run through
distributors and processing companies.
35

This supply-side view is countered
by the customer-centric approach,
which assumes that a Supply Chain
consists of all necessary stages that are
directly or indirectly involved in
fulfilling a customer requisition. In this
specific case, the focus is upon the
transportation businesses, warehouses,
dealers and the customers in question.
36
The combination of both approaches
leads to a superior definition, whereby
the Supply Chain is seen as an agreement
between companies in order to provide
the market with products and services.
37

Furthermore, this comprehensive
point of view can be raised to a global
level and placed in the context of a
global association of organizations. In
this sense a Supply Chain represents a
global network of organizations,
working together to improve the flow of
material and information between
supplier and customer. The operational
objectives are the lowest possible cost
and the highest possible speed. The
ultimate objective is the satisfaction of
customer needs. The information flow
runs, as it were, forward-facing (i.e.,
from customer to supplier); the material
flow, on the other hand, runs backward-
facing (i.e., from supplier to customer).
Furthermore, information flows from
customers to dealers, manufacturers,
logistic services and raw material
suppliers. Material flows from raw
material suppliers or component
suppliers to customers. The common
trait of both the material and information
flows is that the process amongst the
Supply Chain partners should be
coordinated, and this also implies that
some degree of forward and backward
coordination isrequired.
38

To take this line of thought further,
the approach can also be differentiated
from the supply and demand aspect. A
Supply Chain has the purpose of
transferring products and services from
the suppliers up to the consumer (for
example organizations, stores,
individual people). The actions within
the Supply Chain change depending upon
the product and type of demand, but it is
possible to identify a number of
generally valid value-creating processes
as follows:
39

Make:Manufacture of material or
building components, etc.
Combine:Assemble, package, etc.
Move:Distribute, collect, etc.
Store:Stock, trade, etc.
Customize:Install, configure, etc.

The demand-side Supply Chain can
be described as the demand chain
focusing upon market demand towards
suppliers. It becomes clear during the
explicit consideration of the demand that
a respective Supply Chain is customer
driven.
40
The term pull concept is
occasionally used to describe this
process of government by a form of
demand vacuum.
41

In exactly the same way as a
supplier can have a multitude of Supply
Chains to monitor, the suppliers
customer also has limited demand chains
that can be individually analyzed. The
demand chain translates a customers
objective into information that the
supplier can use as an instruction to act
upon and is, in this sense, determined by
a decision process. The four general
stages by which the decision process is
characterized begins with the definition
of the purpose (define purpose). At the
second stage planning takes place
(plan), for example in the form of a
category plan. The third stage comprises
the management of consumption and
requirements (manage consumption and
requirements); for example, within the
field of stock management. Buying
transactions (purchase transactions) are
at the center of the last stage; for
example, a call-off order as part of a
master agreement.
42

An alternative approach is the
organization-orientated view of the
Supply Chain. In accordance with this,
the Supply Chain represents an
alignment of processes within a
company, as well as with other
companies (inter- and intra-business
processes), which produce goods and
services and deliver them to the
customer. It comprises actions such as,
for instance, procurement of material,
production planning and distribution.
Purchasing, production, inventory
management, stock-keeping and transport
are usually regarded as part of the SC
organization. Marketing, sales, financial
areas and strategic planning, on the other
hand, are not considered to be a part of
the SC organization. Product
development, marketing plans, order
registration, customer service and
company accounting are not clearly
assigned. They clearly belong to the SC
processes, but are only seldom part of
the SC organization.
43

The combination of the process and
organization-orientated points of view
can be summarized as follows:

The supply chain includes the
organizations and processes
for the acquisition, storage,
and sale of raw materials,
intermediate products, and
finished products. Supply
chain product flow is linked
by physical, monetary, and
information flows.
44

The present view of a Supply Chain
is largely one-dimensional, but a further
differentiation can take place with the
aid of its layered arrangement of various
levels. In accordance with this view, a
Supply Chain is an alignment of
suppliers and customers, beginning at
one end with raw material and ending at
the other with the delivery of a
completed product to an end customer.
The Supply Chain can be dissected into
several layers.

A single-level Supply Chain purely
illustrates the direct customer and
supplier, whereas a multi-level Supply
Chain can reach as far as the raw
materials on the one hand and the
disposal of worn-out finished goods on
the other. The complexity increases
proportionately with the increase in the
number of levels. Most companies,
therefore, have neither the means nor the
resources to monitor the Supply Chain
network and because of this restrict
themselves to one or two levels.

In addition to the levels, the
components flowing through the Supply
Chain must be considered and
illustrated: Goods and services in one
direction, payments in the other, and
information in both directions.
45
The
interpretation of a bidirectional
information flow advocated here
represents the reality far better than the
multi-directional flow of information
described above. Actual concepts, like
that of Collaborative Planning,
Forecasting and Replenishment
(CPFR), for example, build upon a flow
of information in both directions.
46

A further criterion that can be
included into the Supply Chains
description is the decision aspect. A
multitude of decisions must be reached
within a Supply Chain showing a large
number of SC partners. These decisions
refer, for example, to investments,
strategies for coordination and
cooperation with partners, customer
service, and profit-maximizing
strategies. Some of these decisions have
far-reaching influences upon the Supply
Chain and are of a complex nature
because with increasing market
dynamics, a constantly higher level of
uncertainty exists regarding the effects,
and a multitude of variables must be
taken into account. The Supply Chain
resulting from this can be described as a
market-driven Supply Chain.
47

The inclusion of the respective
companys functional areas and the main
activities connected therewith lead to a
functional description of the Supply
Chain. The following five main
activities can be identified with regards
to a companys functional areas:
48

Purchasing: includes the tasks of
purchasing raw materials,
components, resources and
services.
Manufacturing: refers to the
manufacture of products or services
in addition to resource maintenance
and repair, as well as the training
of co-workers. It may be
summarized therefore as the
implementation of all tasks
necessary for production.
Movement: consists of the
transportation of materials and
personnel inside and outside the
Supply Chain.
Storage: refers to those products
which find themselves being
processed (work in process, WIP)
in addition to raw materials, whilst
these await transportation or
reformation, and the finished goods
before these are sent to the
customer.
Sale: comprises all market-
orientated activities, including
marketing and sales.

The step from a static to a dynamic
view of the Supply Chain is achieved by
including activities pertinent to the
functional area. Up to now, the
previously mentioned flows of material,
payments and information have been
regarded as linear and coupled. Due to
the introduction of the internet
49
and the
acceleration of information flows
associated with it, these flows have (to a
certain degree) become uncoupled from
one another. Information now flows in a
predominantly independent manner from
the respective flows of material and
payments.

As a result of this, Supply Chains in
the traditional sense have further
developed themselves into networked
Supply Chains, which network the SC
partners together with the best suited
components, technologies and customer
services. SC networks are additionally
dynamic in nature and make it possible
for SC partners to be included or
excluded according to certain criteria;
for example, technological advantages,
product life cycles and customer
preferences.
50

These dynamic Supply Chains
promote, amongst other things, the
development of new business strategies.
Within this framework, focus is placed
upon new methods of customer
integration, outsourcing of business
functions, cooperation with customers
and suppliers
51
and inventory
management.
52
By these means
traditional linear Supply Chains are
converted into dynamic SC networks.
53
A further integral SC element is
represented by its value generative
character (value-add).
54

According to this, the Supply Chain
is a network of organizations, which are
associated with each other in a forward-
and backward-facing manner, in order to
generate value within diverse processes
and activities. This value is reflected in
products and services which are
delivered to the end consumer.
55

Normann and Ramirez describe the
connection between value generation
and the respective business and Supply
Chain strategy as follows:

Strategy is the art of creating
value. It provides the
intellectual framework,
conceptual models, and
governing ideas that allow a
companys managers to
identify opportunities for
bringing value to customers
and for delivering that value at
a profit. In this respect,
strategy is the way a company
defines its business ().
56

With consideration given to value
generation, aspects of ?information
technology can finally be integrated into
the operationalization of a Supply Chain.
The result is a so-called Value Chain
(VC). Accordingly, a Value Chain
represents a business outline that uses
digital SC concepts to ensure not only
customer satisfaction,
57
but also
profitability.
58
The VC focuses mainly
upon the competitive factors of time and
flexibility
59
and has the primary
objective of being able to react quickly
and flexibly to changing customer
requirements.

The special characteristics of a
value chain pronounce a distinct
difference from a traditional business
outline and may be described as
follows:
60

Customer-aligned
Collaborative and systematic
Agile and scaleable
Fast material, payment and
information flows (fast flow)
Upheld by Information Technology
(IT) (digital).

A Value Chain is hence positioned
above the concept of the Supply Chain. It
assumes the reality of a Supply Chain
and focuses explicitly upon the
generation of value for all involved
parties (the company itself, customers
and suppliers). It still represents, to a
greater extent, a static system, but the
(bilateral) information flow is often
supported by modern IT systems.
61
The
approaches outlined above assume
physical partners to be participants in
the Supply Chain.

Virtual value nets
62
originate due
to the increasing usage of virtualization.
The linear, physical Value Chain model
has adjusted itself accordingly. This
reformation reaches above the physical
boundaries of a marketplace and into the
global and fast-developing digital
economy. With the introduction of the
internet and the increasing role of
technology as a catalyst of new
strategies, companies find themselves
confronted with new strategic
requirements and management
problems.
63

The real-time information exchange
and the interactive performance potential
of the internet have changed the business
environment to the point where it is now
not only customers, but also other
companies that have access to
alternative products and services. New
distribution channels are establishing
themselves and leading to opportunities
for optimizing value generation and
simultaneously enabling interactions to
become more transparent. The winners
in these virtual value chains will be
those who have faster access to
information and resources, and can at the
same time extract from this the suitable
competitive and SC strategies.
64

Because of this, the traditional
physical alliance has developed itself
into a virtual alliance, in which there are
an increased number of possible SC
partners who exchange information. The
virtual Value Chain represents an
alignment of market partners who work
together as a unit, whereby each of them
contributes, so to speak, a component of
the value. The value-donating activities
extend outwards from the supply-side in
the form of the raw materials, incoming
logistics and production procedures,
right up to the demand-side in the form
of outgoing logistics, marketing and
sales.
65

Michael Dell, founder of the Dell
company,
66
describes a virtually
integrated organization as an
organization that is not networked by
physical objects of wealth, but by
information
67
or, alternatively
expressed, by information technology
(IT).

The Supply Chain is, therefore, a
component of a superior Electronic
Business (E-Business) concept. This
association is illustrated by the
definition developed by Seibt:

An organization practices
Electronic Business, if several or all
business processes

within the organization
between itself and its business
partners
between itself and a third party
(e.g., authorities)

are totally or partially realized
via the assignment of
electronic communication
networks and are supported by
Information and
Communication Technology
(ICT) systems.
68

In the interests of clarity, it is
important to differentiate here between
E-Business and the related concept of
Electronic Commerce (E-Commerce)
that generally denotes the electronic
execution of business transactions.
69
The
part of the E-Business concept relevant
to the Supply Chain is also often
referred to as Electronic Supply Chain
Management (E-SCM).
70

Ross describes E-SCM as the
tactical and strategic components of the
business strategy that aim to combine the
common production capacities and
resources of overlapping SC systems by
means of internet technology, with the
objective of creating customer
advantages.
71
The main difference from
the traditional SCM or respective
value chain management is thus seen in
the fact that information technology is
applied in the process in order to
support the optimal completion of the
flow of goods and information.
72

1.3.2 Categories of Supply
Chains
The definitions included above focus on
various Supply Chain features or
characteristics. Building upon these,
however, a variety of extra
categorizations should also be included
in the equation, and these are
summarized below.

One possibility lies in the question
of whether the Supply Chain is chiefly
aimed at the product or the end
customer. Ayers suggests the following
differentiation in this context:
73

Product-centric Supply Chains are
Supply Chains tailored in
accordance with special products.
One or more product offers can
result from this, which constitute a
separate Supply Chain.
Customer-centric Supply Chains
are Supply Chains tailored in
accordance with special market
segments. One or more Supply
Chains may result from this, which
are organized around market
segments.

A further difference can be
identified by looking closely at the
business strategy, and requirements
associated with it:
74

Arms length, open competition:
competitive offers and tender
action. The emphasis here is upon
intense trading.
Commodity trading: independent
marketing, forced by the necessity
of the business agreement. The
emphasis here is upon monitoring
the deviational range of commodity
goods.
Partnering for customer delight:
openness, trust and splitting of the
work to be carried out. The
emphasis here is upon supplier
performance extended towards the
customer (forward-facing in the
Supply Chain) and the value aspect
extended from the customer
towards the supplier (backwards-
facing in the Supply Chain).
From suppliers suppliers to
customers customers: here there
is a linkage of all market
participants within a horizontal
Supply Chain. The emphasis is
upon seamless delivery,
optimization and integration.
Lean supply chains and systems
integration: these are associated
with cost minimization and
reformation of the cost structure by
stages. Their emphasis is upon
efficient cooperation, but not,
however, upon economizing, which
could lead to resource bottlenecks.
Competing constellations of linked
companies: here, market leaders
form an alliance with the best
market partners. The emphasis is
upon performance potential,
capabilities and organization-
cultural combination ability.
Interlocking network supply
between competitors: these
consolidate the step-by-step
completion of transactions. The
emphasis is upon unification where
a minor competitive advantage
75
exists, with the aim of using
synergies.
Asset control supply dominate or
die: this approach is used to gain
control over the assets and target
their application. The emphasis is
upon the correct usage of
competitive instruments at tender
action stage.
Virtual supply no production,
only customers: here, fixed costs
are kept low by outsourcing of
production.
76
The emphasis is upon
marketing and distribution
capabilities.

In focusing upon the primary
Supply Chain area or (to use another
title) the corporate-policy point of view,
it is possible to categorize further and
differentiate on the grounds of strategy,
function, logistics-transportation, and
information management points of view.

The strategic view considers the
Supply Chain design to be the most
important element of the competitive
strategy. As a part of this, the Supply
Chain represents an alignment of
resources which are used to support the
products position in the market with
regard to the combination of end
customers, price calculation and sales
measures. The purpose of such a process
is the improvement of profit margin upon
product turnover.

In the functional view, the Supply
Chain consists of the individual
organizations that are required in order
to purchase, transform and sell
materials. The focal point is occupied by
the material: its procurement,
transportation, and other costs are
important. The aim is to lower cost in
the functional areas relevant to
success.
77

The logistics-transportation view
assumes that the Supply Chain represents
the physical course of a product through
a number of operating plants and
facilities which are connected by means
of a transport association. These
facilities and installations include
factories, warehouses, sales centers,
vehicle pools and distribution centers,
and the view seeks to bring about the
minimization of logistic cost.

In the information management
view, the information flow between the
various parties represents the integration
factor. In this sense, an integrated Supply
Chain possesses a communal basis of
information, as well as mechanisms with
which to exchange this information
amongst the participants. Accordingly,
the aim of this view is a reduction of the
information process cost.
78

This study follows the latter
categorization. This type of linkage is
anchored most strongly into the SCOR
model, which will be dealt with later.
But for the purposes of this study, it must
be decided what the importance of the
Supply Chain is with regard to the
competition between companies. The
unequivocal and simultaneously most
radical answer, with which the
author agrees, is as follows:

The leading-edge companies
() have realized that the real
competition is not company
against company, but rather
supply chain against supply
chain.
79

There is not much more to add to
this quotation, although it does serve as
a powerful example of the way in which
the term has brought forth and seen the
rapid development of a new discipline
in the last decade: management of the
Supply Chain or Supply Chain
Management, respectively.
80
This will
be the focus of the study in the pages
which follow.

1.4 Overview of the Present
Status ?of Supply Chain
Management ?in Literature
The role of Supply Chain Management
(SCM)
81
within an organization has
changed considerably over the roughly
last three decades. In the 1970s, when
the area was better known as logistics, it
was largely restricted to the integration
of storage and transportation policies
within a company. In addition to this, the
high interest rates (often in the two-digit
region) that most countries experienced
during that decade forced companies to
be particularly vigilant when it came to
the investment of their capital. At this
time, leading logisticians were primarily
concerned with reducing their stocks.
Their focus was mainly upon how the
business could implement internal
changes, which would lower the
inventory and logistic costs. Even
attempts to reduce production and
delivery cycle time and as a result of
this, safety stock, were carried out
internally because cycle times were
mainly considered to be incoming
information for the forecasting and
procurement process.

In the 1980s, the focus shifted
towards restructuring the cost structures
within the Supply Chain. Attention was
diverted to integration of Supply Chain
procedures in order to reduce SC
business cost and assets for the Supply
Chain. Around the end of the 1980s,
SCM then changed its focus from cost
reduction towards the improvement of
customer service. The advantages sought
by means of an improvement of the
Supply Chains performance included
higher turnover and higher profitability,
due to a greater share in the market, and
pricing advantages over the competition
which manifested themselves in higher
margins.

The level of interest in improving
customer service was an equally
important feature of businesses during
the 1990s. In the same way, business
growth which had been considered
within many companies to be the
responsibility of product development,
marketing and sales was adopted as an
SCM objective.

In the present decade, the field of
SCM has seen further changes, namely
the development of Strategic Supply
Chain Management. As opposed to the
traditional point of view, in which it
was only a partial definition of
objectives, SCM has achieved a
strategic function which immediately
contributes to the organizations success
and has simultaneously become an
immanent component of business
strategy. It is increasingly the shared
view that SCM not only determines the
business strategy of many companies, but
also makes their successful trading
possible. Alternatively expressed, SCM
is simultaneously conditional for
successful business strategy and a
determining factor of business strategy
designation.
82

In addition to these factors SCM
was, above all, strongly concentrated on
improvements with regard to the supply-
sided processes. Thinking in this area
tended to overlook, however, the fact
that companies who wished to monitor
their Supply Chain in an optimal way
could only achieve this goal if they were
able to recognize the fundamental
connection between supply and demand
and the resulting effects of this upon
the SC strategy. In many cases, however,
companies scrutinized their supply-sided
possibilities, but neglected the demand
factor. The relationship between the
supply and demand side lies in the fact
that demand determines the Supply
Chains aim and therefore has a
determinative character, whilst the
supply-orientated performance potential
supports the fulfillment of the demand.
Now that this link has been affirmed,
companies must find new means of
creating the coordinated monitoring of
supply and demand chains. SCM
represents a central component of these
efforts.
83

The ability of a business to
reconcile supply and demand is a
function of its capability to react, or
alternatively expressed, its capability to
answer to market signals in a timely
manner. This flexibility, on the other
hand, is mainly influenced by the
companys working capital and
operating capital expenses.
Organizations have often fought to adapt
supply and demand in this manner
because during this process, the focus
falls upon improvement in forecast
accuracy, production, and inventory
optimization and the reduction of cycle
times.
84

Consideration should thereby be
given to the fact that, although useful,
these measures do not offer a unified
solution. Companies must therefore also
consider such measures which include
labor and capital equipment costs, and
they must find new ways to adjust the
incentive systems, not only internally,
but also within the extended Supply
Chain (i.e., with reference to the SC
partners).
85

1.4.1 Evolution of Supply
Chain Management
Long before the term Supply Chain was
created and the new discipline of
formation and optimization of this
Supply ChainSupply Chain
Managementemerged, people were
speaking of a so-called logistic chain.
This logistic chain stood in the center of
a discipline described as logistics (and
nowadays is partially still described as
such). Hugos submits the following
description:

The term supply chain
management arose in the
1980s and came into
widespread use in the 1990s.
Prior to that time, businesses
used terms such as logistics
and operations management
instead.
86

To this end and for the purpose of
demarcation, it is useful to introduce
several definitions of logistics at this
point. In the classic terminology of the
Council of Logistics Management
(CLM),
87
logistics are described as the
processes used to plan, implement and
control the efficient flow of material,
beginning with storage of raw materials,
through work in process (WIP), to
finished products and services, as well
as the respective information from the
outlet to the point of consumption. This
field includes incoming and outgoing
goods as well as internal and external
material movements. The ultimate
purpose is to be able to fulfill customer
requirements.
88

Logistics can also be seen from the
organizational aspect, as representative
of an objective-orientated logic which
exists to monitor the processes of
planning, allocation and control of
financial resources - processes which
are reserved for the physical
distribution, production support and
purchase transactions.
89

Other definitions focus upon the
issue of conceptual integration by which
logistics include the creation of
relationships to time, space, amount,
shape and possession, not only within
one company, but also in conjunction
with other companies. The tools used to
arrive at a logistical target are strategic
management and infrastructure and
resource management. The aim is to
create products and services that satisfy
customer needs. Within this, logistics
are involved at all levels of planning
and implementation on strategic,
operational and tactical levels.
90

Logistics management also
inevitably presents limitations and
dependencies. Accordingly, logistical
activities usually consist of incoming
and outgoing logistics, vehicle-pool or
fleet management, respectively, stock-
keeping, material movement, order
registration and completion, logistic
network design, inventory management,
supply and demand planning, and the
coordination and monitoring of logistic
service providers.
91
Only in a limited
way do such activities cover issues of
procurement and purchasing, installation
and packaging, and customer service.
92

From such definitions, it is but a
short step to move to management of the
Supply Chain (i.e., Supply Chain
Management) which is identifiable on
account of its integrative character.
Therefore, Supply Chain Management
(SCM) includes not only logistics but
also, above and beyond this, business
areas such as purchasing, marketing and
information technology. The major
purpose of this field is to improve
Supply Chain efficiency.
93

Expressed another way, SCM can
be defined as the integrated planning and
monitoring of processes in the value
chain. The representative objective in
this case is the optimal satisfaction of
customer needs. In this sense, logistics
management represents a component of
SCM. This component has the task of
planning, implementing and controlling
the efficiency and effectivity of the
forward- and backward-facing flows of
goods, services and appropriate
information, with the intention of
fulfilling customer requirements.
94

As a result of this, SCM represents
an integrative functional area whose
priority is the responsibility for the
connection of main business functions
and processes within an organization
and also of other firms included in the
Supply Chain. These connections are
intended to help the business arrive at a
consistent and achieveable business
model that comprises the logistics
management functions in addition to
production flows and has the task of
ensuring the coordination of the SC
processes with the functional areas of
marketing, sales, product design,
finances and information technology.
95

SCM also comprises the planning
and monitoring of all logistics
management activities. Beyond this,
however, it comprises the coordination
of and cooperation with the business
partners within the Supply Chain, such
as suppliers, distributors, logistic
service providers and customers. In the
main, SCM integrates the management of
supply and demand Supply and
Demand Management within one
business, and also throughout various
other firms.
96

A clear definition of the term SCM
is, however, nowhere near as simple as
one would imagine due to the diffusion
of the term in modern usage. In actual
fact, the term SCM is associated with
various meanings. In the widest sense, it
encompasses all logistical activities,
customer-supplier relationships,
development and introduction of new
products, inventory management and
facilities. The concept allows itself to
be applied, in analogue, to the area of
service provision. Many practitioners
define SCM more closely and restrict
the definition to activities within one
companys Supply Chain. By this they
inevitably reduce the application area of
improvement measures to their own
business and the internal Supply Chain,
without the inclusion of external Supply
Chains.
97

1.4.2 Definition of the term
Supply Chain Management
At this point, it is useful to define Supply
Chain Management in order to outline
the applicable boundaries of this study.
98
Originating from the classical planning
and control approach, Supply Chain
Management represents an expansion of
the existing approach into a company-
spanning planning and control strategy.
This is also inherently connected with
the Advanced Planning System (APS),
99
which also explicitly includes an
information technology (IT) support
aspect.

If the time dimension or the
planning horizon is included, SCM can
be defined as the coordination of the
strategic and long-term orientated
cooperation between all participants
within the whole SC network.
100
This
includes the purchasing area as well as
the production area, and extends into the
fields of product and process innovation
where the purpose is to develop and
manufacture products. Each SC
participant is active in the area for
which he possesses core
competences.
101
The choice of further
SC partners is mainly made from the
aspect as to which potential is present
for the realization of shorter lead
times.
102

SCM may be described as the
process of planning, introducing and
controlling an efficient and effective
flow of goods, services and relevant
information, from the starting point of the
Supply Chain right up to the point of
consumption. The focus of such a
process is the satisfaction of customer
requirements.
103
By a further
differentiation of the process-related
point of view, SCM can also be seen as
the design, maintenance, and application
of SC processes for the satisfaction of
end customers needs. In this sense, it
covers Supply Chain formation as well
as the consequent operation and
maintenance. New tasks ensue for the
involved executives, because traditional
tasks have to be completed in a new
way. Principally, the introduction of an
(explicit) SCM discipline has, as a
consequence, an extension of the range
of tasks and responsibilities of co-
workers.
104

Apart from this, the business
process-related definition can be
extended to the point where SCM
represents the integration of business
processes from the end customer right up
to the suppliers. This integration
provides the products, services and
information that generate value for the
customer. Having said that, SCM leads
to a change in the existing Supply Chain
and generates customer benefits by
means of the targeted usage of
information associated with the Supply
Chain.
105
The organizational processes
within the Supply Chain must also be
planned, monitored and controlled, a
task that requires a generally accepted
system of objectives.
106

Extending from the (physical)
goods flow, the Supply Chain subsumes
all those activities associated with the
flow and transformation of goods,
starting with raw material right up to the
end consumer, as well as the associated
information flows. SCM therefore
represents the integration of these
activities by means of improved
relationships with the SC partners, in
order to gain a permanent competitive
advantage.
107

The definition also reminds us that
SCM arises from a constantly self-
developing management philosophy. In
the framework of this philosophy, the
objective is to combine the common
production competences and production
resources of the business functions that
lie not only within the organization, but
also with the external allied SC partners.
The aim is to create a highly competitive
SC system, furnished with customer
benefits which targets the development
of innovative solutions and the
synchronization of the product, service
and information flows. The ultimate goal
is the generation of maximum value for
the customer.
108

If one continues this almost
dialectic development of SCM, the
further developments of earlier
management concepts, such as Lean
Manufacturing,
109
may be seen as
precursors of the practice. In such
concepts the application area is
extended into the sphere of
distribution.
110
In this sense, the aim of
SCM is to improve the efficiency of the
product delivery process, starting with
material suppliers right up to the end
customer, in order to deliver the correct
product at the correct time, with the
minimum of completion effort and safety
stock.
111
The focus of improvement
measures lies in the areas of
coordination, distribution, production
and purchasing spread over
organizational units and various firms.
112

Seen from the functional side, SCM
may be defined as the systematic,
strategic coordination of traditional
business functions and of the tactical
measures beyond these business
functions. This means that it includes the
functions within the respective business,
as well as throughout various firms
which are integrated into the Supply
Chain. The practice aims for long-term
improvement of the performance
capacity of the individual firms in
addition to the Supply Chain as a
whole.
113

Seen from a behavioral angle, SCM
can be defined as those activities carried
out in order to influence the Supply
Chains behavior. In this form, SCM
represents the coordination of
production, inventory stocks, locations
and transportation amongst the SC
participants, in order to ensure the best
relationship between performance
capacity (capability) on the one side,
and efficiency on the other.
114
Both
objective criteria performance
capability and efficiency will be more
closely examined later, as they
represent, so to speak, the two pillars of
the SCOR model or more specifically
the two sides of the equation with regard
to the performance indicators which
form the basis of the model.
115

A further possible differentiation
can be undertaken by looking closely at
the two sides of the Supply Chain, i.e.,
monitoring the supplier-side (supplier-
centric supply chain management) on
the one hand, and the customer-side
(customer-centric supply chain
management) on the other. In
accordance with this, the distinction of
the supplier-centric approach exists in
the fact that the business and its
suppliers, distributors and customers,
i.e., all the business associations in the
further sense cooperate in order to
provide the market with a common
respective product or service, for which
the customer is prepared to pay the
required amount. The group of firms
recruited from the respective partners or
participants functions like an expanded
business
116
and ensures the optimal use
of shared resources (manpower,
procedures, technologies and
performance measurement), in order to
attain synergies. The results are products
and services which combine high quality
with value for money and can be quickly
delivered to the market.
117

The definition of the customer-
centric approach purely requires that the
conventional definition be expanded as
follows (emphasized):

The business and its suppliers,
distributors and customers
i.e., all Supply Chain parties
in the further sense work
together in order to provide
the market with a common
product or service
respectively, for which the
customer is prepared to pay
the required amount
throughout the total life cycle
of the product. The group of
firms recruited from the SC
partners or participants
respectively, functions so to
speak as an expanded business
and ensures the optimal usage
of shared resources in order to
attain synergy. The results are
products and services of high
quality that can be quickly
delivered onto the market and
ensure customer
satisfaction.
118

For the SCMs focus upon the
customer side, the terms demand-supply
chain management or demand
management can occasionally be used.
The primary purpose of this concept is
the generation of value for the customer,
with simultaneous performance
capability improvement regarding asset
performance and cost-efficiency.
119
The
SCMs primary objective is the
enhancement of the marketing of goods
and services to the respective end
customer or end consumer whilst
simultaneously lowering inventory
stocks and minimizing costs.
120
Conflicting objectives so-called
trade-offs inevitably arise from this,
because the underlying competitive
factors (cost, time, quality and
flexibility) compete with one another.
As a result, SCM seeks to optimize the
efficiency of the companies involved
and harmonize the conflicting objectives
(under the provisions of the priorities
according to each chosen competitive
strategy).
121

1.4.3 Value-based Supply
Chain strategies
In recent years the number of companies
following a so-called Value Chain
strategy has risen markedly. This
tendency has been mainly promoted by
firms who use highly developed
information technologies to improve
their capability in the field of SCM. A
decisive factor to business success is
their competence in being able to offer
innovative products of the highest
possible quality, at marketable prices
and faster than the competition.
122
The
SCM ompetences
123
objective, using
respective SC processes, is to improve
service of customer requirements, make
better decisions, and enhance business
performance to secure a competitive
advantage.
124
The consequence is that a
multitude of organizations have drafted
strategies which focus upon the relevant
processes for the fulfillment of demand
(demand fulfillment process). Such
strategies are ultimately supposed to
contribute to optimizing order cycle
times, financial flows (cash flow),
125
Return on Equity (RoE), market share
and profitability. In this sense, they
represent the basis of the SC strategy.
126

SCM represents a mutually
dependent organizational structure which
connects functions, firms and countries
with one another, synchronizes goods
movement with demand rate and
propagates the value generated on the
global market. For each product there is
a Supply Chain, and for each Supply
Chain a competitor. These chains are
developed by large corporations
typically distinguished wholesale chains
and Original Equipment Manufacturers
(OEMs)
127
who have the necessary
vision and enforcement potential to
advance their SC partners performance
capability, exchange data and work in an
alliance, in order to ensure a superior
market position and the improved
efficiency of the business.
128

The development of the value-
oriented SC approaches results from the
recognition that the isolated optimization
of individual parts of the Supply Chain
does not lead to an overall cost-
favorable solution. Goldrath summarizes
this in the recognition that the sum of
local optima is not equal to the global
optimum.
129
It is therefore necessary to
view the alignment of events within the
Supply Chain as a whole (holistic),
starting with the customer requisition, as
far back as the purchase order to the raw
material supplier, as well as forward-
facing through all businesses included in
the manufacture and delivery of the
product to the end customer. Focusing on
the Supply Chain as a whole represents
the first stage; focusing on the product
the second; and the inclusion of the
value-generating flows in the sense of a
value-oriented, SC-focused process
organization, as opposed to the
traditional performance measurement
that was built-up on structural
organizations,
130
represents the third
stage. The assignment of a value
stream is thereby possible, which
illustrates the present-day business
processes more effectively than would
be the case within the framework of the
conventional Supply Chain.
131

1.4.4 De-integrated Supply
Chain strategies
De-integrated Supply Chain strategies
132
are a diametric oppositional approach in
connection with SC strategies, because
the latter specifically shifts the
importance of integration into the focal
point. Within the development
framework of the so-called SMART
automobile,
133
a feasibility study was
carried out in the first instance. The
Supply Chain developed in this context
and at that point in time, mid 1990s,
represented a completely new approach.
In this way, for example, new models
were created for supplier inclusion and
production outsourcing, which were
distinguished by pre-installation at the
suppliers location, integration of
suppliers in the design and final
assembly, and the proportional
ownership-splitting of production
locations.

Additional questions arose, for
example, from the fact that the
initializing company only contributed
roughly 15 percent of the value-add
within the Supply Chain. The concrete
question resulting from this was how a
Supply Chain, within which the central
business only provides a relatively
minor contribution in value, could be
monitored.
134
The de-integrated Supply
Chain developed within the framework
of the feasibility study represented the
basis for the introduction of so-called
customer-specific series production
(mass customization).
135
Campbell and
Wilson describe the approach of a de-
integrated Supply Chain with the term
strategic network and define this as an
opposite pole to the previously
represented, value-orientated SC
approaches (value concepts). In
accordance with this, the value-
orientated approaches within business
systems that simultaneously postulate a
close cooperation and the retention of
independent firms are the most effective.

Four characteristic features of a
business system allow themselves to be
identified, which are advantageous to the
development of strategic networks:
136

Some critical SC activities must show
advantages if they are to be
implemented in a de-integrated form.
This can be determined by differences
regarding market entry barriers and
competitive advantages.
Specialized investments lead to higher
efficiencies. These can be represented
in the form of capital investments or
investment in the workforce.
The adaptation speed (speed of
responsiveness) is of fundamental
importance.
Innovation presupposes the
comprehension of the SC system as a
whole.

1.5 Methods of Analysis and
Measurement of the
Performance Potential of the
Supply Chain
1.5.1 Description of Supply
Chain Processes
A process can be defined as a line of
sequential activities and actions which
lead, over time, to a result. Processes
may be further subdivided into partial
processes. Furthermore, a differentiation
can be made between key processes,
which include main or partial processes
and immediately contribute to purpose-
fulfillment in the business core, and
support processes, which represent
associated activities in support of the
key processes.
137
The following listing
shows typical key processes in
production businesses:
138

Product design
Development
Order acquisition
Production planning
Procurement
Production
Distribution and disposal.

Often the key processes named are
also distributed amongst several
companies if a respective division of the
work is predetermined. The key
processes are integrated into the
previously mentioned product life
cycle.
139
Fundamentally, two varying
primary approaches for the respective
illustration or description of Supply
Chains can be differentiated: the Process
Chain Approach and the Supply Chain
Operations Reference Model (SCOR).

The SCOR model extends itself
over the complete Supply Chain,
beginning with the procurement process
(source of supply), up to the point of
consumption. It is an ideal industry-
spanning approach, in which the
procedures within a Supply Chain are
agreed upon by the partners.
140
As the
SCOR model will be dealt with more
explicitly later, the alternative approach
will be explained in more detail first.

The process chain approach, also
referred to as the Process Chain Model,
forms a businesses Supply Chain seen
from a purely process-oriented
perspective. The result is a type of
process-focused Supply Chain, for
which the description Process Chain
can be found.
141
The process chain
model enables a visualization and
analysis, in addition to process
organization within the Supply Chain.
With this, every process within the
Supply Chain, which is reflected in the
form of process chain elements, can be
represented by means of the following
parameters:
142

Input
Output
Resources
Structures
Control

A process chain element is
associated with the business
environment via the input, which
describes the load under which the
Supply Chain stands, and also refers to
the output. According to process chain
design, the respective process chain
element transforms a given input into a
given output. The process, which
underlies the design, is described by
process chain elements upon a lower,
i.e., more detailed, level.
143

1.5.2 Quantities/Times-
framework in the context of
the Supply Chain
The comparison between input and
output quantities allows conclusions to
be drawn both with regard to the
productivity
144
of the process chain and
to its effectiveness and efficiency.
145
The approach also aims to make the
necessary information available for the
implementation of model-supported,
quantitative Supply Chain performance
analyses. This quantities/times-
framework is vitally important in the
field of indicator measurement and its
necessary factors.

Cost accounting is an important part
of the successful business operations.
Before costing can be undertaken, a
number of decisions have to be made for
example with reference to the timing of
the cost accounting. Pre- and post-
costing can be differentiated with
regards to the timing:
146

Pre-costing is necessary if a
product is newly introduced onto
the market. Exact cost data are
therefore not known, but can be
estimated on the basis of factors
like presumed purchase prices or
preparation periods. Pre-costing
thus enables an initial price
determination.
Post-costing is mostly undertaken
upon expiry of an accounting period
and namely on the basis of actual
cost data. Deviations identified in
this process can then be used to
influence price corrections.

Costs represent the assessed
consumption of production factors for
the provision and marketing of business
performance, as well as the maintenance
of operational preparedness.
Alternatively expressed, quantities and
times are multiplied, or respectively
appraised, by prices or rates, leading to
a cost figure.
147
Costing, also described
a s cost accounting, is concerned with
the distribution of costs to the individual
product or performance. It therefore
identifies the personal cost and with that
creates the basis for price politics
through the identification of lowest price
limits.
148

Business leaders are usually most
concerned with the measurement of
Supply Chain costs (SC costs). This
refers to an area that often comprises a
complex alignment of activities, and an
exact measurement is often difficult.

There are two primary stages
which must be successfully implemented
in order to ensure the exact measurement
of the SC costs:
149

First, the cost structure of the
Supply Chain must be located as
close to the reality of the situation
as possible.
Further, the system for the
measurement and reporting of these
costs must be well designed.

In addition to the specific SC costs,
the most generally used components that
can be accurately measured (in post-
costing) or estimated (in pre-costing) are
quantities and times. The
quantities/times-framework can
consequently serve to determine the
merits or demerits of a certain
alternative, without requiring large
amounts of time devoted to the
evaluation of prices and/or calculatory
rates. This is particularly important
when it can be assumed that no
substantial differences are to be
expected with regards to quantities and
times. Stemmler combines the meaning
of the quantities/times-framework
constituted by these diverse aspects and
within the context of the Supply Chain as
follows:

There is no doubt that a
successful business depends
on accurate and timely
delivery of goods or services
to its customers. Supply chain
management aims at
minimizing mass and time.
Needless to say, an efficiently
managed supply chain requires
measurement of the costs
150
associated with the physical
movement of goods and
related information flows.
151

The quantities/times-framework
and the costs connected with it will be
referred to in the context of performance
indicators described below.

1.5.3 Special Performance
Indicators of the Supply
Chain
Indicators for the purpose of evaluating
an organizations performance capability
(performance indicators) should cover
the financial area as well as the
operational procedures, as the objective
is to attain customer satisfaction at low
costs and to ensure long-term
competitive capability. In this sense,
performance indicators are not only
intended to contribute to the continual
improvement of the Supply Chains
performance, but also to further refine a
competitive business strategy. To be
most effective, the performance
indicators should be easy to define,
simple to apply and easy to comprehend,
in order to enable the executives who
use them to react speedily and suitably
with adequate measures.

The performance of the operating
procedures is a substantial premise for
(external) customer satisfaction. The
financial performance potential, on the
other hand, reflects the companys
(internal) profitability and its ability to
be competitive in the long-term. In the
short-term period, the estimation of the
financial performance potential consists
of the measurement of incremental cost
per unit
152
for every activity and every
project, in addition to the measurement
of non-value generating expenditure.
153
In the mid and long-term, a reliable
estimate is problematic. This fact can be
attributed to a number of causes; for
example, the consideration of costs for
Research and Development (R&D),
since R&D costs cannot be split and
applied to each individual product.

During all this, the business
executives must consider that capital
investors are focused upon maximizing
the capital productivity of the invested
capital, and that such a focus favors
maximization of the profit margin and
capital turnover. Finally, they must
allow sufficient financial clearance
whilst making strategic decisions or, in
other words, ensure the business has a
sufficient cash flow.
154

Business Performance
Management seeks to ensure, within the
framework of business leadership, that
the focus is upon achievement of the
defined strategic and company
objectives. To this end performance is
measured and monitored by means of
performance indicators. In this case,
however, not all measurement
procedures and indicators lead to their
objectives. Many organizations are
barely in a position to cope with the
amount of data, which is either
irrelevant, too explicit, badly classified
and of low value for decision making, or
on the other hand can be difficult to
obtain. A glut of information can, in fact,
have a detrimental effect.

Several of the indicators defined
above may only have a nominal
relationship to an organizations goals.
They are, therefore, not relevant to the
achievement of objectives. Other
indicators can be misinterpreted,
because their meaning is unclear or
ambiguous, resulting in wrong decisions
with far-reaching consequences. This
leads to a management reporting system
that is characterized by Key
Performance Indicators (KPIs)
155
and
their application for example, in the
framework of a Balanced Scorecard,
which will be dealt with more closely in
the next section. The key performance
indicators must be seen in conjunction
with the so-called Critical Success
Factors, (CSF): Critical success factors
serve the purpose of identifying the
substantial factors for the organizations
success.
156
These more qualitative
critical success factors are measured
and quantified by the key performance
indicators.
157

Various studies have shown that
companies which objectively control
and monitor their performance by
indicators are more successful than those
which do not do this at all.
158
If business
executives are informed of the
performance indicators and the factors
that influence them and lead to results,
they can make better and more effective
decisions. Control of the performance
indicators must, therefore, be directed
towards the targets, problem areas and
decisive factors, in other words: the
critical success factors. The resulting
advantages allow themselves to be
collected as follows:
159

Better achievement of objectives
Better and quicker decision making
All staff are aligned to common
goals
Managers and staff have greater
confidence and motivation.

The problems immanent to the
general performance indicators have
lead to the development of special
performance measures and metrics, used
to support companies in specific areas
such as SCM. Novack et al. have
developed a questionnaire for
performance measurement in the
logistics field (logistics service
performance). In this a differentiation is
made between ten so-called logistics
activities and five logistics service
outputs. The logistic activities contain
the Supply Chains partial processes:
160

Purchasing
Inbound transportation
Packaging
Inventory management
Warehousing
Manufacturing
Intra-company transportation
Order processing
Outbound transportation
Logistics design and strategic
planning

The logistics service outputs
measure the performance of the
aforementioned activities and therefore
represent performance indicators. These
include:
161

Product availability
Order cycle time
Logistics operations
responsiveness
Logistics system information
Post sale customer support.

Another possibility for improved
control may be found in the
differentiation by process performance
indicators (process measurements) and
the method used to measure the
indicators (metric measurements). The
process performance indicators include,
in the first instance, customer
satisfaction. This can be measured by the
collection and evaluation of customer
complaints, thus enabling the customer to
be included in product- and procedure-
orientated performance evaluations.
162

A further indicator is the quality of
customer deliveries. This focuses upon a
products successful delivery to a
customer, fulfillment of his expectations
and the extent to which the product is
useful to him. These customer
expectations include, as a rule, perfect
order rates as well as the delivery of the
product to the correct location, in good
condition and at the correct time.

Finally, there is also the time
between order submission and
respective delivery and payment (order-
to-deliver/cash cycle time). This
represents that part of the cycle, which
covers the period from the submission of
the order up to delivery, and measures
the amount of time which passes
between placing the order on the
customer side and the receipt of the
delivery/payment.
163

A procedure that utilizes the range
of such cost measurement elements is
that of Activity-Based Costing (ABC).
164
Aside from the classical allocation of
cost by areas of expenditure, Activity-
based Costing has been particularly
popular and important in the field of
logistic services in recent years. Due to
the fact that performances within a
Supply Chain often involve overlapping
and cross-sectional tasks, the formation
of a cost distribution by areas of
expenditure is often difficult.
Additionally, cost distribution
transparency on an internal and higher
operational level is often not
possible.
165

It is therefore necessary to identify
those factors that can influence costs
within the framework of process cost
identification. These influencing factors
are described as cost drivers. Those
drivers that are themselves shaped by
quantity (amount) and those that are
dependent on performance are
differentiated. The aim is to identify the
cost per process implementation. The
relevant basis data is collected from the
study of the individual activities of the
process.
166

1.5.4 Measurement of
Performance Indicators:
Balanced Scorecard and
Supply Chain Scorecard
In order to illustrate how the
aforementioned performance indicators
are respectively measured or can be
made concrete, it is useful to give an
example and explain the procedure
applied in it. The following example is
supposed to show how performance
indicators in the logistics area can be
classified and identified.
167
For this
purpose, reference will then be made to
the previously mentioned study by
Novack et al. concerning the
measurement of logistics service
performance.
168

The method of procedure for
measuring the performance of the
defined indicators was carried out in
three stages by means of a
questionnaire.
169
The rate of return was
approximately 1,600 executives from the
field of logistics. The companies were
distributed over a multitude of industry
sectors, whereby the majority roughly
a quarter came from the Food and
Beverage industry.

The first stage consisted of the
identification of logistics activity costs
and performance. The purpose of this
part of the questionnaire was to find out
which percentage of the companies
questioned measured the costs connected
with performance and logistics
activities. During this the precondition
was taken as a basis that fundamental
measurement of costs and services
represents a necessity for quantification
of the logistic value.

The second stage consisted of the
identification of relative cost and
relative value creation. The people
questioned were asked in the survey to
prioritize the ten logistic activity areas
with regards to their percentage of the
logistics activity costs as part of the total
of the firms expenditure, and the
relative value generation of each activity
in their respective company. A ranking
of 1 was allocated to the highest relative
logistic activities cost and value
generating percentage, a ranking of 2 to
the second highest and so on, up to a
ranking of 10 for the lowest percentage.
This was done for two reasons: firstly, it
would determine whether a relationship
exists between what a company
measures and the relative logistic
activity costs and value generating
percentages which are actually
measured. Secondly, it would help
identify whether a relationship exists
between the cost of an activity and the
value generation for a business that
results from it.

In the third and final stage, the
logistics service performance was
identified. This part contained two
separate questions. First, the people
questioned were asked to specify
whether they measure the five logistic
service outputs (product availability,
order cycle time, logistics operations
responsiveness, logistics system
information and post sale customer
service) at all. They were then asked to
allocate a ranking for the five outputs
with 1 for is most important and 5 for is
least important. One of the results
identified within the framework of the
study was that logistics activities are
more important from the companys
point of view, whilst logistics service
outputs are more important for the
customer.
170

The problems that the study brought
to light were the trigger for a study of the
t heme Performance Measurement in
Businesses of the Future that was
carried out at the beginning of the 1990s
at the Nolan Norton Institute,
171
which at
that time was the research branch of the
consultancy company KPMG.
172
The
study confirmed that in addition to the
problems of redundant effort and lack of
comparability, conventional approaches
for performance measurement restricted
themselves too strongly to monetary
measures, and therefore the value-
generating and future-directional
processes, such as SC processes,
received only limited consideration.
173

Apart from this the study
represented a milestone for the
modification of business performance
measurement by the development of a
balanced evaluation list, the so-called
Balanced Scorecard (BSC) . The further
development lay in, above all, not only
optimizing existing processes, but also
including new processes, structures and
procedures. By these means the method
gains in innovative strength.
174

The concept of the BSC was
introduced by Norton and Kaplan with
the intention of contributing to the
development of business objectives,
building upon the support of the
definition of strategic initiatives in order
to achieve these objectives, and finally
making possible the measurement of
results over the course of time. The
method of the BSC was not completely
new at the point in time of its
development (the early 1990s), because
companies were already using a number
of indicators financial as well as non-
financial, tactical and operational but
the application of such a structured
concept, leading to an accurate
measurement of the companys
performance against its set objectives,
was relatively new.
175
The BSC then
became the preferred measurement tool
of the largest consultancy companies.
176

The method has also become an aid
for the evaluation of value-generating
strategies, in order to monitor the
success of value-orientated processes
and to monitor whether the involved
interest groups (stakeholders) receive
the value they expect for example, with
regards to the Return on Investment
(ROI).
177
BSC achieves both the
balance and the visualization of
indicators by means of an evaluation list
(scorecard). The balance aims at the
equality between the following
components: strategic vs. operational
indicators, monetary vs. non-monetary
measures, long-term vs. short-term
positions, cost drivers vs. performance
drivers, hard vs. soft factors, internal vs.
external processes, past vs. future
performances.
178

During the visualization of the
indicators by means of an evaluation list,
the companys vision, determined by
business executives, remains the focus of
observation.
179
This vision must be
operationalized by strategies as well as
activities. The business vision,
strategies and activities are usually
observed from four perspectives:
180

Financial, which covers the capital
backflow and value generation.
Customer, characterized by
customer satisfaction, customer
retention, market share.
Business process, containing
quality, reaction time, cost and
introduction of new products.
Learning and growth, which
includes satisfaction of co-workers
and availability of information
systems.

Each of these perspectives within
the BSC framework is itself determined
by four expressions: objectives,
measures, targets and initiatives.
181
The
BSC guarantees, as it were, a balanced
view of the chosen financial and non-
financial indicators that are necessary in
order to drive the strategic plan and
monitor the companys performance. In
most cases, the indicators are converted
by means of databases (data
warehouses)
182
and spreadsheet
analysis. These were often problematic,
however, as they were often focused not
exclusively on those processes that were
critical to the business success, but on
the entire spectrum of processes and
systems. Equally, the collection,
aggregation and analysis of the (correct)
data, was often presented in a manner
that made sustained analysis difficult
(and sometimes even impossible),
because the necessary data was not
always available.

BSC has developed itself into one
of the most far reaching and recognized
methods of definition and monitoring of
business strategy. According to an
exemplary study on the theme of
performance monitoring, almost half (46
percent) of the people questioned stated
that their companies were implementing
the BSC method or planned to use it in
the future. It was remarkable that the
diffusion was greater in the industrial
and marketing sector than in the service
sector. The application of the BSC in
such cases was mainly done with the
support of the Chief Executive Officer
(CEO) or the Chief Finance Officer
(CFO).
183

The exact characteristic of the
Scorecard depends, in the main, upon the
business area under examination. For the
SC field, a special Supply Chain
evaluation list, a so-called Supply
Chain Scorecard, was developed.
184
The particular indicators necessary to
measure the supply chain performance
vary, depending upon customer type,
product line, industrial sector, in
addition to other factors. Because the
Supply Chain ultimately targets the end
customer, the point of view of the end
recipient must be included during the
development of a SC Scorecard and the
identification of the particular metrics.
That consequently includes aspects that
are relevant to the capabilities of the
Supply Chain: those which satisfy the
end customers requirements in the most
cost-effective manner.
185

Because development of a
Scorecard specially directed at the
Supply Chain conditionally requires SC
partners to reveal business objectives
and data, the implementation is not
practical if no trust exists amongst the
firms cooperating within the Supply
Chain. Therefore, a SC Scorecard
shared by all parties within the Supply
Chain requires a considerable degree of
trust. Simultaneously, however, the
communal development of a Scorecard
and the sharing of data associated with it
can serve to strengthen the mutual trust
and the sense of partnership. Despite
this, the introduction of a Scorecard
directed at the whole Supply Chain,
although theoretically desirable, is
relatively difficult to attain in
practice.
186

Next to the Scorecard, the
previously mentioned SCOR model
represents another unified approach,
especially for the measurement of
Supply Chain performance. Because the
approach is extended to cover the whole
Supply Chain, the procedures are
configurable and the possibility of
illustrating various alternatives of the
same process exists. Through this, a
standardized language evolves, so to
speak, for internal, intra-company, and
integrated communication, respectively,
which in turn is a substantial condition
for the performance comparison between
the SC partners.

The performance of each of the
processes in standardized Supply Chains
is measured with the aid of specialized
performance indicators.
187
The
indicators used within the SCOR
models framework will be explored in
more detail in subsequent chapters.

1.6 Focus of the Work on the
SCOR Model
In 1996, the so-called Supply-Chain
Council (SCC) was founded in the
United States.
188
With the Supply Chain
Operations Reference (SCOR) model,
this organization created a support for
the standardization or respective
normalizing of Supply Chains within
an organization, as well as between the
business itself and other organizations.
The primary objective of the SCC is to
promote a common understanding of the
processes and activities in the various
businesses which participate in a Supply
Chain network. The process categories
in the SCOR model are differentiated
with the aid of the dimensions
production concept and orientation of
product structure. The expression
discrete corresponds in this instance to
the orientation within the installation,
i.e., a convergent production structure,
whilst the expression process
corresponds to orientation within the
process, i.e., a divergent production
structure.
189

The main task of the previously
represented Supply Chain Management
(SCM) concept is the continuous
synchronization of value generation
within the whole Supply Chain network
and subsequent harmonizing with
consumer demand. The SCOR model-
based Supply Chain uses the SCOR
monitoring processes as its foundation
within all businesses involved both on
the supplier and customer sides.
190

All conditions required to fulfill the
process stages are upheld and mutually
agreed, as a whole, by the allied
participants. The planning and control
methods required to make this possible
are consequently identical to the
methods used within firms for internal
planning and control. Further measures
include procedures necessary to access
data between companies, especially data
pertinent to inventory and capacity.
191
A
great advantage of the SCOR model lies
in its definition of a common language
for communication between the various
business-internal functions and the
business-external Supply Chain partners.
Only within a common comprehension of
the relevant processes is the formation
of customer-supplier relationships
possible.
192

The definition of indicators for the
Supply Chain performance in the SCOR
model creates the prerequisite for its
continual evaluation and optimization.
Furthermore, the comparison of SC
performances is only possible with the
aid of a special comparative procedure,
called Benchmarking,
193
based upon
such indicators.
194
The increasing
diffusion area of SCOR model
acceptance in the USA since the late
1990s, seen alongside the rapidly
climbing number of SCC members, is an
indication that a de facto standard for
Supply Chain analysis is developing.
With the reinforced efforts of the SCC to
create a user basis in Europe via the
foundation of a European Chapter, the
SCOR model will, on these indications,
continue to be diffused throughout
Europe.
195

Welke grasps the standardization
aspect and describes SCOR as a
normative model. A normative model
consists of a predefined set of
alternatives, and Welke describes how
an object of the model should be seen
and behave. The value of normative
models lies primarily in the following
areas:
196

Simplification of modeling
constrained choice vs. green field,
by means of a higher degree of
abstraction.
Making model exchange possible
throughout business units and
organizations by means of
standardization.
Description of common problems
and metrics by means of
standardization.
Exchange of benchmarking and best
practices
197
by means of
standardization.

Normative models do not represent
anything fundamentally new and have
been around since the 1980s. Their
origin stems back to the so-called
Business Information Analysis and
Integration Technique (BIAIT)
according to Burnstine and Soknacki.
Whilst the growth in the computer
industry at this time was way above
average, this growth was not
accompanied by a comparable
improvement in communication between
executives in the companies applying it
and their IT managers with regards to the
effective assignment of the new
computer-supported technology. It
became obvious that there was a real
need to find ways of making clear to
executives the importance of IT
applications. BIAIT was developed to
solve these communication and
estimation problems.
198

In addition to BIAIT there were
other, earlier, approaches to developing
normative business process models: for
example, the so-called Klner
Integrationsmodell (KIM) (roughly
meaning Cologne Integration Model),
developed by Grochla; the model of the
c o m p l e t e Informationssystem-
Architektur (ISA) (roughly meaning
Information System Architecture) by
Krcmar; and the Architektur integrierter
Informationssysteme (ARIS) (roughly
meani ng Architecture of integrated
Information Systems) developed by
Scheer.
199

Normative models are
predecessors of the SCOR model, in the
sense that they are particularly focused
upon companies Supply Chains. Instead
of the term normative models, one often
finds the term reference model for
SCOR. This will be dealt with more
closely in Chapter 2.
200

The normative models presently
available allow themselves to be
systemized according to the following
three categories:
201

The modeling viewpoint, i.e., to do with
a structural or behavioral model
The E-Business-field, i.e., to do with
Business-to-Business (B2B),
Business-to-Consumer (B2C) or
Government-to-Consumer (G2C)
202
The commercial branch, i.e., to do with
businesses from industry, marketing or
the public sector.

This study focuses upon industrial
companies, because the author has
practical experience in this commercial
field. Furthermore, it focused upon the
E-Business field (B2B), because it can
be assumed that the greatest scope for
competitive success resides there.
203
Apart from that, this field has by far the
greatest influence upon the formation and
monitoring of Supply Chains, or,
alternatively expressed, the massive
growth in the B2B field has, without a
doubt, highlighted the importance of
SCM.
204

With reference to the models
available to industry for B2B, there is
presently only one model that can be
taken seriously, namely the SCOR
model. Further models for E-Business
are described in literature, but have not
been comprehensively documented, or
do not represent a normative model in
the sense introduced here.
205

For these reasons, this work will
focus upon the SCOR model, which has
successfully entered into use in the
public sector area and gained in
importance over its time there. This does
not, however, refer to the previously
illustrated E-Business area Government-
to-Consumer (G2C), but rather more to
the Government-to-Government (G2G)
and Government-to-Business (G2B)
areas. The aforesaid arrangement can
therefore be expanded by these business
areas in which the SCOR model
presently takes a primary position, as
will be made clear.
206

1.7 Analysis of Supply Chain
Processes by Use of the
SCOR Model
Razvi explains the essential character of
Supply Chain Planning and Analysis as
follows:

Business today has evolved
so that competition is between
whole supply chains rather
than individual companies.
Selecting a few targeted key
performance indicators can
help a company to concentrate
on its supply chain goals.
Choosing the wrong
indicators, on the other hand,
could lead to a decline in
supply chain performance. In
addition, analyzing the supply
chain based solely on
individual events can have the
opposite effect, causing
turbulence in the supply
chain.
207

The statement is made with
reference to the degree of importance
attributed to the analysis of the Supply
Chain and its performance. Hugos
defines five so-called supply chain
drivers, which dominate the SCs
performance potential. Each of these
drivers has two competences (or
respectively, and more precisely, Supply
Chain competences, as in the submitted
context):
208
The performance capability
and the efficiency. The five drivers and
the two expressions are connected in the
following way:
209

Production: This driver can be
arranged highly capable from a
performance point of view, for
example, by the construction of
additional factories showing
surplus capacities and use of
flexible manufacturing procedures,
in order to produce a large
assortment of products. If efficiency
is sought, a firm can build factories
with low surplus capacity and
optimize the factories for the
manufacture of a limited
assortment.
Inventory: Performance capability
can be achieved here by holding a
high amount of inventory stock for a
large assortment of products.
Efficiency, with regards to
inventory management, would
demand reduction of inventory
amounts for all products
especially those which show a low
turnover rate.
Location: A location approach that
emphasizes performance potential
would be seen, for example, where
a computer firm opens many
branches to be physically close to
the customer base. Efficiency can
be achieved by serving all the
customers from only a few
locations and thereby centralizing
activities.
Transportation: Performance
capability can be achieved by a
transportation mode that is fast and
flexible. Efficiency can be
achieved by transporting products
in collective deliveries (batches)
and by fewer deliveries.
Information: The influence of this
driver grows continuously, whilst
the technology for collection and
distribution of information spreads
increasingly, is simpler to use and
becomes less expensive. A high
performance potential can be
achieved by companies with the
accurate and up-to-date collection
of data, whereby that task is
represented by the four drivers
previously mentioned. If the
objective is greater efficiency, it
can be achieved by the collection
of a smaller amount of data,
resulting in a reduction in the
associated and required activities.

The following illustration combines
these connections once again in a
graphical manner:

Diag. 1-2: Connection between Supply Chain drivers
and Supply Chain competences.
210

Both of the Supply Chain
competences named above capability
and efficiency will be examined more
closely in due course. Both are
subsumed under the term Performance
in this study and measured by the
illustrated KPIs.

1.7.1 Efficiency of the
Supply Chain
Effectivity is defined in business science
as the degree of objective achievement
and is consequently a proportionate
measure for work performance (output).
It is therefore about doing the right
things.
211

Efficiency as a possible sub-
objective of effectivity represents a
relationship between input-variables and
output-variables and can therefore serve
as a yardstick for resource efficiency.
212
Thus, it is about doing the things right.
Effectivity implies, for example, an
attractive price-performance ratio for
the customer, competitive advantages in
the usage-related quality elements, a
point of entry into the market which
conforms to the objective, or a means of
marketing products in accordance with
or in excess of the planning level.
Activities are considered efficient if
they accompany relatively low cost, a
relatively short development period or
the use of synergy effects. Together,
effectivity and efficiency influence
commercial success.
213

In a commercial business,
efficiency is therefore respectively
determined or reflected mainly by costs.
In connection to the costs within the
Supply Chain, one also speaks of Supply
Chain costs. SC costs can be recorded
within the framework of a target costing
in supply chains.
214
Target costing in
Supply Chains expands the marginal
costing approach to cover the whole
Supply Chain. The scope of
conventional cost control is a single
firm. The fundamental idea of cost
control within a Supply Chain is to
extend the cost control approach to
cover the whole Supply Chain, which
requires an approach that goes above
and beyond organizational
boundaries.
215

The inter-organizational cost
control resulting from this represents an
approach that seeks to monitor costs and
the profits resulting from them.
Synergies are thereby used, which exist
throughout several firms in a Supply
Chain. Traditional cost controlling
systems are only partially successful in
ensuring an exact analysis of the costs
beyond the domain of production. As
opposed to this, activity-based costing
systems
216
assist organizations to
allocate costs associated with supplier
and customer relations more closely.
This supplier- and customer-orientated
cost information enables firms to
identify opportunities to increase cost
efficiency of their market relations
within the Supply Chain.
217

SCM has substantially contributed
to lowering operational inventory
buffers and costs pertaining to
manufacturers, wholesalers and
retailers. Firms, for example, which
participated in an initiative by the
Massachusetts Institute of Technology
(MIT)
218
under the name Integrated
Supply Chain Management Program
(ISCM)
219
reported a significant
improvement with regards to their
Supply Chains. According to this, firms
reduced inventory buffers by half,
increased on-time deliveries by 40
percent, and reduced the percentage of
non-deliverable products to a fraction,
simultaneously doubling the rate of
inventory turnover.
220

The business consultancy Pittiglio,
Rabin, Todd & McGrath (PRTM)
221
discovered in a study intended to
compare Supply Chain performance
(Supply Chain Benchmarking Study)
that leading Supply Chain companies
invest on average between three percent
and seven percent less of their profit for
the management of their Supply Chain as
their competitors. This degree of cost
effectivity directly improves the
percentage in trading margin or creates
an opportunity of permanently lowering
prices. As an example, leading
companies within the food industry
report about five percent lower SC costs
than their competitors. In that industry,
an increase of five percent in the margin
(or a consequent permanent decrease in
price, if the savings are at least
partially passed on to the end
consumer) is of great importance.
Having said that, the trading margin for
the typical retailer comprises less than a
half of cost savings achievable by
leading businesses within the SCM
area.
222

Stock-keeping
223
is a substantial
component of Supply Chain costs, which
under certain circumstances can quickly
form a high percentage of the total
inventory value. In the computer
industry, for example, a rough estimate
of the annual stock-keeping costs can be
identified by the combination of the
capital costs (10 percent) and price
erosion (25 percent), which equate to 35
percent of the net asset value. A good
measure for orientation can be identified
by the calculation of stock-keeping costs
over a 10 day period. The formula for
this is as follows: 10 days multiplied by
35 percent, divided by 365 days, equals
1 percent. This means that a respective
reduction or increase of the storage
duration of 10 days leads to a respective
one percent improvement or
deterioration of the backflow of
goods.
224

For many firms, stock-keeping
costs have been a substantial impulse for
implementing value innovations in the
sense of a new offer, which gives
customers a significant increase in
added value. Stock-keeping costs consist
of the following components:
225

Obsolescence, i.e., price erosion,
wear-and-tear.
Lost sales
Personnel costs, i.e., work induced
by stock
Fixed assets, i.e., storage space and
accessories
Insurance
Administration, i.e., stock checking
and costs for information
technology
Capital costs, i.e., raw materials,
finished products and goods which
find themselves in production.

Stock-keeping costs have been
identified as one of the main cost drivers
and have a substantial influence upon a
companys profitability. The primary
factor in positively influencing stock-
keeping costs is, therefore, stock-
keeping management, which represents
an integral component within Supply
Chain monitoring.
226

1.7.2 Performance
Capability of the Supply
Chain
According to Bovet and Martha, the
capability in the Supply Chain context
includes reliability and flexibility. They
describe this connection as follows:

Reliability is an important
dimension of world class
service. Reliability means
predictable, on-time delivery
of perfect orders, as expected
by the customer. A perfect
order is one that is shipped on
time and complete, but more
important, one received at the
customers desired location
within a precise time window,
in excellent condition, and
ready to use. It also includes
the flexibility to respond to
last-minute changes by the
customer at equally high
service level.
227

The associated improvements
directly or indirectly influence a Supply
Chains performance capability. The
measurement of these indicators plays,
as already explained in section 1.5, a
central role within the framework of
change implementation. It constitutes a
kind of strength effect and drives the
activities onwards. The implementation
of effective measurement procedures
brings with it permanent challenges for
business executives. It requires not only
the restructuring of existing performance
measurement procedures, but also the
establishment of a structured process for
monitoring the Supply Chain.
228

Evans and Danks extract the
process of value creation by means of
strategic Supply Chain monitoring (value
creation through strategic supply chain
management) straight from the value that
is achieved for the companys
shareholders (Shareholder Value,
SV).
229
Building upon this, they define
the so-called Shareholder Value
Approach.
230
The approach focuses
upon the businesses value or,
respectively, the advantages of this
value for the shareholders of a business.
The desire to positively influence the SV
has in many cases represented the
starting point for Supply Chain
improvement. The Supply Chain can
immediately influence the profitability
as well as invested capital via the
following determinants:
231

Profitability:
232
On the one hand, it
includes revenue in the sense of a
high market share, larger trading
margins and higher product
availability. On the other hand, it
contains cost with the objective of
lower costs for sales,
transportation, stock-keeping,
material movement and distribution
planning.
Invested capital:
233
This
comprises, on the one hand,
working capital with the objective
of lower stocks of raw material and
finished products, in addition to
shorter payback cycles. On the
other hand, it comprises fixed
capital with the primary intention of
binding less capital into capital
goods (for example, vehicle pool,
warehouses, accessories for the
movement of materials).

Repeated references will be made
to the determinants for Supply Chain
performance in the chapters that follow,
because they also find a role within the
framework of the SCOR model. During
this study recourse will often be made to
the division of performance potential
into performance capability on the one
hand as a respectively external or
customer-related component and
efficiency on the other hand as a
respectively internal or business-related
component.
234

Chapter Two

The Supply Chain
Operations Reference
Model (SCOR model) of
the Supply-Chain
Council

This chapter focuses primarily upon the
context of discovery as defined by
Friedrichs within the framework of a
research-logical course.

Under context of discovery,
the motive that leads to a
research project is
understood. The motives are
different in their starting
points, leading to an
examination. They all refer,
however, to social
problems.
235

2.1 Origin and Objectives of
the SCOR Model
2.1.1 Intention of the SCOR
model
The Supply-Chain Council (SCC)
236
was founded with the aim of creating an
ideal model of the Supply Chain. For
this purpose, the Supply Chain
Operations Reference Model (SCOR
model) was defined as a standardized
process reference model of the Supply
Chain, and has been continuously
enhanced. With the SCOR model
providing a unified description, it is
therefore possible to consider analysis
and evaluation of Supply Chains not only
between one company and another, but
also across sectors of wider industry.
The SCOR model is used in three
exercises:
237

1. To evaluate and compare Supply
Chains performance potential
2. To analyze and, if necessary, optimize
integrated Supply Chains throughout
the partners within the logistic chain.
3. To determine suitable places for the
assignment of software and its
functionality within the Supply Chain.

The initial concept of the Supply
Chain is that every production and
logistics network can be described using
five fundamental base processes.
238
With each of the four main execution
processes source, make, deliver and
return materials or products are used
or transported. By joining these
processes into a chain it is possible to
define customer-supplier relations and
factor in the fifth base process, that of
planning. If one combines all the main
processes the result is a complete model
of the production and logistics network.
The description of these fundamental
processes within the Supply Chain is a
substantial component of the SCOR
model.
239

Another factor here is the definition
of metrics for the evaluation of the
processes performance within the
Supply Chain. This definition is
important as it can be used to form the
basis of a performance comparison
(Benchmarking) either with other
companies or other Supply Chains in the
same industry. For the main processes
the SCC members compiled the best
known methods for achievement of high
performance, the so-called Best
Practices,
240
and integrated them into
the model.

Finally, the SCC also added
software system requirements into the
model, which are helpful with the
realization of these practices.
241
Collectively the intention of the SCOR
model can therefore be described as
follows:

The Supply-Chain Council
has published a SCOR model
that describes the (supply
chain) at multiple levels of
detail, identifies best
practices, and defines
associated KPIs
242
for each
process. Organizations are
beginning to leverage SCOR
standards to drive consensus
on terminology, processes,
and expectations among
trading partners.
243

2.1.2 Descent of the SCOR
model
The SCOR model was developed and
promoted by the SCC as a pan-industry
standard for Supply Chain monitoring.

The SCC was founded in 1996 by the
Business Consultancy agency Pittiglio,
Rabin, Todd & McGrath (PRTM)
244
and
Advanced Manufacturing Research
(AMR),
245
and originally included 69
voluntary member firms. Of equal
importance for the SCOR models
diffusion are the respective inputs of
manufacturers and implementers of
system technologies, researchers and
scientists, and governmental
organizations. All of these groups
participate in the SCCs activities and in
the development and enhancement of the
model. By the beginning of 2006, the
SCC had more than 1,000 members
worldwide and had branches in North
America, Europe, Japan, Australia/New
Zealand, Southeast Asia and South
Africa.
246

The SCC is greatly interested in
promoting the widest possible diffusion
of the SCOR model with a view to
building better customersupplier
relationships. It is also interested in the
improvement of its members software
systems through the use of mutual
metrics and terms. Apart from this, the
goal is to quickly recognize and adopt
best practices, regardless of their
origins.
247

Whilst much of the model-based
content has been used by practitioners
for years, the model offers a special
framework within which business
processes, performance indicators, best
practices and system technologies can be
linked with one another. The result is a
unified structure for both supporting
communication amongst the Supply
Chain partners and increasing the
effectivity and efficiency of Supply
Chain monitoring and other activities.
248

Member firms pay a small yearly
subscription in support of the SCCs
functions. All who use the SCOR model
are asked to make reference to the SCC
in documents or representations applying
to the model, in addition to all cases of
its application. Additionally, members
are urged to regularly visit the SCCs
internet page
249
and make themselves
familiar with the latest information
available in order to ensure that they are
using the latest version of SCOR.
250
The
SCOR model represents, in a transposed
sense, the SCCs consensus with respect
to the management of the Supply
Chain.
251

2.1.3 Structure and
processes of the SCOR
model
The five basic management processes or
chevrons, which form the SCOR
models basis, are Plan, Source, Make,
Deliver and Return. In addition to these
five main processes, which form the
organizational structure of the SCOR
model, the following three process types
can be differentiated:
252

Planning: A planning element is a
process that adjusts the expected
resource need to the expected
demand conditions. Planning
processes balance out the aggregate
demand over a certain planning
horizon. Planning processes usually
take place at regular intervals and
can contribute to Supply Chain
reaction times. This type of process
is referenced to the above-named
main process Plan.
Execution: Execution processes are
triggered by planned or actual
demand, which changes the
condition of a product. They
include dispatching and sequencing,
changes in materials and services
and product movement. This type of
process therefore incorporates the
aforementioned main processes
Source, Make, Deliver and Return.
Enable, formally known as
Infrastructure: Enabling processes
are responsible for the preparation,
maintenance and monitoring of
information or relationships, upon
which the previously-mentioned
planning and execution processes
depend.

The following illustration collates
the models structure in graphical form.

Diag. 2-1: Arrangement of the SCOR model around
five main Business Management Processes.
253

In accordance with the illustration,
the model includes an organizations
own Supply Chain and its respective
five basic processes. Beyond this,
however, it can also span the customers
Supply Chains on the one hand, as well
as those of the suppliers on the other. To
take the process a stage further, the
suppliers suppliers and customers
customers can be included. In this sense
the model contains all interactions with
customers, from order entry up to the
paid invoice. Furthermore, it comprises
all products, i.e., physical, material and
services, from the suppliers suppliers
right up to the customers customers,
inclusive of equipment, accessories,
spare parts, and software. Finally, it
takes into account all interactions with
the market beginning with the
understanding of demand as a whole,
right up to completion of the order.
254

The models notation is
predetermined and follows consistent
conventions in the processes
descriptions:

The letter P stands for Plan
elements
The letter S represents Source
elements
The letter M stands for Make
elements
The letter D represents Deliver
elements
The letter R stands for Return
elements.

These main processes can also take
the form of enabling processes. In that
case the respective process is prefixed
with an E, which indicates that the
resulting process represents an Enable
element. Example: EP represents an
enabling element within the planning
process.
255
Within the main processes
there is also a universally valid
structure, whereby the model focuses, so
to speak, upon the product environment.
This is shown in the following example,
which represents the manufacture or
Make process:
256

Make-to-Stock M1
Make-to-Order M2
Engineer-to-Order M3
Retail Product M4.

The assignment is formed
respectively with reference to the
procurement process Source:
257

Source Make-to-Stock Product
S1
Source Make-to-Order Product
S2
Source Engineer-to-Order Product
S3.

An analogue also applies for the
process Deliver:
258

Deliver Make-to-Stock Product
D1
Deliver Make-to-Order Product
D2
Deliver Engineer-to-Order Product
D3.

T h e Return process inevitably
deviates from this and is distinguished
by the following sub-processes:
259

Return Defective Product R1
Return Maintenance, Repair or
Overhaul R2
Return Excess Product R3.

The respective enabling elements
are also described within each section
of the planning and procedure processes.
In this case, the format shown above is
also applicable in the description and
graphical illustration.
260

The following illustration, taken
unchanged from the model description
released by the Supply-Chain Council
(SCC), gives a collective overview of
the associations and underlines once
again the fact that the model spans all
processes from the supplier right up to
the customer.

Additionally, in the case of SCOR
we are dealing with a hierarchical
model with several levels. The
companys Supply Chain itself
represents the starting level (level 1).
The main process level following this,
i.e., Plan P, represents the second
level. This is shown by a single number
and is followed by the target item of the
main process, i.e., P1 Plan Supply
Chain. The exact number can be
extracted from the relevant position
within the models structure. Further
down from that is the third level, where
the respective concrete process stages
are located, i.e., P1.1 Identify,
Prioritize, and Aggregate Supply Chain
Requirements.
262

The following illustration, also
taken unchanged from the SCCs model
description, represents the associations
in graphical form using the process
Plan. Reference is made here to the
planning process contained in Diag. 2-2,
namely P1 Plan Supply Chain, which
is allocated to the second level and its
sub-processes represented on the
following third level. In this sense
analogue representations exist within the
model description for all main processes
and their relevant sub-processes
contained in Diag. 2-2. Further levels,
i.e., those below the third level are,
however, not included in the model,
because they are of industry-specific
character and would therefore contradict
the basic concept of SCOR that it
represents an industry-spanning
model.
263

Diag. 2-2: SCOR model structure
261

The processes from the fourth level
onwards prove themselves to be so
industry-specific and upon increasing
levels even company-specific that
standardization is no longer realistically
possible. The fourth, and all following,
levels represent the object of
implementation projects, whereby the
fourth level refers to task, the fifth level
to activities and the sixth level refers to
instructions.
264

The SCCs SCOR model
documentation contains seven basic
sections: An Introduction, a section for
each process of the second level (Plan,
Source, Make, Deliver, Return), as well
as a Glossary.

Diag. 2-3: SCOR process stages by example of the
process Planning (Plan)
265

For reasons due to Supply Chain
modelling, the basic process Return is
listed in connection with two further
basic processes: Source and Deliver.
The process of returning to suppliers,
i.e., the return of raw materials, is
documented as Source Return activity.
The process that connects an
organization to its customers, i.e., refers
to the receipt of returned finished goods,
is documented as the Deliver Return
activity. This stems back to the SCOR
Supply Chains fundamental thought
represented in Diag. 2-1, whereby the
model incorporates everything from the
supplier right up to the customer.
266

The planning and execution
processes represent the center of the
documentation, whilst the glossary
contains a list of those standard process
and metric terms used within the
document. The sections that occupy
themselves with the types of planning
and procedural processes are organized
in the form of a unified structure: At the
beginning of each section is an
illustration, which contains a visual
representation of the respective process
element, the relationships of such
elements to one another, and any
relevant incoming and outgoing
information (for an example see Diag. 2-
3 illustrated above).

Tables with text follow the
illustration, and comprise the following
information in the order mentioned:
267

Standard name of the process
element, i.e., Process category
Plan Supply Chain
Notation of the process element, for
example Process number P1
Standard definition of the process
element. Example: Process
category definition with the
following description: The
development and implementation of
procedures for resource allocation
over a given time span, in order to
complete certain Supply Chain
requirements.
Performance Attributes associated
with the process element. Example:
Performances attribute Reliability,
metric Delivery performance.
268
Best practices for each respective
special process. In this case such
best practices are examples, but not
a complete listing. This section
also includes special
characteristics or respective
possible features that can contribute
to an increase in performance. An
exemplary best practice is that the
SC process should possess a higher
degree of integration, starting with
collection of customer data right up
to receipt of the customer order and
throughout production, right up to
purchase requisitions upon
suppliers. A possible arrangement
to this end could take the form of an
integrated SC planning system
269
with interfaces to all supply and
demand sources by means of IT-
based systems.

In a similar manner to the process
elements, the performance attributes and
metrics are built-up hierarchically.
Although not explicitly represented in
the model, they are typically assigned to
the first level of the respective planning
process (i.e., P1 Plan Supply Chain).
From there, and following the hierarchy,
they become decomposed and assigned
to the respective planning, execution and
enabling elements.
270
This will be dealt
with more closely below.

2.1.4 Performance attributes
and Level 1 Metrics
Level 1 Metrics are primarily forms of
measured data at a higher level, which
can extend themselves through several
SCOR processes. These metrics do not
inevitably and explicitly refer to one of
the SCOR basic processes of the first
level (Plan, Source, Make, Deliver, and
Return).
271
The metrics can rather be
seen in conjunction with the performance
attributes. In the present version of the
SCOR model (Version 8.0 as at
beginning of 2007) the following five
performance attributes are used:
Reliability, Responsiveness, Flexibility,
Costs, and Asset Management.

Each of these performance
attributes directly refers to the Supply
Chain, which is why the prefix Supply
Chain can be added (for example,
Supply Chain Reliability, etc.).
272
The
illustration below which is taken
directly from the model description by
the SCC gives an overview of the
Performance Attributes used within the
SCOR model. In order to operationalize
the performance attributes, they must be
connected in a further stage with the
Metrics Level 1. For example, the metric
for order fulfillment lead time can be
coupled with the performance attribute
responsiveness.

The performance attributes are
characteristics of a given Supply Chain
for analysis and comparison with other
Supply Chains with competing
strategies. Without such characteristics it
would be extremely difficult, for
example, to compare an organization
which follows a low-cost strategy to one
whose objective is the highest possible
level of delivery reliability.
273

As described above, the
performance attributes are connected to
the metrics of the first level. The latter
represent measures that enable an
organization to calculate how successful
it is with regards to the achievement (or
not) of its desired position within the
competitive market place. Although the
performance attributes are critical for
the application of the model, formal
definitions were only integrated into
later versions. For example, standard
performance attributes were introduced
into Version 4.0 of the model.
275

In Version 5.0, the process
descriptions which are assigned to the
activities of the second and third levels
were adjusted in order to ensure that the
metrics used actually measure their
intended objects. These modifications
are two examples which show how the
SCOR model originated through an
iterative process and, even now, is
constantly revising itself. This
undoubtedly represents one of the great
strengths of the model.

Diag. 2-4: Connection between SCOR performance
attributes and metrics of the first level.
274

The metrics used are of a
hierarchical nature similar to that of the
process elements. The metrics of the
first level result from aggregate
calculations, which in turn are based
upon the metrics of the levels below
them (level 2 and so on). For example,
the delivery performance is calculated
as the total amount of products delivered
punctually and completely. Beyond this,
metrics are also assigned on a lower
level in order to diagnose deviations
between the performance and the plan. It
can therefore be thoroughly
advantageous for an organization to
examine the correlation between the
requested delivery date (request date)
and the approved delivery date (commit
date).
276

2.1.5 Changes in SCOR
Version 6.0
As previously explained, the SCOR
model originated through a type of
evolutionary process and went through
several revisions from version to
version.

In due course, SCOR Version 6.0 finds
itself applied mainly with respect to the
associated performance indicators. The
following lines deal with its main
differences from the previous version,
an understanding of which is necessary
in order to be able to judge the models
evolution. Version 6.0 of the SCOR
model represents the sixth substantial
revision since the introduction of SCOR.
Model revisions are normally
implemented when the members of the
SCC deem that changes are necessary in
order to promote the continued effective
usage of the model. When the committee
responsible for the metrics announced
that the metrics of the first level did not
consistently correspond with the main
processes on the first level it became
necessary to prepare a revised model.
The shortcomings were mainly corrected
in Version 6.0, but minor changes were
announced for the later Version 7.0.
277

In Version 6.0 changes were
implemented in three primary areas:
Retail processes, Return processes and
Electronic Business (E-Business). The
delivery processes were extended with
regards to the sales processes and
expanded by a new process element, D4
Deliver Retail Product. This
extension makes allowance for special
features with reference to the activities
and their sequence which are associated
with the delivery (normally to the end
consumer).

Within the delivery return process,
the process element R 2 Return of
Maintenance, Repair and Overhaul
Product has been reconfigured after
over one year of assignment in order to
better reflect the processes in practice.
The processes associated with the return
of the said products (SR2, MR2), have
been brought up-to-date for better use
and the definitions associated with them
have been improved accordingly. In this
version of the model, only the SR2 and
the DR2 elements have been revised. It
was envisaged that revisions to cover
the SR1-, DR1-, SR3- and DR3-
processes would feature in one of the
next versions.
278

Regarding the concept of Electronic
Business (E-Business),
279
best practices
were included in the manufacturing
process. This represented a continuation
of the inclusion of best practices, which
was introduced in Version 5.0. During
the examination of the effects of new
technologies upon Supply Chain
monitoring, the SCC came to the
conclusion that although the applied
technologies have altered, the
fundamental processes associated with
the Supply Chain have remained
unchanged. The assigned best practices
have, however, changed substantially
due to the influence of new technologies.

In its overhauling of the best
practices and relevant technological
descriptions, then, the updated version
of the SCOR model represented the
formal recognition of tried E-Business
methods and E-Business technologies by
the SCC.
280

2.1.6 Changes in SCOR
Version 7.0
In SCOR Version 7.0, which has been
published by the Supply-Chain Council
in March 2005, changes were
congregated in two areas.
281

Firstly, the application of the
performance indicators has been
simplified. For this purpose the first
level performance metrics were re-
configured and their fundamental
structure carved out more elaborately.
The number of first level metrics was
reduced from thirteen to nine. This did
not, however, mean that the respective
metrics have gone altogether. They have,
rather, been allocated to the performance
measure level below it. A consequence
of this restructuring was that the
processes within the SCOR process
elements Deliver had to be adjusted. The
respective processes on the third level
were therefore extended in order to
guarantee a better alignment with the
cycle time and the cost-specific
performance metrics.
282

Beyond this, a new section added
to the performance indicators has been
attached as an additional appendix,
which described the individual metrics
and their calculation in detail.
Additionally the explanation of the
metrics influence has been substantially
expanded. Only the metrics of the first
level are contained in the Appendix to
Version 7. The question of whether or
not future SCOR model versions would
also include similar detailed
descriptions for all performance
indicators was under construction at this
time.
283

The second area in which changes
have been made was that of the best
practices. Here a number of new
procedures were added. In particular,
twelve new best practices were
included, of which four were already
contained within SCOR Version 6.1, but
not explained in detail. The new
procedures were listed in the Appendix,
and discussed and dealt with in detail
there. Whilst the Appendix to SCOR
Version 7 contained those best practices
which were newly included or changed,
future versions of the model would
likely include the list (and associated
explanations) within the model itself.
284

2.1.7 Changes in SCOR
Version 8.0
Version 8.0 represents the most up-to-
date version of the SCOR model.
285
It
features a number of fundamental
revisions, whereby the processes of the
first, second and third level remain
unchanged from the previous Version
7.0. The main changes are in the areas of
performance indicators, best practices,
illustration of inputs and outputs,
workflow diagrams and the SCOR
database.
286

With reference to the performance
indicators, an additional Level 1 Metric
namely Return on Working Capital
can be found within the performance
a t t r i b ut e Assets. Several further
performance indicators have been
simplified. The second level processes
now exclusively have performance
measures of the first level assigned to
them. Apart from this an additional cost
measure for each individual process has
been integrated. The adoption of a cycle
time measure for each process was
similarly pursued in Version 7.0. By
these means, it is possible to aggregate
those two measures to the first level
performance metrics. In order to
illustrate the aggregation possibilities
and fundamental hierarchy, a completely
new appendix for the performance
indicators (Metrics Appendix) has been
included in the SCOR models
documentation.
287

The Best Practices Appendix was
also revised with the objective of
creating a clear and consistent point of
reference. Changes to several definitions
were brought up to date, and their
assignment to the corresponding
processes was changed accordingly. The
best practices no longer contain the
column Feature, as this is a remnant of
the time when the model description still
contained associated software
characteristics, which are no longer
identified by the Supply-Chain Council.
The respective column has, where
necessary, been replaced by a
definition.
288

The revised model description also
includes the new Inputs and Outputs,
along with their definition. These were
not respectively present, described or
referred to in any of the previous
versions of the SCOR model. This
element was created by a group within
the SCC that assigned the ISA-95
standard
289
by the ISA organization
290
in conjunction with SCOR. The
corresponding definitions were inserted
in order to fulfill the requirements on the
SCOR side as well as those of ISA-
95.
291

Due to the first-time adjustment of
the SCOR model to a form of illustration
that is compatible with Business Process
Management (BPM),
292
the Workflow
Graphics are markedly different from
the earlier ones, which were bound to
the Microsoft Word format. They now
also include the work or tasks to be
carried out (deliverables), i.e., those
elements that move from one process to,
or respectively into, the next (input) and
back out of this process (output). As a
result of these complex work procedures
and the fact that the illustration is in a
special software program replacing
Microsoft Word, the font size in the
work procedure diagrams is very small.
The diagrams are therefore available on
the Supply-Chain Councils internet
page
293
in a Hyper Text Markup
Language (HTML)-format with an
enlargement function.
294

It is envisaged that the next SCOR
version probably Version 8.1 will
illustrate and offer the data stored in
BPM-compatible format within the
SCOR database in a format that is
independent of the manufacturer. At
present the SCC is working on this
suggestion with the respective system
suppliers. In addition to this, a software
license program is being considered
with regards to the release of future
SCOR model versions in an electronic
format.
295

In this study references to the
SCOR Model are to Version 8.0. The
only exception to this is the issue of
performance indicators, where Version
6.0 will be used. This is because
Version 6.0 was the up-to-date model at
the time of the theses models
compilation and as a result of this, the
research is based upon the performance
terms within Version 6.0. The validity of
the evaluations is, however, not
influenced by this because, as mentioned
above, no performance indicators were
removed or added. The only change has
been in the position of the performance
indicators within the models hierarchy.

2.2 Limitations of the
Practical Areas of the SCOR
Models Application as
Descriptive Model for the
Analysis of Companies
Supply Chains
As already noted, the SCOR model was
developed to describe business
activities relevant to the Supply Chain,
which are linked to all phases that are
run through in order to satisfy customer
requirements.

The model is characterized by five basic
processes. By illustrating Supply Chains
using these process building blocks and
generally valid definitions, the model
can serve to describe Supply Chains
both of a very simple or very
complicated nature.
296
In describing, as
it were, the depth and width of any
chosen Supply Chain, the model has
been able to contribute to delivering a
basis for SC improvements for global as
well as location-specific projects.
297

As shown in the next illustration,
the SCOR model represents a so-called
Business Process Reference Model .
Reference models are considered to be
normative models as represented in
Chapter 1.
298
With SCOR, we are
dealing with a special model, which
connects process elements, performance
indicators, best practices and the
specialties relevant to the
implementation of Supply Chain
activities in a very distinctive way. The
singularity and effectivity of the model
and its successful application are mainly
based upon the concentrated and
regulated assignment of these four
elements.
299

Reference models are principally
used to systematize business processes
and to represent them in a unified
manner. The SCOR model builds upon
the input, throughput and output scheme
that is used within the process
monitoring framework. The model is
used to represent the processes on
various levels and to determine their
formulation in stages.
301
The SCC
defines the term reference model as
follows:

Process reference models
integrate the well-known
concepts of business process
reengineering, benchmarking,
and process measurement into
a cross-functional
framework.
302

Reference models are based upon
workflows and the monitoring of these
workflows (Workflow Management ).
303
They identify the interfaces within the
structure of the work procedure which
enable products to interact on a variety
of levels. All systems for monitoring
work procedures contain a number of
universally valid building blocks, which
influence each other within a defined set
of scenarios and work together. Various
products typically show a difference in
levels of performance within the
universally valid building blocks.

Diag. 2-5: SCOR as a hierarchical model
300

To achieve interoperability
between the various work procedures, it
is necessary to determine a standardized
number of interfaces and formats for the
exchange of information. This can take
place by the assembly of unambiguous
interactive scenarios with reference to
these interfaces. The interactive
scenarios in turn serve to identify
various levels with functional
concurrences, which are in line with the
product range found on the market.
304

In addition to this, a reference
model represents a Supply Chain model
that can support the introduction of
application systems.
305
The advantages
of a reference model result, in this
context, from the ability to enable the
detailing of several observation levels
and methods of questioning. Firstly, this
includes the description of process
conditions and process results, i.e., the
answering of the questions as to which
data, information and resources are used
and which objects are being
processed.
306
Secondly, it contains the
description of the associated procedure
from a process point of view, i.e., the
answering of the questions as to which
partial processes and results pilot the
process and which organizational areas
are involved.
307

An important point in this context is
that the model explicitly describes
processes and not functions. Expressed
another way, the model concentrates
upon the activities involved rather than
the people or organizational units that
carry out these activities.
308
The relevant
process is shown in the following
illustration.

Process Decomposition Models,
whose intention deviates considerably
from the formerly mentioned process
reference models, must be clearly
differentiated. The SCOR model
provides the service of a language for
the communication between SC partners.
Process decomposition models are, on
the other hand, designed to observe a
special configuration of process
elements. Therefore they are missing the
integrative character with regards to
the business-internal as well as the
business-integrated Supply Chain.
310

Electronic Business (E-Business)
has risen in importance as a new
application domain in conjunction with
reference models in recent years.
311
According to Fettke and Loos, reference
models for E-Business are those which
support the formation of E-Business
systems.
312
Following this, the SCOR
model can also be understood as an E-
Business reference model, because its
application can determine a
comprehensive application of
information technologies.

Diag. 2-6: SCOR as an activity-orientated reference
model for business processes
309

2.3 Strengths and
Weaknesses of the SCOR
Model Based Upon the
Present Discussion
2.3.1 Strengths and
potentials of the model
One of the great strengths of the SCOR
model is its capacity to predict both
duration and costs, particularly when it
is implemented within the framework of
a Supply Chain analysis project
(described in the following course as
SCOR project in short). SCOR projects
are often formulated with the following
measures in mind:
313

The improvement of a companys
stock market value
The increase of profits and margins
The increase of the available
financial means by implementation
of investments (i.e., IT investments)
The reduction of costs
The optimization of Enterprise
Resource Planning (ERP).
314

Handfield and Nichols provide a
good summary of the more qualitative
advantages in connection with the use of
the model:

The major benefit of SCOR
is that it gives
interorganizational supply
chain partners a basis for
integration by providing them,
often for the first time, with
something tangible to talk
about and work with.
315

In addition to qualitative
improvements, such as improved
communication between the operational
areas, the model can also be used to
achieve the following (exemplary)
quantitative results:
316

The improvement of operating
results of an average of three
percent in the initial project phase
by means of cost reduction and
improvement in customer service.
An increase (of between twofold
and sixfold) in profitability
317
with
regards to project investment costs
within the first twelve months. This
is often in conjunction with
improvements that compensate for
costs inside the first six months.
A reduction of expenses for
information technology (IT) through
minimizing system customizations
and making better use of available
standard functionality.

The continual actualization of the
projects portfolio
318
by continuous
conversion of Supply Chain
improvements with the objective of
increasing annual profits by one to
three percent.

Hughes et al. specify the following
typical and respective areas for potential
improvement and optimization when
SCOR is applied within a framework of
initiatives to improve the Supply
Chains performance (Supply Chain
improvement initiatives):
319

Raw materials purchase costs: 25
percent
Cost of distribution: 35 percent
Total resource deployed: 50
percent
Manufacturing space: 50 percent
Investment in tooling: 50 percent
Order cycle time: 60 percent
New product development cycle:
60 percent
Inventory: 70 percent
Paperwork and documentation: 80
percent
Quality defects: 100 percent.
320

Stephens points out the following
advantages may be achieved when
SCOR is applied to integration measures
(those quantified benefits which may be
attained by integrating the Supply
Chain). He refers to these in the context
of a 1997 comparative study by the
SCC:
321

Delivery performance
improvement: 16 to 28 percent
Inventory cost reduction: 25 to 60
percent
Reduction in order fulfillment cycle
time: 30 to 50 percent
Improvement to forecast accuracy:
25 to 80 percent
Increase in overall productivity: 10
to 16 percent
Lower supply chain costs: 25 to 50
percent
Improvement of fill rates: 20 to 30
percent
Improved capacity realization: 10
to 20 percent.

An additional, although not
immediately quantifiable, advantage to
the application of the SCOR model may
be found in its nature as something
independent of a particular industry.
322
The freedom that this entails means that,
amongst other things, it is possible to
arrive at a comparison of processes in
companies from various industry
affiliations and formulate an optimized
process as a result.
323

A report compiled by the company
Intel
324
describes the advantages that
resulted from the implementation of a
SCOR initiative. The advantages
portrayed are mainly qualitative in
nature. The project team originally
responsible for the SCOR project
strongly promoted the SCOR models
diffusion throughout all areas of Intels
Supply Chain. The subsequent report is
evidence that after reflecting on the
experiences recorded the team was
convinced of the models performance
capabilities and advantages. An
additional advantage gained, although
harder to quantify, was the increase in
knowledge on the part of the project
teams members with reference to
business processes, Supply Chain
processes, and relationships and
associations within the Supply Chain.

The application of the SCOR model
is also seen as a positive end in itself as
part of a process to internalize and
comprehend the fundamental connections
in the chain in a generally valid language
and within a continual structure. The
report stresses that the inclusion of
representatives from different business
areas in the model was a great
advantage. As a result of this approach,
the risk that a one-side point of view
would result was reduced.
325

In the reports conclusion the
central knowledge database
(repository), which originated out of the
project was identified as a significant
advantage for the business. Today this
represents a substantial component of
Knowledge Management
326
within the
framework of Intels Supply Chain. In
addition to this, the part of the repository
used for all SCOR projects was also
applied to overlapping projects for
example, in the form of an initiative for
business process modeling within the
framework of the Enterprise Resource
Planning (ERP) system.
327

The companies SAP
328
and
PRTM
329
began working together in the
year 2000 on a SCOR-based,
standardized program. This program can
be assigned in order to compare
organizations Supply Chain
performance capability to the
competition (standardized
Benchmarking Program based on
SCOR). Participants were able to
compare their results to the results of the
competition based upon the SCOR
model.
330

The BASF Company
331
also
participated in such a comparison study
as carried out by SAP and PRTM. The
corporation stated that the project had
contributed extremely positively to the
analysis and definition of many areas for
possible improvements. The study
demonstrated that the application of the
SCOR model holds the potential for
substantial improvements in the fields of
Supply Chain solutions.
332

The views of leading IT research
companies, like the Meta Group,
333
point
in the same direction. SCOR-based
Supply Chain performance comparison
is considered to be a useful way of
supplying businesses with valuable
information in order to analyze and
optimize their processes. This is
particularly important when the metrics
allow the Supply Chains performance
potential to be compared to that of the
companys competitors. In association
with this, the particular advantages of
this model over the Supply Chain
Scorecard introduced in Chapter 1 are
evident, as the latter is classified as
more one-dimensional and thus
insufficiently integrated. As a result, the
advantages and strengths of the metrics
used within the SCOR models
framework are clear.
334

2.3.2 Weaknesses and
limitations of the model
The SCOR model is still in an
evolutionary condition, and remains
subject to changes. On the one hand, this
gives it a certain strength, because it
guarantees the models continuous
expansion to include up-to-date
themes.
335
This could involve a whole
monitoring process, such as the
introduction of the Return process as
shown by Version 4.0 (even if not all
activities in this field are contained
within Version 6.0). On the other hand,
this is accompanied by a particular
degree of uncertainty as elements of the
model valid today may under certain
circumstances be changed in the future
and thereby may lose at least part of
their present validity.

As in the earlier illustration 2-5,
the SCOR models hierarchy presently
comprises three levels in order to
support Supply Chains of varying
complexity throughout various
industries. The SCC has clarified that it
does not intend to extend the model into
further levels and describe how a certain
organization should execute their
business or adjust their present IT
systems and information flows to suite
market requirements. Such a statement
results from the SCCs conception of
SCOR as a descriptive and formative
model. It does not, however, mean that
the models application excludes the
possibility of a subsequent Supply Chain
optimization building on its findings.
Indeed, it even makes explicit
suggestions in that direction, for
example, in the form of best practices.

The models status does, however,
mean that each organization that applies
it with a view to securing improvements
in the Supply Chain must expand the
model namely by the inclusion of a
fourth level which illustrates the tasks.
This necessitates the inclusion of
organization-specific processes, systems
and practices. This organization-specific
extension is not supported by the SCOR
model, at least not in the present version.
There are, however, approaches
regarding the improvement of the
models assignment possibilities in this
field, and these will be dealt with in
Chapter 5.
336

Furthermore, the model does not
attempt to describe every business
process or every activity within the
Supply Chain. These deliberately
excluded components are: Marketing and
sales (i.e., creation of demand), research
and technology development, product
development and some areas of post-
delivery customer service. The model
also includes several functional areas as
preconditions without addressing them
specifically: Human Resources,
Training, Quality Assurance, Information
Technology, and Administration (as long
as the latter does not refer to the Supply
Chains monitoring). The present SCC
position is that the respective horizontal
activities are implicitly contained within
the model, and that there are particular
organizations that specialize in these
areas. The SCC leaves it to such
organizations to offer qualified support
in these fields.
337

2.3.3 Critical success factors
during application of the
SCOR model
The critical factors for success during
the SCOR models assignment arise
from the models possibilities and
limitations, and the interdependencies
between them. In this way, the model
undoubtedly serves to standardize the
Supply Chains procedures in an manner
that can span different industries. The
participating companies and
organizations speak, as it were, a single
language in which they define their
metrics identically.
338

If an organization chooses to follow
the SCOR model, it is important that it
transposes the universally valid and
formulated concept upon the specific
competitive situation. As a result, it is
obliged to openly address the actual
work processes within the organization,
and this presupposes a good knowledge
of these processes. Harmon
characterizes the conditions as follows:

The use of a framework-
based business process
methodology is only possible
in cases where a high level
analysis of the processes to be
analyzed already exists, and
where measures of process
success have already been
standardized. Obviously, it
will help if the standardization
is done by a large, neutral
standards group, like the
Supply-Chain Council, since
that will assure that the
processes and measures are
really well thought out and that
individual practitioners will
more readily buy into the
common framework.
339

The parties involved in the Supply
Chain can benefit from best practices
with regards to the Supply Chains
monitoring, and as a result of these
practices the compatibility within the
company-spanning Supply Chain (i.e.,
with the inclusion of all parties)
increases. This also applies to the
synchronization of the respective
hardware (HW) and software (SW)
solutions a criterion not to be
underestimated nowadays as these can
represent a substantial cost factor and
must be seen unconditionally in the
context of their related advantages.
340
Due to the greater complexity this
entails, the synchronization is more
difficult than if companies were to
concentrate purely upon their own areas.
To carry this forward successfully,
companies must have sufficient funds at
a relatively early phase of project
implementation. On the positive side,
however, synergies arising from this
process can yield advantages from the
very beginning of the implementation
phase.

The SCOR model has a high degree
of abstraction due to its comprehensive
approach.
341
It is therefore almost
impossible to apply with an unstable
basis of cooperation between the
participating Supply Chain parties as it
presupposes a certain degree of
continuity. If the approach is persistently
applied, the dependency between the
unified partners increases, and as a
result the companies involved lose
sovereignty. Whether that represents an
advantage or disadvantage depends
strongly upon the respective business
strategy. In addition to this, the narrow
supplier-customer connection finally and
inevitably leads to the release of
sensitive information at the interfaces,
whereby critical knowledge can also
flow.
342
The business must decide if the
benefits of this outweigh potential
disadvantages.

It is the authors view that the
critical success factors named do not in
themselves primarily represent a SCOR
model problem, but moreover a problem
of Supply Chain Management in
principle. The reason for this can be
seen in the fact that SCOR illustrates an
organizations Supply Chain, therefore
representing a descriptive model. It
doesnt lay claim to immediately
structuring the Supply Chain, i.e., to
being a formative model.
343
Nevertheless, it should contribute by
respective recommendations to Supply
Chain improvements, but this takes place
due to the description and consequent
extraction of action points.

Brought to a precise denominator:
The SCOR model itself does not form,
but contributes to a (better) formation or
structure of the Supply Chain. Upon
closer examination, this train of thought
does not represent a disadvantage, but
moreover an advantage: It is the high
degree of abstraction that in fact allows
the model to fulfil the requirements of a
normative model or reference model
respectively, as stated above. It is,
however, important to take into
consideration the limitations to the
models successful assignment.

2.4 Practical areas of
application of the SCOR
model
This section will examine the assignment
and application of the SCOR model.
During this a differentiation will be
made between the two following cases:

Companies that have applied
SCOR within the framework of a
business initiative.
External consultancies, which enlist
the SCOR model with customers
for the purpose of analysis and
necessary building upon it for
Supply Chain optimization.

2.4.1 Examples for the
application of SCOR ?in the
framework of a business
initiative
In conjunction with this, the author came
upon two present examples from the
High Tech industry, Hewlett-Packard
(HP) and Intel. In addition to this, SCOR
is presently an intensely discussed topic
within the logistics field of the
Department of Defense (DoD) in the
United States. This last case study is
particularly noteworthy on account of the
scope and the complexity of the
respective Supply Chain.

2.4.1.1 Application of SCOR at
Hewlett-Packard (HP)
Hewlett-Packards
344
Business Process
Management Group (BPM) has
developed a reference system for
product design and for the business
areas responsible for customer relations
which is built-on the SCOR model.

The group has also added a reference
system for demand generation
(Marketing). These reference systems
have been successfully used in numerous
projects, and HP has handed them over
to the SCCs newly formed Special
Interest Groups (SIGs) the Design-
Chain Council (DCC) and Customer-
Chain Council (CCC),
345
so that they
can be adopted as open industry-
standards for business process
monitoring and improvement.
346

A further example of the SCOR
models application took place within
the framework of the merger
347
of HP
with Compaq in 2002.
348
HP considers
this application to be a good example of
a so-called approach to a Second
Generation Business Process Change.
When the merger was first announced,
teams were formed by HP and Compaq
to plan how Supply Chain combination
could be carried out. At this time, both
Compaq and HP had dozens of Supply
Chains distributed all around the world.
The Supply Chains had been developed
at different times and were based upon
differing software systems. Next to the
project team responsible for the Supply
Chains, there were also teams that were
responsible for analyzing the software
systems which were to be applied for
the new, combined functional areas of
sales, marketing and development of
new products, as well as the supporting
functions of a financial, accounting,
personnel and IT nature.
349

Most of the teams began with an
inventory of the systems already present.
Upon completion of this they moved on
to a discussion of the advantages of the
various applications with a view to
reaching an informed decision as to
which ones were the best suited for the
future. At that time it was known that
complex Supply Chains can be
characterized by means of SCOR
diagrams of the second level (Level 2
Thread Diagrams)
350
and that SCOR
provides precise formulas for business
metrics, which can be used upon data
from the past in order to measure the
achievement of success in every process
on the second level.

Based upon previous examples of a
so-cal l ed First Generation Business
Process Change,
351
there was
widespread skepticism as to whether the
projects implementation the analysis
of HPs and Compaqs main processes,
the optimization of the communal future
processes and the allocation of metrics
was realistic within the given time
frame. Firstly, SCOR processes of the
second level, and then of the third level
were analyzed in order to determine
mutuality between the present Supply
Chains. Data from earlier studies was
also used to identify the success of every
process. In several cases two differing
processes of HP and Compaq were
functionally similar, but there was
considerable variation in their
performance potential based upon the
relevant SCOR metrics.
352

In other cases the processes were
compatible as far as their performance
potential was concerned, but one of the
two showed a better functionality, which
was assessed by means of the third level
processes. In addition to this, the SCOR
models application enabled the team to
identify the Supply Chain processes with
the greatest efficiency and, building upon
this, to choose the most suitable
software applications for process
support. The projects success rested
mainly upon the presence of a reference
system which allowed it, in a relatively
short time and in a consistent way, to
analyze and optimize the Supply Chain
processes, as well as to apply metrics in
order to assess the effectivity and
efficiency of every process (and
associated sub-processes). In retrospect,
then, HP was able to state that the
success of the project was primarily
attributable to the SCOR models
assignment.

In the months following the merger,
HPs IT BPM Team concentrated upon
considering how SCORs reference
system could be expanded to include
areas within the business that were not
contained within the present version.
353
Within the framework of several
development and refinement cycles
(iterations) and in conjunction with
business partners, the model was
validated on the basis of regular
operational occurrences. The reference
system resulting from this was an exact
reflection of several of HPs business
areas and proved itself to be adequately
and universally valid in its ability to
analyze and describe the business
processes in any number of HPs
business areas.
354
Welke summarizes
such a means of approach as an
expansion of the normative models
possibilities (broadening the normative
model set)
355
and goes on as follows:

The full-enabling process set
has been used by HP to
manage the Merger and
Acquisition process with
Compaq. It has been the basis
for the extension to an open
standard, SCOR-style,
normative model.
356

With this process the conversion
from a universal, normative model into a
SCOR-based model was effectively
completed.

2.4.1.2 Application of SCOR at Intel
Intel
357
describes the method and the
success of the SCOR models
application under the heading
Experience with SCOR at Intel. It is
thereby particularly remarkable that a
personal method was developed, the so-
called Intel SCOR Best Known Method
(BKM). The BKM Project for Supply
Chain analysis and optimization at Intel
began with focused preparations. Before
a team of employees from various
functional areas was formed, the
business information necessary to define
a clear problem statement was collected
by a core team. After the function-
spanning team had been formed, the
whole team participated in a number of
so-called Face-to-Face (FTF) work
meetings to define the project milestones
according to the SCOR model.
358

The Intel-specific method
developed from this means of
implementation, BKM, recommended in
effect that the core team completed the
assigned tasks and collected detailed
information in small workgroups (for
example, based on metrics, benchmarks
and financial information) and presented
them during the next FTF work meeting.
Additionally, SCOR-based simulations
were used early on in the course of the
project to analyze alternative
configurations and to later confirm the
effects of the suggested changes.

In some cases Intels Supply Chain
was not as effective or reactive as
would have been necessary for a
growing business with a high business
volume. It became evident that the
companys traditional business model
was often unable to support
requirements that arose in particular
business areas. Furthermore, some of the
established workarounds were not
efficient or robust enough. Intel had
started the first SCOR project with the
objective of identifying improvement
potential in the customer service and
efficiency areas, purely with reference
to its own Supply Chain. The project
was intended to test the SCOR models
usage and supporting tools within the
organization, and compile and establish
guidelines for its application.
359
The
desired results of the project lay in the
following areas:

Documentation of the Supply Chain
and the measures for improving the
Supply Chains processes.

Identification of short-term
improvements.
Ensuring support on the part of the
business areas and executives, and
identification of the persons
responsible for long-term
improvements.
360

Additional results contained a
summary of project results and the
learning progress achieved by the SCOR
models usage as well as the principles
compiled for SCOR application in future
initiatives. Beyond this, a method was
developed, due to the adoption of
SCOR, which should, in the future
enable the comparison of SCOR-based
metrics to those of competitors, i.e., a
SCOR-based performance comparison
(benchmarking).
361

The company-wide application of
SCOR BKM within all business areas
was supported and promoted by the Intel
Supply Network Group (ISNG). The
greatest challenge in conjunction with
this resides in the requirement for
circumferential training during
simultaneous acceleration of the
methods further development. In order
to support the latter requirement, the
Intel IT research group cooperated with
t h e Network Decision Support
Technology (NDST) group a group
within ISNG that was responsible for
simulations. The objective was to
develop a SCOR-based Supply Chain
simulation, and examine alternative
designs of Supply Chain networks (so-
called Supply Networks, SN), as well as
the effects of high-priority system
solutions.

BKM has meanwhile been
expanded by the addition of a SCOR-
based planning process with regards to
the Supply Network. This procedure
was checked within an extended Supply
Chain, which illustrated the electronic
devices and component groups Supply
Chain model along with a European
Original Equipment Manufacturer
(OEM). The focus of this study was the
possible replanning of demand response.
During this, it was possible to study the
effects of the balancing of demand
requirements forward-facing, as it were,
within the Supply Chain (i.e., from
delivery process up to procurement
process), and to study effects of the
replanning process upon the Supply
Chain performance and costs.
362

In addition to this, increased focus
on the planning process also made it
possible to effectively make inventory
items available for order fulfilment.
Within BKM, SCORs planning process
has been specially adapted to Intels
business requirements and its marketing
partners companies within the expanded
Supply Chain. New possibilities for
collaborative planning with suppliers, as
well as the sharing of demand
information, have resulted from this.
363

Finally, the SCOR-based
simulation was integrated into tools for
the application of diverse forecasting
methods and the modelling of demand
creation. In this context the so-called
Postponement Strategies
364
could be
modelled, which enables examination of
the effectivity of a products final
assembly at various locations.
365

In the recent past Intel has gone
beyond the measures for the application
and enhancements of SCOR spoken of
above and has engaged in a SCOR-
based model that exists under the name
Value Chain Operations Reference
Model (VCOR).
366
The models
promotion takes place under the
auspices of an organization called the
Value Chain Group (VCG) .
367
VCOR
builds, as it were, upon the SCOR
model, but it is characterized by two
main differences or variations:
368

Firstly, the plan process is
extended by two further so-called
Macro Processes: Govern and
Execute. All further processes
come below these three macro
processes.
Secondly, the model is constituted
by the following eight Process
Classifications instead of the five
classical SCOR main processes:
Market, Research, Develop,
Acquire, Build, Sell, Fulfill and
Support.

Intel provides the following
description for the usage and assignment
of VCOR sought, and the commitment
associated with it:

A general consensus has
developed among partners
developing essential
collaboration models for
product design for supply
chain that the long-term value
proposition is to focus on a
Value Chain Operations
Reference model (VCOR).
Defining business semantics in
terms of the common
vocabulary of VCOR
aggregates business
applications and business
processes to a higher level of
abstraction. In this way, value
chain integration enables
coordination across
departmental, organizational,
and enterprise boundaries
from an overall business level
perspective. The benefit is that
it facilitates service-
composed processes and,
thereby, brings service-
oriented relevance to a
complex IT landscape in
which ongoing, flexible
adaptation is necessary.
369

The further development of VCOR
on the basis of SCOR can therefore be
seen as an attempt to move still further
from normative models towards those
enriched with Value Chain-specific
aspects.
370

2.4.1.3 Application of SCOR by the US
Department of Defense (DoD)
The US Department of Defense (DoD)
maintains, according to value, the largest
worldwide Supply Chain. Within the
organization, the Supply Chain
Integration Office of the Secretary of
Defense (OSD) Logistics and
Material Readiness is responsible for
Supply Chain operation.
371
The annual
logistic expenses in 2004 were more
than $80 billion (US),
372
which were
administered by more than a million
logistics employees. Several years ago,
the DoD began with the SCOR models
introduction in order to lower Supply
Chain cost and improve customer
satisfaction. The ultimate objective was
to implement an integrated Supply
Chain.
373

The DoD assumes that SCOR is a
universally valid platform and language
for cooperation with private firms and
the respective defense organizations,
used in order to mutually develop and
assign best practices and evaluate
Supply Chain efficiency. At the end of
2004, the DoD had introduced the SCOR
model throughout many areas of its
business. The model therefore represents
an immanent component of the strategy
for Supply Chain monitoring, and its
leadership of the logistic area drives
future SCOR developments onwards
within the Supply-Chain Council.
374

The Supply Chain model developed
by the DoD has the purpose of
organizing relevant information and
making it available (Knowledge
Exchange). The SCOR model version
developed by the SCC and widely
diffused throughout industries thereby
developed itself into an analytic tool for
Supply Chain monitoring within the
public sector.
375
This refers back to the
previously mentioned expansion of its
spectrum of usage to cover E-Business
areas Government-to-Government
(G2G) and Government-to-Business
(G2B).
376

For the purpose of knowledge
exchange, the terminology was adapted
to the DoDs SCOR model defined by
the OSD, which is distinguished by the
following monitoring processes: Source,
Make/Repair, Deliver, Reutilize/
Dispose. Under the monitoring
processes lie functional areas, which
serve to categorize Supply Chain
information for the knowledge exchange.

In the case of the functional areas
we are dealing with Material
Requirements Determination, i.e.,
Purchasing, Material Management,
Repair/Maintenance, Material
Distribution, Transportation and
Material Disposition. The result is a
SCOR-based Supply Chain, which takes
the special requirements of the DoD into
consideration.
377
The following
illustration summarizes the explanations
in graphical form.

The above Supply Chain model for
knowledge exchange takes into
consideration the two fundamental
perspectives from which a Supply Chain
can be observedon the one side, an
internal Supply Chain, which subsumes
all the monitoring processes and
functional areas of an organization in
order to fulfil customer orders; on the
other side, an external Supply Chain,
which is defined as a group of
independent organizations cooperating
within special channels in order to
deliver a product or a service.
379

The monitoring of the DoDs
Supply Chain (DoD Supply Chain
Management) is based upon an
integrated procedure that begins with the
planning of the requirements on the
customer-side with reference to material
and services and ends with the delivery
of material to the customer. Included in
this process are the return of material
and the bidirectional information flows
throughout suppliers, logistic functions
and customers.
380

Diag. 2-7: DoD model of Supply Chain
Management
378

Beyond this, Supply Chain monitoring
requires a complete set of related
process cycles (including planning,
procurement, repair and delivery),
which are communally optimized to
ensure that material and service
requirements are efficiently planned and
executed in order to satisfy customer
needs. The monitoring of the DoDs
Supply Chain focuses firstly upon
fulfilling customer requirements and
only secondly upon doing this at the
lowest process costs.
381

2.4.2 Examples for the
application of the SCOR
model by external
consultancies
Research with regards to application of
the SCOR model by external
consultancies has produced the
following results:

There are a number of smaller
business consultancies, for example
SCE Limited based at Stillwater,
Minnesota or mi services group
with its headquarters in Wayne,
Philadelphia, which have chosen to
specialize in the application of the
SCOR model. SCE Limited roughly
describes itself as a center of
excellence in SCOR
application.
382
Companies of this
type usually have less than 500
employees.
There are also medium-sized
business consultancies, usually
with around between 500 and 1,000
employees, that see SCOR as a
substantial component of their
advisory portfolio. The best known
example is the consultancy
Pittiglio, Rabin, Todd & McGrath
(PRTM), which was immediately
included in the creation of the
SCOR model and is still a leader in
the field today. It also formed a
branch which specializes in Supply
Chain Benchmarking, the
Performance Measurement Group
(PMG).
There are then business
consultancies with more than 1,000
employees, that see SCOR as an
immanent component of their
advisory portfolio in the field of
Supply Chain Management. In this
case, we are dealing primarily with
business consultancies that were
initially offshoots of the so-called
Big Four (or respectively the
former Big Five) certified public
accountants.
383
According to the
authors knowledge, the firm
BearingPoint (formerly KPMG
Consulting) with its headquarter in
McLean, Virginia, was the only
example of a business of this
category at the time of the submitted
works origin, which specifically
assigns the SCOR model within the
framework of its consultancy
activities.

There are also software suppliers
with their own advisory field in
which SCOR becomes assigned,
either in the field of SCM solutions
or in the field of reporting.
Examples of these are the firms
BusinessObjects headquartered in
San Jose, California,
384
and SAP
with its headquarter in Walldorf.
Finally, there are institutes, the
majority of which are associated
with universities, which have set
themselves the target of the further
development and application of
SCOR. One example of this is the
Supply Chain Management Centre
of the Singapore Institute of
Manufacturing Technology
(SIMTech) (formerly Supply Chain
Management Centre of the Gintic
Institute of Manufacturing
Technology).

For each of the five cases listed,
one of the named companies will be
more closely examined in the following
pages.

2.4.2.1 mi services group
The tool developed by mi services
group
385
and based upon the SCOR
model, the so-called SCORWizard,
serves the purpose of automating the
SCOR models application. Such a tool
must be clearly differentiated from those
applications which have, amongst other
things, the Supply Chains design or
formation respectively as their
objective.
386
In the present case we are
dealing purely with a tool to support
SCORs application as a descriptive
model not a forming model of the
Supply Chain.
387
The SCORWizard
consists of two components:

1. Balanced Strategic Measurement:
Adjustment of strategic objectives to
Supply Chain objectives
Creation of a Balanced SCOR e-
Card
388
Comparison of performance with
competitors (Benchmarking)
Determination of performance
objectives.

2. End-to-End Visualization:
Clear allocation of the extended
Supply Chains physical scope


Configuration of all process
elements, determination of roles
and relationships
389
Compilation of a reference system
for a detailed analysis.


Whilst the SCOR model delivers
the general reference system, the
SCORWizard automates several stages
and should add a further degree of detail
without negatively influencing SCORs
strengths. We are therefore dealing with
the assignment of one of the tools
originally supporting the SCOR model.
The advantages named are to be
characterized as follows:

Simple addition, removal or change
of best practices and metrics within
the SCOR reference system.
Creation of a knowledge base for
SCOR processes
Simple compilation of examples for
Supply Chain illustration which are
consistent throughout business
areas
Simple determination of the
optimized business processes and
the supporting system technology.

By these means, the redefinition of
the Supply Chain Strategy is supported
and a reference system created for the
improvements along the Supply Chain.
The application is therefore
recommended for executives as well as
employees within the operational
business.
390

2.4.2.2 PRTM
PRTM
391
was one of the first business
consultancies that occupied itself with
the comparison of a Supply Chains
performance potential (Supply Chain
Benchmarking). As a result of this, a
comprehensive database of Supply
Chain benchmarking information was
collected, whereby the fundamental
metrics are based upon the SCOR
model. The PRTMs own Performance
Measurement Group (PMG),
392
which
was founded for this specific purpose,
describes itself as a leading supplier of
data for Supply Chain performance
comparison.

The spectrum of services offered
stretches from individually tailored
performance comparisons up to fast,
efficient diagnoses on the basis of the
PMGs Supply Chain database. In all
cases, the performance comparison is
seen as a tool to provide the initial
incentive and focus for Supply Chain
improvements. During this, it is assumed
that in the course of project
implementation not only possible
improvements, but also necessary
initiatives for improvement can be
defined. The services offered
individually cover:
393

Data collection, identification of
gaps and implementation planning
Access to the Supply Chains
metric database
A circumferential set of data for the
comparison of Supply Chains
(benchmarking) which are
completely consistent with the
SCOR model
A specially developed model, the
so-called Supply Chain Maturity
Model that contains a multitude of
procedures in order to estimate the
companys development condition.
Highly-automated analysis tools.

We are also dealing here with an
automation of the basic SCOR models
stages, as illustrated by the first
example, with sporadic enhancements in
selected areas.

2.4.2.3 BearingPoint
BearingPoint (formerly KPMG
Consulting)
394
assigned the SCOR model
in the area of Supply Chain Strategy as a
reliable basis for Supply Chain
illustration. The methodology used
within the framework of advisory
projects for Supply Chain transformation
and the supporting tools were
completely adapted to the SCOR
model.
395
The five main processes of the
SCOR model were therefore analyzed
and evaluated by means of four key
dimensions:
396

Market/value chain integration
Process design?
Organizational design
Technology design and
infrastructure.

In comparison to the previously
cited examples, the consultancy did not
attempt to automate or extend the SCOR
model. Moreover, it assigned the model
to consequently develop consistent
procedures.
397
Additionally,
BearingPoint has, in association with
this, developed a personal tool (KPI
Benchmarking Questionnaire) based
upon quantitative questionnaires, which
will still be dealt with in detail in
Chapter 3, as it represents the basis of
the empirical examination.
398

2.4.2.4 SAP
SAP
399
in conjunction with PRTM
conducted a SCOR-based Supply Chain
study in the years 2002 and 2003. The
study evaluated and followed the Supply
Chain performance of more than 100
global SAP customers in order to see
what influence the processes and
systems for Supply Chain planning have
upon companies performance
capability. During this, two types of
metrics were differentiated:
400

Internal-facing indicators:
Inventory days of supply, inventory
costs and cash-to-cash cycle
time,
401
etc.
Customer-facing indicators: Order
fulfillment according to customer
request, on-time delivery, order
cycle times, etc.

In addition to this, the study
occupied itself with the degree of
maturity of the planning procedures
development position with respect to the
Supply Chain, as well as that of the
supporting systems (maturity of Supply
Chain planning practices). It was
presumed that mature planning
procedures and systems are
characterized not only by the enabling of
integration within the expanded
business, but also with external business
partners. The study arrived at several
revealing insights:
402

The most significant cost reductions
were identified in the area of
inventory days of supply.
Companies could therefore save 63
percent costs, or respectively gain
a 1.7 percent improvement in
profitability, with a high degree of
maturity.
403
In association with this, the
obsolescence of stock was a highly
important factor. The companies
with the highest degree of maturity
were able to lower the drop in
inventory value by up to 84 percent.
In addition, the inventory
obsolescence could be reduced
from 0.9 percent of the profit down
to 0.3 percent by the assignment of
leading planning procedures and
systems for the development of new
products.
It became apparent that companies
with a high degree of maturity
showed a 17 percent improvement
in on-time order fulfillment rate and
a 7 percent improvement in
deliveries. Based upon the value of
experience it was assumed that a 17
percent improvement in ?on-time
order fulfillment rate represented
an increase of 3.4 percent in profit.

Beyond this it became apparent that
these firms showed a 45 percent
shorter order cycle time. A
decrease of 45 percent can,
according to experience, lead to a
45 percent reduction in inventory
stock.

Apart from the aforementioned
cases, conclusions were also reached
which do not allow themselves to be
extracted from the collective results by
means of scientific methods, but would
rather seem to have a qualitative
character. It was therefore stated that
companies which use the SAP planning
system had shown particularly positive
results with regards to internal and
external metrics.
404
In addition to this
there were indications that customers
who use the SAP application program
achieved a net profit roughly three
quarters higher than other companies
achieved, an average margin of 14
percent as opposed to 8 percent.
405

2.4.2.5 Singapore Institute of
Manufacturing Technology (SIMTech)
The Supply Chain Management Centre of
the Singapore Institute of Manufacturing
Technology (SIMTech)
406
carries out an
annual Supply Chain Benchmarking
Study, based upon the SCOR model, for
the Southeast-Asian region.
407
The
participating companies come from
Indonesia, Malaysia, the Philippines,
Singapore and Thailand. The project
was started in the year 2000, and six
reports have been submitted to date.

The study is based completely upon
the SCOR model and its associated
metrics. The objective is to give the
participating firms a clear picture to as
to their position with regards to their
competitors, and to what extent they must
improve themselves in order to belong
to the best in their peer group (Best in
class). The targeted group is restricted
in this case to the industrial sector.
Furthermore, a better data collection is
sought in order to compare the
performance potential of companies and
their Supply Chains in the Asian region.
Given the various business environments
and regional features, the collection of
such comparable data is seen as a
particularly important requirement.

In order to guarantee the
comparability of the collected data in the
Asian region, as well as with
competitors in North America and
Europe, it was decided to use the SCOR
model in this respect. This was reached,
on the one hand, because the SCOR
model is seen as a comprehensive
methodology for Supply Chain analysis
that has been successfully able to prove
its application ability and the advantages
thereof. One the other hand, the SCOR
models wide diffusion and the
accessibility of comparable data
associated with it, primarily in North
America, were also decisive. The
initiators of the study believe that it will,
over an increasing period and with the
associated growth in collected data,
develop into an increasingly important
source of information for the respective
companies within the region.
408

Chapter Three

Empirical study based
upon a quantitative
questionnaire

This chapter addresses the context of
justification within the framework of the
research-logical course. According to
Friedrichs, this context may be
characterized as follows:

Under context of justification,
the methodological steps must
be understood with whose aid
the problem is to be examined.
It is a methodological
procedure by which the
individual stages are
interdependent. The goal is an
exact as is possible,
verifiable, and objective
examination of the
hypotheses.
409

A hypothesis or thesis
410
in this
context refers to a presumption of the
connection between at least two
variables. An empirical theory is a
system of logical, contradiction-free
statements in the form of hypotheses with
respect to the object to be examined,
along with the associated definitions of
the terms used. Therefore, several
hypotheses (or a system of hypotheses)
must accompany a theory.
411
This study
seeks to make an initial contribution to
such a field. It has adopted an
exploratory approach
412
and reached
some initial findings. If these are to be
useful in the broader context, however,
further research is needed to explore
other aspects of the field.
413

The fundamental central
presumption of this study, which still
remains to be tested, is as follows:
414

The SCOR model is grouped
around a main axis with a
customer-facing competence on
the one side, and an internal-facing
competence on the other.
415

Both the SC competences are each
also assigned Performance
At t r i b ut e s : Reliability and
Responsiveness as well as
Flexibility on the customer-
orientated side, Cost and Assets on
the business-internal side.
It is presumed that the Performance
Metrics assigned to the
Performance Attributes within one
of the two SC competences are
consistent with one another, i.e.,
point in the same direction. The
performance metrics assigned to the
performance attributes between the
two competences mutually
complete each other, i.e., they
guarantee a balance between the
various objectives.

It must be noted that besides the
models depiction, which was
developed for the purpose of
examination within the framework of the
work at hand and is reflected in the
aforesaid central presumption, a
multitude of further illustrational
alternatives theoretically exist.
Reference to the SCOR model in a
general sense must really be seen against
this background.
416
In order to examine
the central presumption, hypotheses or
more exactly: a system of hypotheses
are formed and examined with the aid of
statistical procedures. During this
process, a hypothesis-investigative
approach is adopted.
417
Some of the
terms necessary for this have been
explained in Chapters 1 and 2, and
others will be introduced before the
description of the empirical
examination.

3.1 Objectives of the
Empirical Examination
At the close of Chapter 2 it was noted
that the SCOR models diffusion and
application has increased considerably
in the past three to four years, mainly in
the American and Asian regions. In spite
of this increased usage, however, there
has not been a detailed study that has
subjected the SCOR models basic
structure or its fundamental assumptions
to a scientific examination. For the most
part, only generally held indications
exist, and these are based upon the value
of experience. This may be due to the
fact that, despite constantly increasing
membership numbers and enhancements,
the SCOR model is not yet fully
accepted in practice.
418

The examination at the center of
this study is therefore intended to serve
as a scientific contribution to research
into the structure of the SCOR model.
419
The data or correlation of the individual
variables (in accordance with the
theses) will be primarily examined on an
empirical basis within the findings. It is
not envisaged that interpretations
unless referring to the statistical
durability of the theses or appraisals
regarding concrete recommendations for
action will feature in the findings.
420
The
respective conclusions are moreover to
be reached in the further course of the
work within the context of realization, in
order to accommodate for the Freedom
of Value Judgment Posit
(Werturteilsfreiheits-Postulat)
contained within research science (see
chap. 5).
421

A Balanced SCOR-based Supply
Chain Scorecard serves as an
instrument for the examination, for which
the term SCORcard will hereafter be
used. Bolstorff and Rosenbaum
introduced the term SCORcard as
Fowlers SCORcard Matrix in
connection with a practical example
within an American corporation called
Fowlers Inc.
422
The construction of this
SCORcard will be explained in the next
section.

3.1.1 Concretizing of aspects
and formation of theses
The connection between the SCOR
models fundamental performance-
respective terms needs to be explored in
order to arrive at a form of SCORcard
that can function as a basis for empirical
examination.
423
For this purpose, the
relevant forms of data and their
connection must be defined beforehand.

3.1.1.1 Overview of the performance
terms relevant to the examination
The following illustration represents the
five Performance Attributes used within
the SCOR model in addition to their
definition and the associated thirteen
Level 1 Metrics.

The Level 1 Metrics illustrated in
diag. 3-1 are in turn defined as
follows:
425

To (1): Delivery Performance [to
commit date]:
P.rcentage of orders delivered
upon or before the agreed date.

To (2): Fill Rate:
P.rcentage of deliveries from the
warehouse within 24 hours of receipt
of order. In the case of services, the
percentages of services are meant
which were completed within 24
hours.


Diag. 3-1: Assignment of the SCOR performance
attributes to the associated level 1 metrics
424

To (3): Perfect Order Fulfillment:
A perfect order is defined as an
order which fulfills all the following
requirements: Delivered complete
with all order lines included.
Delivered to the point in time
requested by the customer whereby
the customers definition of on-time
delivery is applied.
426
The order
documents (inventory list, bill of
lading, invoice, etc.) are complete and
accurate. The delivery is in perfect
and damage-free condition. The
installation, as far as applicable, has
been faultlessly performed, is in
accordance with the configuration
requirements and ready to be taken
over.

To (4): Order Fulfillment Lead Times:
The average actual order cycle
time which is consistently and
reproductively achieved. The process
comprises the following stages:
Respective customer signature or
approval up to order confirmation,
from there to the completion of order
receipt and entry, from there to the
beginning of production and/or issue
of purchase orders, then on to the
shipment-readiness of the order, from
there to product release, and finally to
installation, if necessary.


To (5): Supply Chain Response Time:
Indicates how fast a business can
adjust itself to changes to the market.

To (6): Production Flexibility:
Production flexibility becomes
apparent in two variations:

Upside flexibility: The number of
days necessary in order to ensure
an unplanned, permanent 20 percent
increase in production.
Downside flexibility: The number of
days required in order to react to an
x-percent enduring reduction in
order volume, which takes place 30
days prior to the planned delivery
date without building up stock of
material or raising a contractual
penalty.

To (7): Total SCM Cost:
The sum of all costs incurred by
a business due to the development of
an integrated Supply Chain.
Comprises all Supply Chain related
costs for the Management Information
System (MIS),
427
finances, planning,
stock of material, material
procurement and order management.

To (8): Cost of Goods Sold, COGS:
Direct as well as indirect costs
incurred by a business in order to
manufacture finished goods.
428
Represents the margin as a percentage
of total income.

To (9): Value-Added Productivity:
Calculated as total product sales
minus total material purchases.

To (10): Warranty Cost or Returns
Processing Cost:
The number of return deliveries
within the guarantee period.
Guarantee is an (explicit or implicit)
insurance that a particular event with
reference to a component of a contract
is actually correct or adjusted
properly. Guarantee costs comprise
material and labor costs plus the costs
for the examination of a defect.

To (11): Cash-to-Cash Cycle Time:
The time necessary for a certain
amount of money to flow back into the
business after being spent upon
material procurement. The value
represents one of the main metrics
used to identify how efficient a
business monitors the financial flow
between customers and suppliers.


To (12): Inventory Days of Supply:
The number of days necessary in
order to manufacture and sell goods.
Hence, represents the time necessary
to convert an investment in stock of
inventory into goods sold.

To (13): Asset Turns:
The relationship between annual
sales and total asset value.


Diag. 3-1 served as an illustration
of the relationship between the
Performance Attributes and the Level 1
Metrics. Following on from that, it is
necessary to highlight the association
with the previously represented Supply
Chain competences the customer-
centric SC Capability on the one hand
and the business-related Efficiency on
the other.
429
This correlation, for
example, corresponds to the opinion
held by Geimer and Becker, whereby the
SCOR models measures are grouped
around four main performance attributes:
customer service, flexibility, costs, and
assets. Whilst the first two areas are
customer-orientated, the other two put
internal business priorities into the
foreground.
430

Srie and Wagner go a stage further
and describe the given performance
attributes as universally valid,
applicable and relevant for every Supply
Chain within the framework of a Supply
Chain Scorecard regardless of the
fundamental model. They assume that
although every Supply Chain is unique
and requires a special approach, there
are still several characteristics which
are applicable in the majority of cases.
Because they focus upon differing
aspects of the Supply Chain, they can
basically be assigned to the categories
already named in accordance with the
performance attributes (reliability,
responsiveness, flexibility, costs and
assets).
431

This approach is to be followed in
the further course, whereby both the
performance attributes Reliability and
Responsiveness are sensibly combined
within the performance attribute
Customer service. Bovet and Martha
hold a similar viewpoint whereby as
already more closely explained the
Supply Chains Capability is compared
with Efficiency.
432
In other SCOR model
illustrations, the SC performance
capability is also described as a
customer-orientated component and the
efficiency as a business-related
component.
433

The Level 1 Metrics illustrated in
diag. 3-1 must, in the next stage, be
assigned to Performance Measures,
which are associated with a more
narrowly arranged spectrum of sub-
processes.
434
Of the two hundred or so
Performance Metrics referred to in
SCOR Version 6, this study focuses on
about sixty.
435
The basis for this was the
quantitative survey (KPI Benchmarking
questionnaire)
436
used within the
framework of the empirical examination,
which was developed in conjunction
with an internal business consultancy
project.
437
The influx of experience into
this resulted in the focus upon roughly 60
primary performance metrics, which
were enlisted again for use within the
framework of the empirical examination.
The main intention during this was to
avoid redundancies and enable
concentration upon the most relevant
metrics. At the same time, such an
approach ensured the representative
coverage of the most decisive
influencing factors (cost, quality, time
and productivity).
438

As the performance metrics can be
used to formulate and design measures
for improvement, they may conceivably
be referred to as tools for
Diagnostics.
439
These diagnostic
instruments are, for instance, supposed
to help to diagnose the deviation of the
delivered orders from the original
plan.
440

3.1.1.2 Clarification of the
performance terms
There are significant gaps in the existing
literature as regards the usage of certain
words in reference to the process.
441
In
response to this, a suggestion by Seibt
was adopted and a valid nomenclature
was determined for the further course of
this study.
442
This is constituted
hierarchically as listed below, whereby
Ossola-Harings recommendations were
followed with reference to metrics used
for business management:
443

The two SC competences, performance
capability and effi ciency, each have
four Performance Attributes assigned
to them:
Customer service
Flexibility
Cost
Assets.


The performance attributes represent
aggregated constructions and therefore
do not allow themselves to be directly
measured or calculated.
444
The thirteen Level 1 Metrics:
Delivery performance [to commit
date]
Fill rate
and so on.

The performance metrics
represent so-called relative figures or
ratios, i.e., they relate two (or more)
absolute figures to each other.
445

3.Performance Measures are assigned to
the Level 1 Metrics. Each Level 1
Metric has several performance
measures assigned to it. The
performance measures represent so-
called absolute figures, i.e., they stem
from individual numbers, sums or
differences.
446
4.The collective term >Key
Performance Indicator (KPI)> is
used for the aforementioned terms
which were introduced in Chapter
1.
447
The application of the
performance terms subsumed beneath
these KPIs within the framework of a
SCOR-based quantitative analysis of
the Supply Chain (KPI Benchmarking)
is at the heart of further observation,
the focus of which is mainly upon a
process performance comparison or
more precisely: a comparison of
Supply Chain processes in the sense
of process benchmarking.
448

The exact means by which the
respective performance indicators relate
to each other can be taken from section 3
of the Appendix, whereby the hierarchy
runs from left to right originating from
the performance attributes on the left of
the table, through the performance
metrics, right up to the performance
measures.

3.1.2 Establishment of
hypotheses and SCOR
model groups
The theses to be developed within the
study refer, as a rule, to the correlation
of interval-scaled SCOR model
parameters. The theses may usefully be
divided into three SCOR model groups
in keeping with the central presumption
formulated at the beginning of the
chapter:

Within a SCOR Performance Attribute:
Metrics and associated Performance
Measures are being examined, which
are allocated to a particular
Performance Attribute. For this
purpose, the respective term or
a b b r e v i a t i o n Intra-Performance
Attribute (I-P) will be used.

Between SCOR Performance Attributes,
on one side of the equation :
The focus here is upon metrics and
associated Performance Measures
within one of the two SC
competences, i.e., only one side of the
equation will be observed at a time.
For this purpose, the respective term
or abbreviation Intra-Competence (I-
C) will be used.
449

Between SCOR Performance Attributes,
however on different sides of the
equation:
Metrics and associated Performance
Measures between the two SC
competences, i.e., on both sides of the
equation, will be observed (and with
that inevitably between various
Performance Attributes). For this
purpose, the respective term or
a b b r e v i a t i o n Inter-
Competence/Performance Attribute
(I-CP) will be used.


As a matter of priority, an
argumentative establishment of the three
SCOR model groups will be undertaken.
The theses that will be examined later
will be deduced from those definitions.

3.1.2.1 Intra-Performance Attribute (I-
P)
The associated work theses refer
exclusively to indicators within one
performance attribute, for example
within flexibility or costs. In this case,
the theses must be positively correlated
and synchronous. For example, a high
or low value for one variable means a
simultaneous high or low value for the
other variable. The interdependency
between delivery performance and fill
rate is an example of this.

The circumstances in question
become more apparent by use of an
example from the computer industry,
which shows the connection between
inventory and operating margin. In this
way, a rough estimate of the annual
inventory costs for the PC business can
be reached through the aggregation of
investment cost (10 percent) and the
price erosion (25 percent), which
together represent a total of 35 percent
of the inventory value. A good approach
is to calculate the inventory management
costs for a period of ten days: 10 days
multiplied by 35 percent and divided by
365 days makes 1 percent. This means
that the reduction or increase of 10 days
of inventory (days on stock, DOS)
influences the profitability by one
percent.
450

One of the Level 1 metrics
allocated to the performance attribute
costs is that of total Supply Chain
Management costs, and it is
immediately affected by the process
described above. The inventory
management cost as a percentage of
revenue is subsumed into this metric,
reflecting the aforesaid connection
between inventory and operating margin.

3.1.2.2 Intra-Competence (I-C)
In this case the theses include indicators
belonging to various performance
attributes. The performance attributes,
however, lie on one side of the equation,
i.e., they are without exception either of
a customer-orientated or business
internal nature. Examples of these are
fill rate and response time.

Geimer and Becker assume that the
indicator within a competence (customer
centric vs. business internal) represents
the variety of performance perspectives,
which guarantee the balance between the
various objectives. This balance is
important for the companys overall
success. It would not be purposeful to
shorten order fulfillment lead time, for
example, without taking into
consideration the effect upon production
flexibility.
451

A further example can be found
within the business-related competence.
The Supply-Chain Council deliberately
differentiated between the terms lead
time and cash-to-cash cycle time within
the SCOR model. Lead time precipitates
itself not only in the form of the total
Supply Chain Management cost, but also
in the form of inventory days of supply.
This differentiation between the terms is
relevant for a companys competitive
position and can be made as follows:

T he lead time is associated with a
product or service provided by the
Supply Chain. Lead time is therefore
imposed upon the Supply Chain and
is dependent upon customer
expectations, Supply Chain
innovations, and competitive
pressure.
The cycle time is based directly upon
the Supply Chain processes. The
lowest possible cycle time for a
products Supply Chain is represented
by the sum of all single cycle times,
i.e., the sub-processes cycle times.

The main reason for carrying out an
inventory and incurring the associated
cost lies in the inequality between lead
time and cycle time. If the lead time
demanded by the market is lower than
the respective cycle time, inventory of
stock is required. It is also valid to say
that the larger the inequality, the greater
the required stock level. For this reason,
leading companies are constantly
striving for synchronization of the
operating procedures and efficient
design of the procurement and
production processes with the aim of
reducing the difference.
452

The company Dell
453
has, for
example, reduced the lead times for
customer-specific computers so far that
it possesses a positive cash-to-cash
cycle time.
454
Dell therefore receives
payments from customers even before
the suppliers invoices have to be paid.
However, this must not be taken as proof
that inventory stock is no longer
necessary: it means rather that Dell has
purely reduced its own stock holdings,
and the burden of this has in turn to be
borne by its suppliers.
455

3.1.2.3 Inter-Competence/Performance
Attribute (I-CP)
In this case the work theses refer to
indicators, which belong to various
performance attributes and additionally
lie on differing sides of the equation
(i.e., customer-orientated as well as
business-related). An example here is
the case of fill rate and total SC cost.

The SC competences
performance capability and efficiency
have already been addressed in more
detail elsewhere.
456
The connection
between the two terms can be illustrated
by an example of the fundamental
conflicting objectives: It makes no sense
for a supplier to invest intensively in the
construction of production capacities
and inventory in order to build up a
potential loss of sales in products with
low margins. On the other hand, it could
be thoroughly purposeful to do this in the
case of products with high profit
margin.
457
A high value of the one
variable is linked to a low value of the
other variable, and vice versa.

This connection was already
illustrated in the so-called SC driver/SC
competence approach according to
Hugos. In this approach high production
capacities determine a high Supply
Chain performance capability
(responsiveness), but on the other hand a
simultaneously low level of efficiency.
In opposition to this, low production
capacities determine a high level of
efficiency, but on the other hand a low
level of responsiveness. The following
applies to the respective products: High
stock levels determine a high level of
responsiveness, but lead on the other
hand to low level of efficiency. Contrary
to this, low inventory stocks may
determine a high level of efficiency but
determine on the other hand a
simultaneously low level of
responsiveness.
458
Meyr et al describe
the connection as a trade-off between
customer service and inventory
investments.
459

A further example of this dynamic
is the connection between customer
service and investment in assets, i.e.,
capital expenditures. The cash-to-cash
cycle time depends amongst other things
upon the industry within which the
business finds itself. For example, in the
Food and Beverage industry relatively
short payment and cycle times are
normal. However, a tendency can be
recognized whereby leading companies
have a cash-to-cash cycle time half as
long as that of their competitors.
Alternatively formulated, these
companies receive their payments within
half the time, which creates an obvious
competitive advantage for them, because
they have lower for working capital
expenses.
460
Typically, the associated
performance indicators correspond to
the delivery performance: Companies
showing a high delivery performance
often have fewer customer problems
with regards to wrong or belated
deliveries, incorrect delivery documents
or incorrect invoices. This in turn results
in shorter cash-to-cash cycle times for
the firms in question, because, for
instance, customers have less reason to
defer a payment.
461

There are a number of further
reasons why a higher level of delivery
performance has financial advantages
and connects customer service on the
one hand and costs with investments in
assets on the other. Companies with
shorter lead times and a high degree of
customer service can significantly
increase their operating procedures. By
these means a business may undertake a
strategic adjustment of customer groups
and financial and business objectives. In
addition to this, the development of
better customer relations is made
possible, and this has a direct influence
upon the customer retention rate and the
costs associated with it.
462
Schary and
Skjott-Larsen combine the facts of the
illustrated case as follows:

The objectives of the supply
chain become a difficult
balance. (_) The dominant
purpose is to provide service
to final customers, to deliver
products reliably, as rapidly
and with as much variety as
possible. Service, however,
commits resources and incurs
costs. Supply chain
management must seek to
control assets and cost to
obtain profit as a return on the
assets employed.
463

3.1.2.4 Formulation of hypotheses and
theses model
In this case we are dealing primarily
with bivariate suppositions of
correlation which in the face of
continual variables (level of interval-
scale) can be investigated by means of
correlative procedures with the aid of
the usual Product-Moment Correlation
according to Pearson.
464

The respective theses or hypotheses
contain relationships between variables,
whereby the variables represent SCOR
performance measures. These types of
relationship may be defined more
exactly using several criteria, whereby a
differentiation can be made between
various fundamental instances, as is the
case with deterministic or statistically-
variable relationships.
465
Several of
these relationships are of particular
relevance within the framework of
theses formulation and they are applied
in conjunction with this.

The theses model is built up
hierarchically as already explained, on
the levels Performance Attributes
Level 1 Metrics and Performance
Measures. The theses formulation
follows this hierarchical structure,
whereby the starting point is the lowest
level, i.e., the performance measures.
The respective theses foundations or
model assumptions, on the other hand,
start at the base of the highest level, i.e.,
the performance attributes. The theses
investigation therefore takes place upon
the performance measures level and the
conclusion of model assumption
investigation is carried out by means of
theses aggregation in the form of Meta
theses based upon the performance
attributes.

The allocation of each SCOR
monitoring process to each performance
measure is possible, but has only a
predetermined influence upon the theses
formulation. The reason for this is that a
comparison of the performance measures
allocated to the various monitoring
processes can occasionally make sense.
This may be seen in the performance
measure Percentage of purchase orders
received on time and complete
allocated to the procurement process,
and the performance measure Backorder
value allocated to the delivery process.
The investigation of a potential
connection between these two quantities
is of great interest.

The following illustrations show
the theses model in graphical form, and
differentiate between the derived SCOR
model groups. In this case, the cross-
hatched areas purely represent examples
for the actual SCOR model group.

Diag. 3-2: Supply Chain competence and key
performance indicators as building blocks of a SCOR-
based theses model: Intra-Performance Attribute (I-P)

Diag. 3-3: Supply Chain competence and key
performance indicators as building blocks of a SCOR-
based theses model: Intra-competence (I-C)

Diag. 3-4: Supply Chain competence and key
performance indicators as building blocks of a SCOR-
based theses model: Inter-Competence/Performance
Attribute (I-CP)

In this way, and with regards to the
model group Intra-performance attribute
(I-P), the other three performance
attributes (customer service, costs,
assets) are investigated in addition to the
illustrated Flexibility. This also applies
to the other SCOR model groups and
their associated performance indicators.

Before the work theses due to be
examined are extracted on the basis of
the developed theses model, we must
consider possible variants. As the theses
model to be investigated is concretely
designed around Supply Chain specific
performance indicators, particular
attention must be paid to alternative
approaches for the evaluation of the
Supply Chains performance
potential.
466

3.1.2.5 Variations in approach and
models for the illustration and
measurement of the Supply Chain
performance
Rummler and Brache identify three
fundamental performance dimensions in
their approach to the measurement of
Supply Chain performance. They
differentiate between quality,
productivity and cost-orientated
performance indicators. Furthermore,
they differentiate between three
performance levels: the organizational,
process, and workplace or employee
level.
467
The first level performance
indicators are characterized by the
individual market requirements and
success-determined functions of the
organization. Additionally, the type and
scope of the performance indicators
being observed are orientated upon the
organizational strategy, the organization-
wide objectives, and the organizational
structure.

Neuhuser-Metternich and Witt
define four performance areas and
divide them into time, cost, quality, and
performance-related measures.
468
Sellenheim differentiates five varying
dimensions and uses flexibility and
preparation-orientated indicators, in
addition to cost, quality and time-related
performance indicators.
469
Beischel and
Smith similarly identify five dimensions
critical to success and use cost, quality
and flexibility, as well as service and
resource-related performance
indicators.
470

The aforementioned approaches are
united in their premise that non-monetary
performance dimensions (i.e., quality,
time, flexibility and productivity) are of
evidently higher importance and that
monetary performance dimensions
should only receive marginal
consideration.
471
One reason for this can
be seen in the fact that non-financial
performance indicators can be
accommodated in a process model like
SCOR,
472
because the causes of
deviation in performance are made
apparent and targeted corrective
measures are made possible. If a fall in
quality (i.e., increase in reject rate or
increase in repair quota) is noted,
respective measures can be taken
immediately.
473

However, the use of non-monetary
performance indicators carries with it
inevitable respective disadvantages or
restrictions, e.g., that non-monetary
indicators cannot be aggregated so
easily.
474
Furthermore, an association
between those improvements determined
by non-monetary indicators and the
achieved profit is difficult to establish.
Therefore, it cannot be basically
assumed that the improvements
measured upon the basis of non-
monetary quantities really have an effect
upon financial results. In this way,
seeking a monetary quantification of
falling production cycle times can
become a difficult venture. On the other
hand, the occurrence of a slump in sales
due to falling degree of delivery ability
and the associated effects upon profits
can be easily estimated.
475

It was for this reason that expanded
models or respective approaches were
developed, and these explicitly include
monetary in addition to non-monetary
indicators.
476
Greene and Flentov set
down three performance levels as a
basis for this: The business or factory
level, the functional level, and the work
place level. The first level performance
indicators measure the respective
companys or factorys performance
with regards to the achievement of
critical market and competition-related
success factors. The performance
capability of functionally overlapping
processes is measured on this level. The
functional levels indicators are used in
order to measure the contribution of each
function towards the achievement of the
companys strategic objectives. They
measure how effectively the resources
are used to fulfill the given strategic and
tactical objectives. Finally, the
performance indicators of the third level
measure the production performance at
workplace level. Their main task is the
early highlighting of deviations, so that
corrective actions can be taken at an
early stage.
477

Utzig differentiates four
performance levels: Market level,
corporate level, factory level, and
workplace level. The market level
indicators are to measure the overall
business compared to the competition, in
order to determine the companys
competitive position. The performance
indicators applied here can refer to
quality, service, costs, and market share.
On the corporate level we are dealing
with assessment of the actual revenue
situation, as well as the assessment of
revenue potential. The indicators are for
instance the annual surplus, Return on
Assets (ROA) or Return on Sales
(ROS),
478
and the market share. On the
factory level, financial and non-financial
indicators are applied; for example cost,
productivity and delivery times. On the
lowest level, workplace performance is
assessed and indicators such as stock
levels and cycle times play a supportive
role.
479

Apart from scientific approaches
there are also a number of models from
practical business that contain monetary
as well as non-monetary performance
indicators, as for example the Tableau
de Bord. This mainly integrates
quantitative performance indicators;
qualitative indicators are merely
allocated an inferior importance. The
individual indicators are extracted top-
down from the business strategy in order
to enable an association between the
operational activities and the strategic
business objectives. The performance
indicators contained therein are
orientated towards both the long-term
and the short-term.
480

The J. I. Case approach comprises
a multitude of non-financial and
financial performance indicators, and
assesses not only quantitative but also
qualitative measures (i.e., for the
purpose of estimation of customer
satisfaction).
481
With the Harman
approach, monetary and non-monetary
performance indicators are also
integrated. Qualitative measures are, on
the other hand, not included. The
indicators are extracted top-down from
the critical success factors, whereby a
consistent targeting of all business levels
is sought.
482
The Caterpillar approach
integrates monetary and non-monetary,
as well as hard and soft performance
indicators (for example customer and
employee satisfaction).
483
On the other
hand, the Skandia-Navigator contains a
multitude of non-financial indicators and
thereby integrates quantitative and
qualitative performance indicators.
Apart from internal stakeholders (i.e.,
employees), it also includes external
stakeholders (i.e., customers) in the
concept.
484

T h e Data Envelopment Analysis
provides an ultimate indicator, the so-
called efficiency value. However, it is
still possible to consider several input-
and output-related performance
indicators. In this case the approach is
sufficiently flexible enough to include
the time, adjustment and monitoring
objective and the dimensional, format-
and output-related dimension. However,
the performance data is so strongly
aggregated that it is no longer
transparent enough, especially in the
case of operational areas.
485
The
performance measurement matrix
contains both monetary and non-
monetary, in addition to internally- and
externally-orientated performance
indicators. The approach necessitates
the development of strategy-conformant
figures as well as their level-specific
adjustment.
486

T h e Performance Pyramid
combines monetary and non-monetary as
well as internally- and externally-
orientated performance indicators.
These indicators are extracted top-down
from the business strategy. There is
differentiation between various
performance levels, and highly
aggregated financial information is
prepared for the higher business levels,
in addition to transparent performance
data prepared for the operational
business areas. During this, primarily
quantitative performance indicators are
applied. Qualitative indicators, on the
other hand, are only considered within a
limited scope.
487

Kaplan and Nortons Balanced
Scorecard (BSC), which has already
been addressed
488
uses the categories of
finances, customers, and processes, in
addition to those of innovation, and
growth. The applied performance
indicators refer in this instance to the
dimensions of cost, quality, time and
productivity.
489
The BSC has
increasingly developed itself into a
respective de facto-standard or
reference model for performance
measurement.
490
The Quantum
Performance Measurement Approach
also integrates costs (monetary) in
addition to quality- and time-related
(non-monetary) performance indicators.
The dimensions represented are
therefore cost, quality and time. In
addition to quantitative data, qualitative
performance data is taken into
consideration here. The approach
differentiates between three performance
levels: organizational (more long-term
orientated), process, and employee
levels (set up for more middle- or short-
term).
491

Of the respective approaches or
models represented, only the
Performance Pyramid, Balanced
Scorecard and Quantum Performance
Measurement Approach show a
relatively strong process orientation. As
a process reference model, then, they are
decidedly compatible with the SCOR
model. The other approaches and
models are only weakly or moderately
highlighted in this aspect. In turn, of the
three approaches the Balanced
Scorecard alone shows an individual
perspective for process-related
performance indicators. It is therefore,
as far as the model structure is
concerned, the most closely related to
the concrete model due to be examined,
i.e., a performance indicator-specific
depiction of the SCOR model. It must,
however, be borne in mind that the BSC
in its original condition is not explicitly
directed at Supply Chain processes. The
special requirements to be considered in
order to focus upon Supply Chain
processes have already been discussed
in Chapter 1.
492

As the associated effects
fundamental to the BSC and the SCOR
model are consequently founded upon a
variety of performance indicators, no
applicable examples can be found for
comparison with the association effects
contained within the theses introduced in
the study. The study is exploring new
territory, as it were. Furthermore, it must
be borne in mind that the SCOR model
falls under the above category of a
model that explicitly focuses upon non-
monetary performance indicators. The
restriction inevitably resulting from this
is that financial quantities are not
expressly included.
493
Within the
framework of the questionnaire chosen
for the implementation of the empirical
examination, however, financially-
related data was partially collected, as
for example in the case of revenue or
Return on Assets (ROA). During the
evaluation, this information (if it was
considered worthwhile) was used for
additional discriminatory evaluations in
order to identify whether this would lead
to relevant changes in the respective
results extracted from them. This will be
dealt with more closely later.
494

Although efforts do exist to arrive
at a standardized, SCOR-based Supply
Chain Scorecard (a quasi Reference
SCORCard),
495
these efforts have, up
until now, remained of a project-specific
nature.
496
To date, no empirical
examination of these approaches from a
scientific viewpoint has, in the authors
knowledge, taken place.
497
This point
will be taken up again in connection
with suggestions for further research at
the end of the work.
498

3.2 Derivation of the Central
Work Theses
Building upon the theses model and its
foundations, as discussed above, the
hypotheses to be examined must be
extracted and formulated.
499
Here the
available and applied data was of great
importance and had an immediate effect
upon the derivation of the hypotheses.
The basic variables that were assigned
during this can be taken from the
Appendix: Section 3 of the Appendix is
an overview of the applied performance
indicators and section 4 contains the
exact definitions and calculative
formulas, along with information on each
of the sixty or so performance measures
adopted.

The theses that follow refer directly
to the performance measures or, more
exactly, to a combination of two
performance measures (the bivariate
assumption of correlation). The Meta
theses that are outlined at the beginning
of every paragraph are situated upon a
higher level, namely that of the
performance attributes. It must be borne
in mind that not every single thesis
allocated to a Meta thesis correlates as
strongly with the respective Meta thesis.
It is also necessary to take into
consideration the indicator-specific
differences in performance terms
explained at the end of paragraph 3.1.1.

For this reason, an operational
exploration of the single theses is
essentially more precisely and
immediately possible than in the case of
the Meta theses. Thus, the Meta theses
serve purely as verification upon an
aggregated level, whereas the detailed
evaluation takes place upon the single
theses, and therefore upon the
performance measures level.

3.2.1 Theses of the SCOR
model Groups Intra-
Performance Attribute (I-P)
META THESIS I:

The Performance Measures within
one Performance Attribute conform to
one another (Performance Measures
Consistency Criteria).

3.2.1.1 Performance Attribute
Customer Service (reliability and
responsiveness)
500
a. Delivery performance and fill rate:
Thesis 1: A high on-time
delivery percentage inbound and
outbound leads to a high customer
retention rate.

b. Delivery performance and perfect
order fulfillment:
Thesis 2: A high perfect orders
rate leads to a high customer
retention rate.

Thesis 3: A low on-time
delivery percentage inbound and
outbound correlates with a low
perfect orders rate.

c.Delivery performance and order
fulfillment lead time:
Thesis 4: A high average
manufacturing cycle time correlates
with a low on-time delivery
percentage inbound and outbound.

d. Fill rate and perfect order fulfillment:
Thesis 5: If a high percentage of
purchased orders received on time
and complete is present, there is
simultaneously also a high perfect
orders rate.

e.Fill rate and order fulfillment lead
time:
Thesis 6: A high average MPS
plant delivery performance work
orders leads to a short average
manufacturing cycle time.


f. Perfect order fulfillment and order
fulfillment lead time:
Thesis 7: A short average
purchase requisition to delivery
cycle time determines a high lines
on-time fill rate.


3.2.1.2 Performance Attribute
Flexibility
501
a. Supply chain response time and
production flexibility:
Thesis 8: A high inventory
stockout percentage leads to a high
backorders value.


3.2.1.3 Performance Attribute Cost
502
a. Total supply chain cost and cost of
goods sold:
Thesis 9: High purchasing cost
as a percentage of revenue correlates
with high inventory management cost
as a percentage of revenue.

b. Total supply chain cost and value
added productivity:
Thesis 10: High inventory
management costs as a percentage of
revenue accompany a high inventory
management cost per FTE.

Thesis 11: High transportation
cost as a percentage of revenue
correlates with high transportation
cost per FTE.

c. Total supply chain cost and warranty
cost or returns processing cost:
Thesis 12: A high
transportation cost as a percentage
of revenue correlates with a low
amount of damaged shipments.

d. Cost of goods sold and value added
productivity:
Thesis 13: High purchasing cost
as a percentage of revenue
accompanies a high purchasing cost
per FTE.

e. Value added productivity and
warranty cost or returns processing
cost:
Thesis 14: High customer
service cost per FTE correlates with
a low amount of customer disputes.

Thesis 15: High transportation
cost per FTE correlates with a low
amount of damaged shipments.


3.2.1.4 Performance Attribute Assets
503
a. Cash-to-cash cycle time and inventory
days of supply:
Thesis 16: A high inactive
inventory percentage accompanies a
low average inventory turnover.

b. Cash-to-cash cycle time and asset
turns:
Thesis 17: A high inactive
inventory percentage accompanies a
h i g h average warehousing space
utilization.

c. Inventory days of supply and asset
turns:
Thesis 18: A high average
inventory turnover correlates with a
l o w average warehousing space
utilization.


3.2.2 Theses of the SCOR
model Groups Intra-
Competence (I-C)
3.2.2.1 Customer-facing indicators
504
Customer service (reliability and
responsiveness) vs. flexibility:

META THESIS II:

A high (low) customer service
correlates with a high (low) flexibility.

a. Delivery performance and supply
chain response time:
Thesis 19: A high on-time
delivery percentage inbound and
outbound accompanies a low
backorders value.

b. Delivery performance and production
flexibility:
Thesis 20: A low inventory
stockout percentage correlates with
a high on-time delivery percentage
inbound and outbound.

c. Fill rate and supply chain response
time:
Thesis 21: A high percentage of
purchased orders received on time
and complete contributes to a low
backorders value.

Thesis 22:A high percentage of
purchased lines received on time and
complete contributes to a low
backorders value.


d. Fill rate and production flexibility:
Thesis 23: A high inventory
stockout percentage correlates with a
l o w average MPS plant delivery
performance work orders.

e. Perfect order fulfillment and supply
chain response time:
Thesis 24: A high lines on-time
fill rate contributes to a low
backorders value.

f. Perfect order fulfillment and
production flexibility:
Thesis 25: A low inventory
stockout percentage correlates with a
high perfect orders rate.

Thesis 26: A low inventory
stockout percentage contributes to a
high lines on-time fill rate.

g. Order fulfillment lead time and supply
chain response time:
Thesis 27: A short average
manufacturing cycle time contributes
to a low backorders value.

h. Order fulfillment lead time and
production flexibility:
Thesis 28: A high inventory
stockout percentage correlates with a
hi gh average manufacturing cycle
time.


3.2.2.2 Internal-facing indicators
505
Cost vs. assets:

META THESIS III:

High (low) costs correlate with
high (low) asset investment.

a. Total SCM cost and cash-to-cash
cycle time:
Thesis 29: High inventory
management cost as a percentage of
revenue correlates with a high
average received finished goods
turnaround time.

Thesis 30: High inventory
obsolescence cost as a percentage of
revenue accompanies a high inactive
inventory percentage.

b. Total SCM cost and inventory days of
supply:
Thesis 31: High inventory
obsolescence cost as a percentage of
revenue accompanies a low average
inventory turnover.


c. Total SCM cost and asset turns:
Thesis 32: High inventory
management cost per customer order
correlates with a low average
warehousing space utilization.

d. Value added productivity and cash-to-
cash cycle time:
Thesis 33: High inventory
management cost per FTE is found in
conjunction with a high average
received finished goods turnaround
time.

e. Value added productivity and
inventory days of supply:
Thesis 34: High inventory
management cost per FTE is found in
conjunction with a low average
inventory turnover.

f. Value added productivity and asset
turns:
Thesis 35: A high average
throughput per FTE correlates with a
high average plant capacity utilization
for finished products.

Thesis 36: High inventory
management costs per FTE
accompany a low average
warehousing space utilization.

g. Warranty cost or return processing
cost and cash-to-cash cycle time:
Not applicable.
506

h. Warranty cost or return processing
cost and inventory days of supply:
Thesis 37: A low average order-
to-shipment lead time correlates with
a low amount of customer disputes.

i. Warranty cost or return processing
cost and asset turns:
Not applicable.
507


3.2.3 Theses of the SCOR
model Group?Inter-
Competence/Performance
Indicator (I-CP)
3.2.3.1 Customer Service (reliability
and responsiveness) vs. cost
508
META THESIS IV:

A high (low) customer service
correlates with high (low) costs.

a. Delivery performance and total SCM
cost:
Thesis 38: High inventory
management costs as a percentage of
revenue correlate with a low
backorders value.

b. Delivery performance and cost of
goods sold:
Thesis 39: High customer
service cost as a percentage of
revenue accompanies a high on-time
delivery percentage inbound and
outbound.

c. Delivery performance and value
added productivity:
Thesis 40: High customer
service cost per FTE correlates with
a high on-time delivery percentage
inbound and outbound.

d. Delivery performance and warranty
cost or returns processing cost:
Thesis 41: A low number of
customer disputes accompanies a high
customer retention rate.

e. Fill rate and total SCM cost:
Thesis 42: A high cycle count
accuracy percentage correlates with a
high inventory management cost as a
percentage of inventory value.

f. Fill rate and cost of goods sold:
Thesis 43: A high percentage of
purchased orders received on time
and complete corresponds to a high
purchasing cost as a percentage of
revenue.

g. Fill rate and value added
productivity:
Thesis 44: A high percentage of
purchased orders received on time
and complete, accompanies a high
purchasing cost per FTE.

Thesis 45: A high manufacturing
cost per FTE correlates with a high
average MPS plant delivery
performance work orders.

h. Fill rate and warranty cost or returns
processing cost:
Thesis 46: A high percentage of
purchased orders received on time
and complete correlates with a low
amount of damaged shipments.

Thesis 47: A high average MPS
plant delivery performance
accompanies a low amount of
customer disputes.


i. Perfect order fulfillment and total
SCM cost:
Thesis 48: High inventory
management costs per customer order
correlate with a high perfect orders
rate.

Thesis 49: A high inventory
management cost per customer order
accompanies a high lines on-time fill
rate.

j. Perfect order fulfillment and cost of
goods sold:
Thesis 50: A high customer
service cost as a percentage of
revenue correlates with a high perfect
orders rate.

k. Perfect order fulfillment and value
added productivity:
Thesis 51: A high customer
service cost per FTE contributes to a
high lines on-time fill rate.

l. Perfect order fulfillment and warranty
cost or returns processing cost:
Thesis 52: A low perfect orders
rate correlates with a high amount of
customer disputes.

m. Order fulfillment lead time and total
SCM cost:
Thesis 53: A low average
purchase requisition to delivery cycle
time accompanies a high inventory
management cost as a percentage of
revenue.

n. Order fulfillment lead time and cost of
goods sold:
Thesis 54: A high average
purchase requisition to delivery cycle
time correlates with a low purchasing
cost per purchase order.

o. Order fulfillment lead time and value
added productivity:
Thesis 55: A high purchasing
cost per FTE correlates with a high
average purchase requisition to
delivery cycle time.

Thesis 56: A high manufacturing
cost per FTE stands opposite to a low
average manufacturing cycle time.

p. Order fulfillment lead time and
warranty cost or returns processing
cost:
Thesis 57: A low average
purchase requisition to delivery cycle
time accompanies a low amount of
customer disputes.


3.2.3.2 Flexibility vs. cost
509
META THESIS V:

A high (low) Supply Chain-
flexibility correlates with high (low)
costs.

a. Supply chain response time and total
SCM cost:
Thesis 58: A high inventory
management cost as a percentage of
inventory value accompanies a low
backorders value.

b. Supply chain response time and cost
of goods sold:
Thesis 59: A high manufacturing
cost as a percentage of revenue
correlates with a low backorders
value.

c. Supply chain response time and value
added productivity:
Thesis 60: Low customer
service costs per FTE take place in
conjunction with a high backorders
value.

d. Supply chain response time and
warranty cost or returns processing
cost:
Thesis 61: A low backorders
value correlates with a low amount of
customer disputes.

e. Production flexibility and total SCM
cost:
Thesis 62: A high inventory
stockout percentage correlates with a
high inventory obsolescence cost as a
percentage of revenue.

f. Production flexibility and cost of
goods sold:
Thesis 63: A low inventory
stockout percentage accompanies a
high manufacturing cost as a
percentage of revenue.

g. Production flexibility and value added
productivity:
Thesis 64: A high manufacturing
cost per FTE correlates with a low
inventory stockout percentage.

Thesis 65: A high customer
service cost per FTE takes place in
conjunction with a low inventory
stockout percentage.


3.2.3.3 Customer Service (reliability
and responsiveness) vs. assets
510
META THESIS VI:

A high (low) customer service
correlates to high (low) assets.

a. Delivery performance and cash-to-
cash cycle time:
Thesis 66: A high on-time
delivery percentage inbound and
outbound correlates with a low
inactive inventory percentage.

b. Delivery performance and inventory
days of supply:
Thesis 67: A high average
inventory turnover is simultaneous to
a low backorders value.

Thesis 68: A low average order-
to-shipment lead time accompanies a
high on-time delivery percentage
inbound and outbound.

c. Delivery performance and asset turns:
Not applicable.
511

d. Fill rate and cash-to-cash cycle time:
Thesis 69: A high cycle count
accuracy percentage correlates with a
low inactive inventory percentage.

e. Fill rate and inventory days of supply:
Thesis 70: A high percentage of
purchased lines received on time and
complete accompanies a low average
order-to-shipment lead time.

f. Fill rate and asset turns:
Not applicable.
512

g. Perfect order fulfillment and cash-to-
cash cycle time:
Thesis 71: A high inactive
inventory percentage takes place
mutually with a high lines on-time fill
rate.

h. Perfect order fulfillment and inventory
days of supply:
Thesis 72: A high average
order-to-shipment lead time
correlates with a high lines on-time
fill rate.

i. Perfect order fulfillment and asset
turns:
Not applicable.
513


j. Order fulfillment lead time and cash-
to-cash cycle time:
Thesis 73: A high amount of
transactions processed via web/EDI
accompanies a low average received
finished goods turnaround time.

k. Order fulfillment lead time and
inventory days of supply:
Thesis 74: A high percentage of
sales via web/EDI correlates with a
low average order-to-shipment lead
time.

l. Order fulfillment lead time and asset
turns.
Not applicable.
514


3.2.3.4 Flexibility vs. assets
515
META THESIS VII:

A high (low) flexibility correlates
with high (low) assets.

a. Supply chain response time and cash-
to-cash cycle time:
Thesis 75: A low average
received finished goods turnaround
time correlates with a low backorders
value.

b. Supply chain response time and
inventory days of supply:
Thesis 76: A high average
inventory turnover occurs
simultaneously with a low backorders
value.

c. Supply chain response time and asset
turns:
Not applicable.
516

d. Production flexibility and cash-to-
cash cycle time:
Thesis 77: A low inventory
stockout percentage correlates with a
low average received finished goods
turnaround time.

e. Production flexibility and inventory
days of supply:
Thesis 78: A low inventory
stockout percentage accompanies a
low average order-to-shipment lead
time.

Thesis 79: A high inventory
stockout percentage accompanies a
low average inventory turnover.

f. Production flexibility and asset turns:
Thesis 80: A low inventory
stockout percentage correlates with a
high average operating-equipment
efficiency rate OEE for finished
products.


3.3 Planning and Design of
the Empirical Examination
3.3.1 Sources of information
(types of method for
information retrieval)
There are two types of information
retrieval: primary and secondary
research. Primary research, also
referred to as field research, is the case
if one conducts ones own investigations
in order to receive information. In this
case one is therefore working with data
unknown prior to commencing ones
own research.
517

Secondary research occurs when,
during the acquisition of data, material
already available, which was collected
by other institutions for other purposes,
is used. In this case, the object of the
secondary research is the collection and
evaluation of data that was identified
and retrieved at an earlier point in time
and for other purposes.
518
Data is
therefore submitted to a second or third
evaluation, which is why we speak of
secondary research as opposed to
primary research, i.e., the first survey of
data referring to a concretely described
objective. Since the renewed processing
of the data can take place mainly at a
desk or in an office, the term desk
research
519
may also be found to
describe this procedure.

This study employed a two-stage
approach with regards to the type of
information retrieved. In the first stage
during the primary research, data was
collected within industrial companies. In
the second stage this data was used as
secondary research for a purpose other
than the original, within the framework
of the examination carried out.

3.3.2 Data collection and
sampling methods
The relevance of any observational or
informative source in a primary survey
is governed above all else by nature of
the information required. During the
course of a survey the range of elements
used to reach specific conclusions is
described as the total mass or universe.
A full survey (or total survey) is one in
which every individual element is
examined for characteristics of interest.
In most cases, however, such a total
survey proves to be practically
impossible within a large scope of
population, often for financial, time or
organizational reasons. For reasons of
research economy, the examination is
limited to a part of the population, the
so-called partial mass or sample.
520

The selection procedures or spot
check techniques used today may be
judged according to two criteria which
partially overlap each other: the result
validity or obligation, and the
application of selection criteria:
521

1. Result validity or obligation:
In accordance with the validity of the
results, a differentiation can be made
between those procedures that lead to
representative results and those that
do not. Representative procedures can
be further divided into simple and
complex random sampling.
522
2. Application of selection criteria:
The selection criteria to be applied are
then re-classified as random sampling
and non-probability sampling. Those
selection procedures considered as
non-probability sampling include the
accidental sampling or sampling of
available subjects on the one side,
and quota sampling, sampling of
typical cases, snowball sampling and
quota sampling on the other side. In
those cases, subjective decisions are
required at some phase of the
selection.
523

A similar division can be found in
the work of Hammann and Erichson,
who differentiate between random
sampling and non-probability
sampling.
524
Therefore, whilst random
sampling is based upon random
selection mechanisms, the procedure of
purposive sampling comprises a
selected sub-set. The selection takes
place in a targeted and considered way
and according to factually relevant
characteristics.
525

Sampling of typical cases is
especially suitable for
examinations that test
hypotheses. The premise of
this method lies in its
restriction of the analysis to a
relatively low number of
population elements, which
are considered to be
characteristic or especially
typical. Each individually
selected case should therefore
represent a larger number.
526

As this study is concerned with the
examination of the SCOR models
developed depiction, the selection
criteria for typical data orientated
themselves upon the SCOR-specific
characteristics of the companies found
within the data pool. The SCOR models
illustration reflected in the theses model
also covers all SCOR process areas
(chevrons). For this reason, all
companies whose data were actually
present in all SCOR processes and
complete were selected for the purpose
of secondary research. A sample size of
73 companies resulted from this. The
reason for the failure of some companies
to give information regarding individual
SCOR processes can be traced primarily
in their Supply Chain strategy. In this
way, companies that have, for instance,
displaced their production (Outsourcing)
could inevitably not make any statements
on the SCOR process Make. The same
principle applies to the other SCOR
process areas.
527

Particular attention was also paid
to seeking the maximum data available,
with the minimum of missing data. To
this end, sets of data were omitted from
the selection when a principal
declaration to all the SCOR process
areas had been given, but where partly
incomplete information was present
within one or more areas. By these
means, a distortion of the results due to a
fluctuating sample size and associated
sample consistency could be avoided,
and the set of data could be monitored as
exactly as possible. This will be more
closely dealt with in paragraph 3.3.5.

3.3.3 Survey types
When conducting primary research
surveys, observations and experiments
are considered possible methods of data
collection. The most commonly used
method in this respect is that of the
survey. Surveys involve the subject
contributing either factual information or
an expressed opinion (judgment).
Depending upon the type of approach it
is possible to differentiate between an
unsystematic (improper) and a
systematic survey.
528
Hammann and
Erichson use the following
differentiation between the types of
survey:
529

1. Written survey
2. Verbal survey: Personal interview,
telephone survey
3. Electronic survey, either as an online
or offline survey.

Often, the survey is carried out with
the aid of a questionnaire. In this case,
the questions are posed in a standardized
form, and answered accordingly. The
persons in question therefore receive
survey stimuli via the questions they are
given, and provide their own
information as input to the
questionnaire.
530

An electronic survey (or
precisely, an online survey)
was assigned in the case of the
primary research. This, in
addition to the data applied
within the framework of the
work submitted, formed the
basis for the secondary
research.
531

Data retrieval for primary
examination purposes took place in the
period between the middle of 2001 until
the end of 2003. In total, 170 companies
were included in the survey. The
answers to the questions were divided in
accordance with the SCOR main
processes (chevrons). The responsibility
for the provision of the answers lay with
the managers of the respective process
areas. For instance, the procurement
manager was responsible for the
questionnaire block Source
(purchasing).
532
The answers to finance-
related questions were the responsibility
of the financial manager or Chief
Financial Officer (CFO), who in most
cases also acted as the sponsor of the
company surveyed.
533
This, of course,
does not exclude the fact that further
levels within the hierarchy were
included into the examination during
data collection at various points.

3.3.4 Design of the applied
questionnaire
The issue of the questionnaires
construction plays an important role in
determining the success of a survey,
particularly in the arrangement and
sequence of the questions. Over time, a
number of basic rules have been
developed for the creation of
questionnaires, which can now be
considered as binding. Four phases, and
consequently four groups of questions,
are differentiated:
534

1. Introductory phase (contact questions)
2. Information retrieval phase
3. Monitoring phase (control questions)
4. Personal or organizational
information.

In the case of each type of question,
a differentiation can be made between
closed questions and alternative
questions. In turn, closed questions can
be subdivided by looking at the radius
within which the categories are
determined by the questionnaire, and the
extent to which these categories are
actually revealed to the person being
interviewed.
535
Apart from this, attention
must also be paid to the external
structure of the questionnaire.
536

Alternative questioning, scale
questioning, and catalogue
questioning were assigned in
the primary survey, which
served to collect the data used
within the study. The build-up
followed the four phases
mentioned above. The
structure of the survey took
place in the form of an online
questionnaire (KPI
Benchmarking
Questionnaire).
537

The primary research questionnaire
was developed within the framework of
an internal project by the business
consultancy BearingPoint (formerly
KPMG Consulting),
538
in conjunction
with a business consultancy specializing
in the design of questionnaire-based
surveys, and completed by the beginning
of 2001. At this time, SCOR Version 4
was available. The changes to this
version through Version 5 up to Version
6 (which formed the basis for the study)
did not, however, influence the
extrication of the theses model. This is
because the model structure of this time
already represented the structure due to
be operationalized and analyzed in the
relevant parts of the study.
539

3.3.5 Practical examples for
analysis
Companies included in the study were
drawn from various regions or countries,
and also from various industrial groups.
This was done in order to avoid a weak
degree of generalization in the results,
and to make them as universally valid
and industry-independent as possible.
This follows a fundamental
benchmarking idea, namely to apply best
practices for optimization of individual
processes, as well as the industry-
spanning definition of the Supply
Chains capability.

The sample size orientates itself, as
described, upon the data retrieved as
part of the primary research. The
selection of practical examples took
place upon the basis of available
empirical data material using typical
cases.
540
Consequently, the results of
more than seventy actual companies
were enlisted as examples and the
respective items of data were processed.
In this case, an ideal representation
could not be reached.
541
Nevertheless, it
is assumed that the results obtained via
the random sampling characteristics
which are to be more closely explained
in later sections can be taken as an
empirical and scientifically strong
declaration. In this context, it is also
noted that empirical works with large
sample sizes and with a variety of
criteria, which have the SCOR model as
their topic, are still rare.

A differentiation according to
regional distribution and industry-
affiliation leads to the following results
in the study:

The companies have their locations
in the following respective regions or
countries and are distributed as
follows:
542

North America (USA and Canada):
75.3 percent
Europe (France, Germany,
Hungary, Italy, Turkey and the UK):
16.5 percent
Asia (India, Indonesia and
Singapore): 8.2 percent.

The companies cover the industrial
sector and comprise the following
specific industries or industrial
groups:
543

Aerospace and Defense
Agriculture and Biotechnology
Apparel
Automotive
Biotechnology
Chemicals and Pharmaceuticals
Computers and Consumer
Electronics
Consumer Packaged Goods, CPG
Electronic equipment
Household appliances
Machinery and Equipment
Metal Products
Office and Printing Machines
Rubber and Plastic Products
Telecommunications
Retail and Distribution.

The above-mentioned distribution
refers to the 73 selected companies, but
also applies to the primary surveys data
pool. The companies must remain
anonymous on the grounds of client
protection.

A study of company distribution on
the basis of revenue and total employees
leads to the following results, attained
using the German Commercial Codes
(Handelsgesetzbuch, HGB) guidelines
for the measurement of companies
size:
544

Small companies: 2 percent
Middle-sized companies: 37.5
percent
Large companies: 60.5 percent.

With regards to their business
success, the companies under
observation distribute themselves as
follows, whereby Return on Assets
(ROA)
545
is the measure for
judgment:
546

ROA negative: 9.6 percent of the
companies
ROA between 0 and 10 percent: 63
percent of the companies
ROA over 10 percent: 27.4 percent
of the companies.

Of the 73 companies observed, by
the end of 2006 seven no longer existed
in the same form in which they found
themselves during the survey period.
Four of them had been taken over by
other companies or merged into new
companies. Three were no longer
present on the market, or no information
could be obtained as to their
whereabouts. Of those three companies
none had shown a negative ROA during
the period of the survey.
547

The resulting variety in the data
with respect to industry-affiliation
represents the fundamental principle
upon which the SCOR model is based. It
reminds us that it is intended to be an
industry-independent business process
reference model.
548
This variation
inevitably conceals certain
disadvantages. Under normal
circumstances generalized statements
regarding the illustrated models
universal suitability (or more exactly in
this case: the SCOR models developed
depiction) are particularly targeted
during such sampling. As a result, less
emphasis is placed upon sub-group
specific statements (whereby for
example in the sense of a clustering, the
examined sample size had to appear
critical for the latter intention).
549
The
data appeared to permit an exploratory
approach towards this objective despite
the immanent sampling restrictions.
550

A process of differentiation
according to varying types of strategy or,
in the present case, Supply Chain
strategy types (e.g., mass
customization)
551
was not possible here,
since the data required in order to
enable such a differentiation was not
acquired within the field research. In
turn, the primary research did not focus
upon these data elements, because the
SCOR model in the form observed here
(i.e., on SCOR levels 1 to 3) does not
provide for such a differentiation.
552
Those differences in this form that
address the issue of distribution
according to industry affiliation may be
found from the fourth level onwards
(i.e., upon a project-specific
granularity).
553

In turn, the accompanying
heterogeneity of the set of data conceals,
in the variables resulting from the
industry-independent observation
represented above, the risk of unusual
effects which may influence results. As
far as the extent of this risk is concerned,
closer quantification is not possible due
to the above-mentioned lack of relevant
data. However, it must be pointed out in
this context that the focal point of
analysis should, in the first instance, be
the illustrated models fundamental
capacity, and not those unusual effects
which are difficult to determine.
554

Apart from these issues, as part of
the data evaluation within the empirical
study and in addition to the parameters
for revenue and number of employees
(see above), a companys success in the
form of Return on Assets (ROA) was
differentiated for test purposes using the
aforementioned classification. This was
done in order to intercept heterogeneity
within the set of data.
555
When this led to
an incremental accumulation of
knowledge it is noted in the results. If no
further declaration is made in the course
of the study, no additional conclusions
could be reached via this discriminating
observation.

3.4 Execution of the
Empirical Examination
3.4.1 Applied method for the
data survey?(primary
research)
The business consultancy BearingPoint
(formerly KPMG Consulting)
556
implemented the SCOR model as an
immanent component of the methods
applied for analysis and Supply Chain
optimization. The methods used for
Supply Chain transformation and the
tools for that purpose are expressly
adapted and tuned to the SCOR model.
The company did, however, modify and
enhance the SCOR model slightly. The
most significant differences are as
follows:

1. The delivery process (Deliver) was
split into two sub-processes: a
storage process (Store) and a
transport process (Transport).
According to BearingPoint, the
logistical functions can be more
clearly and effectively represented in
this manner.
2. The sales process (Sell) was
introduced within the delivery
process. The reason given for this
step was the need to accommodate the
increasing importance of the
connection between Supply and
Demand Management.

3. New Product Development was
added. BearingPoint states that this is
because, although the process was not
a part of the present SCOR model, it
will become all the more important
for the business success in the future,
for example in connection with core
competences and the constantly
increasing importance of Outsourcing.
4. The planning process was integrated
into the other above-mentioned
processes and therefore is not
explicitly apparent. The consultancy
explains that this is so the planning
processes functions appear
throughout the Supply Chain.

One method developed by
BearingPoint for Supply Chain analysis
is represented by a questionnaire based
upon the SCOR model.
557
Here, the
focal point is the Key Performance
Indicator (KPI) which has already been
introduced, and which is supposed to be
compared to the values of other
companies (Benchmarking). In this case,
the survey is a quantitatively-orientated
one (KPI Benchmarking questionnaire).
According to BearingPoint, the aim of
this method is the comprehensive
analysis, representation, and comparison
of firms Supply Chains with each other
within a relatively short period. As an
additional advantage, the consultancy
claims that this procedure also promotes
the build-up and transfer of
knowledge.
558

3.4.1.1 Course of the examination
The planning and preparation of the
examination was done jointly by the
customer and the business consultancy.
The individual stages were as
follows:
559

1. Preparation:
Customer:

Identification of the companys
employees taking part in the
examination and filling out the
questionnaire
Identification of an (executive)
sponsor to ensure a high return
quota.
560

BearingPoint:

Granting access rights for the online
questionnaire completion
Support during data collection


2. Execution:
Customer:

Completion of the questionnaire
561

BearingPoint:

Support during data collection.

3. Analysis:
Customer:

Answers to further questions and
availability of further information
material, if required.

BearingPoint:

Evaluation of the collected data
562
Compilation of action points for
Supply Chains improvement.

4. Results:
Customer:

Validation of the results
Validation of the action points.

BearingPoint:

Presentation of the results
Presentation of the suggested action
points.


3.4.1.2 Examination results
The result report contained the
aggregated results of collected data
throughout all the surveys participants.
The submitted results comprised
individual reports of performance
comparison supported by graphics.
Potential improvements were also
contained within it. In addition to this,
the results could be aggregated in a
SCORcard format based upon the SCOR
processes.
563

The result report included a
combination of graphical forms of
representation; for example, bar charts
for the illustration of comparison group
averages and quartile charts for
standardization of results compared to
the average value of a comparison
group.
564
From these it was possible to
build up a detailed view for every
SCOR process, originating from the
overall view. To take this line of
analysis further, the respective
performance measures behind these
results could be viewed in detail. As
this also applied to the diagnosis level,
suggestions for improvement there were
also contained in the report.
565

3.4.2 Evaluation of the
results of the empirical
examination (secondary
research)
This study evaluated the results of the
empirical survey. This process must be
differentiated from that of the survey,
which the BearingPoint consultancy used
to handle their type of field research, as
explored in the previous section. In this
study, the results collected were used
more in the form of secondary research
(desk research).

3.4.2.1 Evaluation of data
It is the general task of data evaluation to
sort, investigate and analyze the
surveyed data, and to condense the data
into clearly visible proportions, in order
that decisions can be reached. Data
evaluation is therefore, ultimately, about
arriving at assertive and informative
measurements so that immanent data
correlations can be recognized.
566

The findings (or the diagnosis part
of the study) are orientated around the
theses outlined previously and are
clearly and visibly arranged in
accordance with them. Such an approach
is in line with the established guidelines
for empirical research.
567
In this sense,
the data present was evaluated in order
to investigate the connection between the
individual variables on an empirical
basis and in accordance with the theses.
Interpretations are thereby restricted
exclusively to the statistical durability of
the theses. Estimates or concrete
recommendations for action do not play
a role as far as the findings part of the
study is concerned. On the contrary, the
respective conclusions are extracted
during the later parts of the work.
568

Originating from the data collected
in the survey phase, which has been
checked for completeness, the evaluation
of the data has four stages:
569

1. Data preparation
2. Data processing
3. Interpretation
4. Report and presentation of the results.

3.4.2.2 Methodology of evaluation for
the single hypotheses
For the purpose of data preparation, data
processing, and result presentation, an
application program by the corporation
SPSS with the same name SPSS
(abbreviation for Statistical Product and
Service Solutions, formerly Statistical
Package for Social Sciences)
570
was
applied in this study.
571
During this
process, the data available to the author
was transferred from an Excel file into
the evaluation program. Based upon this,
the following statistical values were
investigated:
572

Arithmetic Mean:
573
A measure of location
574
in
conjunction with metrical (i.e., at
least interval-scaled) data. This is
often also described as measure of
central tendency, which is (strictly
speaking) incorrect due to the
existence of other central measures
(such as a geometrical or harmonic
center). It is calculated as the sum
of the individual values of the data
package, divided by the number of
data elements
Range:
The span in variation represents a
diffused measure. It is calculated as
the difference between the highest
value (Maximum) and the lowest
(Minimum) of a data package.
Standard Deviation:
The standard deviation is
calculated as the root of the
variance of a data package. As with
the variance, a distinction must be
reached between the standard
deviation, which characterizes the
given data (empirical standard
deviation), and that which is
calculated from sample data as an
estimated value for the population.
Type I Error:
The erroneous declination of a null
hypothesis
575
is described as a so-
called Type I Error.
576
It reflects
the risk of declining a neutral
hypothesis purely upon the grounds
of the randomness of the respective
sample, therefore also of assuming
a connection or difference that de
facto does not exist. A value of
P(a) = 0.05 stands for example for
a respective Type I Error or error
margin of 5 percent.
577
Correlation Coefficient:
Correlative measures emphasize
the strength of the correlation
between two variables. In this case,
if correlations between these and
further variables are taken into
consideration, one speaks of partial
correlation.

Measures for the strength of the
correlation are described, as a rule, as
correlation coefficients. Correlation
coefficients can often take on values of a
minimum of 1 and a maximum of +1. In
this instance 1 indicates a perfect
negative and +1 a perfect positive
correlation. The choice of correlation
coefficients is dependent upon the
standard of measurement of the
variables. Often in the case of two
metric characteristics, the so-called
Product-Moment Correlation (PM
Correlation) and the corresponding
Bravais-Pearsons correlation
coefficient (BPC) are used, which in
statistics is usually abbreviated by using
the letter R.

The BPC is calculated as the
covariance
578
of both variables of
interest, divided by the product of the
standard deviation of both the variables.
It can adopt values between +1 (perfect
positive correlation) and 1 (perfect
negative correlation). A value of 0
indicates the absence of a (linear)
correlation.
579
Those methodical
influences that may interfere with the
BPC, on account of the absence of the
linearity of variable relationships (such
as polynomial progression), and the
respective safety insurance measures
within the work submitted, will be dealt
with more closely in the following
sections.

In the case of the examined theses,
we are dealing with bivariate
correlation assumptions based upon
pairs of respective characteristics or
continual variables (interval-scaled) in
the shape of SCOR performance
measures. Therefore, the BPC was
chosen to be the correlation coefficient.

The minimum requirement for a
significant conclusion was
fundamentally established as P(a) < 0.05
within the usual (business) scientific and
statistical criteria.
580
In conjunction with
the statistical significance, it was
presumed that the result of a hypotheses
test could be considered significant if
the assumption is correct that a
theoretically assumed correlation or
difference between the characteristics
found within the data is not explained
purely by the _blurring_ associated with
the sampling approach (typical
cases).
581

In addition to the respective
inferential statistic or conclusive data
analysis,
582
it is possible to achieve an
illustration of the acquired knowledge
for exemplary findings provided
unambiguous systematic coupling of the
variables is present by means of
additional and descriptive graphics.
583
In concrete terms, and for the
representation of the usual measurement
of central tendency, the use of block
diagrams was deemed the best option.
584
During this process and in accordance
with each diagnostic situation special
attention was paid to the issue of
whether companies deviate from a given
basic tendency, dependent upon factors
such as turnover and employee numbers,
or whether they _cover_ these extremely
well. This was done in order to enable
the derivation of later attempts at
clarification.
585

Each correlation-immanent null
hypothesis refers to _parallel running,_
(i.e., no correlation) of the bivariate
number of measures involved in the
present case. Because missing data
played no role within the present case,
significance-modulating effects
following a variety of sample sizes
require no further consideration.
586
The
illustrated statistical values are enlisted
in order to confirm (verify) or reject
(falsify) the established theses and
arrive at an interpretation resulting from
this. The ultimate purpose of this
process is the accommodation of
appropriate answers to the questions
fundamental to the examination.
587

The above indication of the level of
significance applied to the inferential
statistics must not be overlook the fact
that this approach can by all means
accommodate the acceptance of model
images which taken individually
contain no significant effects, but do
collectively contain a homogenous
pattern. In view of this fact, this
approach is also used during the
following explanation of the first stage
theses results (classic inferential
statistic, in this case: correlation
analysis) to separate totally unsystematic
results (i.e., roughly in the area of the
absolute correlation level 0 to 0.1, in
order to demarcate partially tendencial
or _strictly_ substantial and therefore
statistically significant results). The
conventional respective dichotomy or
differentiation between significant and
non-significant will be closely observed
during the following.

This binary examination represents
the secured fundamental and statistically
inferential evaluation criteria for the
examined theses. It does, however,
represent a momentous difference as to
whether:

A thesis is correlatively confirmed
in a significant way,
A postulated bivariate correlation
is to be highlighted as quite simply
unsystematic (see above), or
The example referred to presents
itself contrary to expectation in a
statistically significant way.

The question of the classification to
be used within this study in order to
incorporate the examined bivariate
correlations can irrespective of the
relevance of basic binary division
contribute to a varied understanding of
the outcome.
588
In accordance with this,
the following groups can be
differentiated:

Significantly model-conformant
Significantly model-contrary (i.e., a
correlation counteracting the
expectancy in a significant way)
Unsystematic within the R-range
from -0.10 to +0.10
Tendentially model-conformant or
tendentially model-contrary (i.e.,
indicative of the respective
opposite but not yet significant
correlative direction).

So far, we have dealt with a purely
pragmatic illustration. During the
collective theses findings, binary
division will also be used.
589

3.4.2.3 Special evaluation procedure
for the Meta theses
For examples chosen to concretely
investigate the developed Meta theses in
a second stage, it was decided to assign
a so-called Structural Equation Model
(SEM) or, more exactly, a Covariance
Structure Model
590
as an examination
model. Namely, it is the so-called
AMOS procedure, whereby AMOS
stands for Analysis of Moment
Structures.
591
AMOS was chosen
because this procedure is able to analyze
and exchange data matrix results with
SPSS.
592
Because SPSS had already
been used to investigate the single
theses, the desired assignment of AMOS
had research-economical advantages.

Calculation procedures or
programs such as AMOS or the related
LISREL
593
are, as mentioned, to be
assigned to structural equation models.
This is a form of statistics which goes
beyond inferential statistics and
descriptive statistical procedures
applied for investigation of the single
theses. In the recent past, it has
sometimes been the case that people
have spoken of _new generation_ in
conjunction with AMOS and other
related procedures. The fact is,
however, that these procedures were
already conceived around 30 years ago.
In any case, the respective software has
in recent times increasingly developed
in the direction of better usability, and is
therefore available to an extended field
of users.
594

Collectively observed, therefore,
programs such as LISREL and AMOS
allow more complex models to be tested
_en bloc_ for compatibility. The models
to be tested thereby usually contain
respective statements or hypotheses for
the effect association of ?so-called
constructs, which in turn normally
comprise particular single variables
(indicators). AMOS and LISREL enable
the conclusive decision as to whether the
model ideals can be retained (model
confirmation), or whether they must be
declined (model rejection). High sample
sizes, i.e., N>150 are optimal for model
investigation, whereby AMOS and
LISREL can also calculate sample sizes
from 40 onwards. It is something of a
precondition for this process, however,
that the model due for investigation does
not show an excessively high degree of
complexity.
595
These circumstances will
be explored more closely in Chapter
4.
596

Various statistical measurements
are available for model evaluation
within the framework of structural
equation procedures, whereby the so-
called Goodness-of-Fit Index (GFI) has
gained an increasingly substantial
presence. The GFI determines a
guideline, similar to a conventional
level of significance, as to the point from
which a postulated model is still seen as
compatible (i.e., suitable _Fit_ between
data and model assumptions), and from
which point it is considered to be
incompatible. The GFI measures the
relative amounts of variance and
covariance justified in total by the model
and illustrates the stability index within
the framework of regression analysis.
597
The GFI can accommodate values
between 0 and 1, whereby a value of 1
means that all empirical variance and
covariance are exactly reflected by the
model (_perfect model fit,_ usually a
theoretical case).

Another noteworthy tool within the
context of structural equation models is
the Adjusted-Goodness-of-Fit Index
(AGFI). The AGFI is similarly a
measure for the variance expressed
within the model which, however,
additionally takes into consideration the
model complexity in the form of degrees
of freedom.
598
The AGFI also
accommodates for values between 0 and
1. A models _Fit_ may be seen as more
suitable the closer it becomes to a value
of 1.
599

Without preempting the illustration
of results that follows, it must be noted
here that inevitable conclusions can
already be drawn as to the models
compatibility from within the framework
of the conventional inferential statistic
(therefore correlation analytical)
observation of the theses. The structure-
analytical approach strives to make a
_holistic_ contribution to the model
evaluation.

Chapter Four

Comparison of work
hypotheses and
acknowledged results of
the empirical study

Chapter four continues the context of
justification within the framework of the
research-logical course, started in the
previous chapter and as defined by
Friedrichs.

Evaluation, statistical
investigation and result
interpretation transform data
into findings and conclusions.
The evaluation does not take
place randomly, but is led by
the hypotheses. Description,
analysis and explanations are
the most important parts of the
interpretation process.
600

4.1 Results of the Evaluations
of the Theses
In this section the evaluation results for
the theses developed previously will be
explained using statistical procedures. In
this context, statistics can be defined as
the art of analyzing, illustrating, and
interpreting accumulated data so that the
user arrives at new knowledge.
601

The data gathered from the more
than 70 actual companies available for
the evaluation was of essential
importance here. The calculations for the
individual variables or respective
performance indicators, and the further
information thereto, can be found in
section 4 of the appendix. The complete
set of data is available from the author.
The close subject matter proximity
between the data basis and the central
questions made it easier to meet the
requirement of a reflective reference to
the examination-leading hypotheses in
the course of interpreting the
examination results.
602
Several factors
can constitute the cause for a possible
Mis-Match between accumulated data
and empirical reality in a study like
this.
603
On the sampling procedure level,
for instance, surveying units or persons
questioned for information on the
decisive examination object could
simply prove to be unsuitable, or lead
one to a restricted or distorted selection.
This could occur in the case of a survey
whose results are intended to be
applicable to large industrial companies,
but where results were gained following
a survey of companies that belonged
exclusively to a particular industry.
604

Amongst several other artifact
sources,
605
a Mis-Match can result
from the fact that despite the partial
basic suitability of a selection
examiners and persons questioned have
differing frames of reference available.
This risk is to be classified as especially
delicate, because it can lead to
substantially false content conclusions
without this always immediately
becoming obvious. This can happen for
example in the form of a weak
questionnaire return quota, or criticism
articulated by the persons questioned, or
similar peculiarities.
606
In this study
such a difference in frames of reference
could have existed in the fact that
examiners and persons questioned had a
varying comprehension of the relatively
highly specialized question categories.
In the same way, the case could be
possible where, for socially desirable
reasons, the persons questioned
submitted information pertaining to
question categories not applicable to
company reality. An example of this
would be the issue of estimative
statements as to certain process
attributes not followed by the company
itself, and therefore not specifically
included into the survey.

As has already been pointed out
elsewhere,
607
after the focus had been
placed upon those answers obtained
within the consolidation of the primary
research which contained gapless and
differentiated statements, the previously
mentioned risks become more
i mprobabl e (reversed conclusion of
high statement authenticity). The
conclusion of risk improbability
therefore became more applicable to the
study as the statements were made by the
executives within each business
specializing in Supply Chain topics.
608
In the case of the presence of a Mis-
Match between the screening questions
and company reality, those respondents
would have been more likely to express
criticism than if the questions had been
put to less professionally experienced
contact persons. The case of gapless and
differentiated statements being given as
to the individual Supply Chain attributes
(if the question categories had not had
close proximity to business reality) must
be considered relatively improbable.
However, the aforementioned risks may
not be completely ruled out, as total
avoidance of artifacts is not practically
achievable in any empirical examination
in which the Human Factor plays a
role (surveys or interview for
information, etc.)
609

All following evaluations took
place discriminately and in accordance
with the groupings represented in
paragraph 3.3.5. This was done in order
to capture heterogeneity within the set of
data and respectively monitor input
measures on the evaluation side with
regards to possible result-influencing
distortions. Those cases in which this
led to an incremental knowledge
accumulation are noted with their
respective results. If no further
declarations are made, additional
recognition could not be gained from the
discriminate observation. The diagnostic
situation presents itself as a rough
comparison for the companies
characterized by various discriminating
characteristics, i.e., no inferential-
statistically relevant interactions were
present.
610
The representation and
interpretation of the results was
performed by means of the following
rough screening process:

Description of the evaluation
results by using statistical figures
as for example arithmetic mean,
standard deviation, etc.
Explanation of the bivariate
correlation by means of statistical
values, as for example the Bravais-
Pearsons correlation coefficient
(R) and the Type I Error (P().
The direction of conclusion being
whether the thesis is confirmed
(verification), rejected
(falsification) or judged to be
unsystematic.
611
Exemplary graphic illustration, if
meaningful. In this case, it was
decided for inferential-statistical as
well as content reasons to carry out
visualization of the bivariate
correlations from a correlation
level of R = 0.30 (absolute).
612

For better comprehension of the
following illustrations it did, however,
seem important to first illustrate the
pertinent descriptive-statistical
measures of the central tendency and
dispersion (especially arithmetic means
and standard deviations) in addition to
the respective units of measurement (i.e.,
percentages, hourly or daily recording,
etc.) of all model parameters involved in
the assumed correlations. The necessary
information is made apparent by the
following tables 4-2a to 4-2e. An
overview of the examined samples
distribution takes place beforehand in
the tables 4-1a to 4-1e.

Tbl. 4-1a: Distribution of the examined companies (N =
73) by region and country
613
Country Region Quantity Percentage
Canada North America 2 2.74
USA North America 53 72.6
France Europe 1 1.37
Germany Europe 1 1.37
Hungary Europe 1 1.37
Italy Europe 5 6.85
Turkey Europe 1 1.37
UK Europe 3 4.11
India Asia 2 2.74
Indonesia Asia 3 4.11
Singapore Asia 1 1.37

Tbl. 4-1b: Distribution of the examined companies (N =
73) by industry
614
Industry Quantity Percentage
Aerospace and Defense 2 2.74
Agriculture and Biotechnology 3 4.11
Apparel 3 4.11
Automotive 2 2.74
Chemicals and Pharmaceuticals 7 9.59
Computers and Consumer
Electronics
7 9.59
Consumer Packaged Goods 7 9.59
Electric Utilities 4 5.48
Household Appliances 3 4.11
Machinery and Equipment 6 8.22

Metal Products 5 6.84
Office and Printing Machines 4 5.48
Rubber and Plastic Products 5 6.85
Telecommunications 7 9.59
Retail and Distribution 6 8.22
Others 2 2.74

Tbl. 4-1c: Distribution of the examined companies (N =
73) by group size based on revenue according to
German Commercial Code (HGB)
615
Size range Revenue Quantity Percentage
Small-size
companies
Less than 6.77m Euros
(approx. 8.5m US-
Dollars)
3 4.1
Mid-size
companies
6.77 to 27.5m Euros
(approx. 8.5m to 35m
US-Dollars)
14 19.2
Large
companies
Greater than 27.5m
Euros (approx. 35m US-
Dollars)
56 76.7

Tbl. 4-1d: Distribution of the examined companies (N =
73) by group size based on FTE number according to
German Commercial Code (HGB)
616
Size range
Number of
Employees
Quantity Percentage
Small-size
Less than 50 2 2.7
companies
Mid-size
companies
50 to 250 16 21.9
Large companies Greater than 250 55 75.4

Tbl. 4-1e: Distribution of the examined companies (N =
73) by Return on Assets (ROA)
617
Return on Assets (ROA) Quantity Percentage
Negative (< 0 percent) 7 9.6
0 to 10 percent 46 63.0
Greater than 10 percent 20 27.4

Tbl. 4-2a: Description of Source
629
No.
Parameter
(Performance
Measure)
ME
618
X
619
s
620
Min
621
Max
622
1
Purchasing
cost as a
percentage
of revenue
Percent 1.33 0.64 0.23 3.67
Percentage
2
of purchased
orders
received on
time and
complete
Percent 80.64 18.56
5
624
99
3
Percentage
of purchased
lines
received on
time and
complete
Percent 81.79 20.32
0
625
99
4a
Transactions
processed
via web
Percent 4.45 13.18
0
626
90
4b
Transactions
processed
via EDI
Percent 3.27 13.19
0
627
90
5
Number of
active
suppliers per
FTE
Quantity 81.92 121.95
1
628
550
6
Purchasing
cost per FTE
Dollar 72,692 45,614 66 199,200

Tbl. 4-2b: Description of Produce
631
No.
Parameter
(Performance
Measure)
ME x s Min Max V
1
Manufacturing
cost as
percentage of
Revenue
Percent 60.11 20.17 8.89 65.38 56.49
2
Average
operating-
equipment
efficiency rate
Percent 84.80 14.25 45.00 99.80 54.80
3
Average
manufacturing
cycle time
Percent 201.52 356.70
1
630
2,160 2,159

4
Average MPS
plant delivery
Performance
Percent 87.16 13.93 15 95
5
Average plant
capacity
utilization
Percent 70.35 19.85 20 94
6
Manufacturing
Dollar 387,266 752,362 29.851 3.81818m
cost per FTE
7
Average
throughput
per FTE
Pieces 496,616 909,367 481 5.454555m

Tbl. 4-2c: Description of Deliver Store
634
No.
Parameter
(Performance
Measure)
ME x s Min Max V
1
Inventory
management
cost as
percentage of
revenue
Percent 1.95 1.54
0.02
632
7.88 7.86
2
Inventory
mgmt. cost as
percentage of
inventory
value
Percent 37.16 33.04 0.79 80 79.21
3
Average
inventory
turnover
Quantity 15.08 19.73 2 109 107
Inactive
4 inventory
percentage
Percent 10.16 17.28 3 67 64
5
Inventory
obsolescence
cost as
percentage of
revenue
Percent 1.07 2.29 0.50 11.64 11.14
6
Cycle count
accuracy
percent.
Percent 90.34 19.22 1.89 98 96.11

7
Average
received
finished
goods
turnaround
time
Number
of
hours
19.20 38.34 1 240 239
8
Inventory
stockout
percentage
Percent 14.00 20.13
5
633
60 55
9
Average
warehousing
space
utilization
Percent 84.45 16.27 30 96 66
10
Inventory
management
cost per FTE
Dollar 253,331 1.07689m 480
7.75
Mio.
7.74952m
11
Inventory
mgmt. cost
per customer
order
Dollar 219,83 320,62 10 1,500 1,490

Tbl. 4-2d: Description of Deliver Transport
636
No.
Parameter
(Performance
Measure)
ME x s Min Max V
1
Transportation
cost as
percentage of
revenue
Percent 3.93 5.20 1 35.23 34.23
2b
Percentage of
inbound cost
Percent 40.04 25.86 5 80 75
2b
Percentage of
outbound cost
Percent 62.34 26.01 10 80 70
3
Damaged
shipments
Quantity 1.56 2.16
0
635
10 10
On-time
4a
delivery
percentage
(inbound)
Percent 92.04 8.91 60 98 38

4b
On-time
delivery
percentage
(outbound)
Percent 94.01 7.29 60 99
5
Transporta-
tion cost
per FTE
Dollar 1.04822m 1.61365m 1.8298m 8.1032m

Tbl. 4-2e: Description Deliver Sell
639
No.
Parameter
(Performance
Measure)
ME x s Min Max
1
Customer
service cost
as
percentage
of revenue
Percent 3.21 7.87 0.50 56.10
2
Customer
retention
Percent 85.03 18.17 30 97
rate
3
Customer
disputes
Percent 4.33 7.56 1 50
4
Perfect
orders rate
Percent 85.12 16.28 25 98
5
Lines on-
time fill rate
Percent 88.95 10.14 60 98
6
Backorders
value
Dollar 11.17801m 28.7459m 10.000 1.38359bn
7
Average
order- to-
shipment
lead time
Hours 281.88 378.21 1 2,000
8
Customer
service cost
per FTE
Dollar 108,577 254,600 221,900 1.81912m
9
Percentage
of sales via
web
Percent 22.07 33.32
0
637
100

4.1.1 Results of the theses of
the SCOR model group
Intra-Performance
Attribute (I-P)
4.1.1.1 Performance Attribute
Customer Service (reliability and
responsiveness)
Thesis 1:
The thesis that a high percentage of on-
time delivery percentage inbound or
outbound would lead to a high customer
retention rate, was correlation-
analytically confirmed for the
inbound-component (supplier side).
An increased customer retention rate
was also coupled with an increased
percentage of on-time deliveries. An
unsystematic result was consequently
present for the outbound-component.
The respective Product-Moment-
Correlation (PM-Correlation) can be
collectively found in Tbl. 4-3.
640

The additional consideration of the
parameters company revenue and FTE-
Number in a multiple regression
(percentage of on-time deliveries as a
criterion, manufacturing cycle-time in
addition to the am. parameters as the
predicates) were of no incremental
value. This means that the correlation to
be substantially assessed mainly
represented itself independently from the
revenue and employee-related
operationalized company measure.

This statement was valid on the
whole for all other theses, which is why
these aspects are only enlisted in the
following in cases where incremental
information value is actually present
(additional explanatory value) for the
par ameter s company revenue and
number of FTE.

Tbl. 4-3: Correlation between on-time deliveries and
customer retention rate
Correlation
N
641
R
642
P()
643
M
644
on-time delivery percentage
inbound & customer
retention rate
73 +0.23 < 0.05 I-P
on-time delivery percentage
outbound & customer
retention rate
73 0.04
non-
signif.
I-P

Thesis 2:
For the thesis whereby a high perfect
orders rate determines a high customer
retention rate, only a tendencial
confirmation could be provided. The
correlation does not therefore represent
itself as significant, but is at least
rudimentarily present.

Tbl. 4-4: Correlation between perfect order rate and
customer retention rate
Correlation N R P() M
perfect orders rate & customer
retention rate
73 +0.17
non-
signif.
I-
P

Thesis 3:
The position whereby a low on-time
delivery percentage inbound or
outbound correlates with a low perfect
orders rate was confirmed in the case of
the outbound-component. In addition
to this there was an extremely
homogeneous relationship between a
high percentage of on-time deliveries
and a strong proportion in percentage of
perfect customer orders. Therefore, a
reversible relationship of variables was
present.
645
On the other hand, and with
reference to the inbound-component,
only a tendencial correlation could be
assumed.

The respective PM-Correlations
and other evaluation results may be
taken from Tbl. 4-5.
646
The factual
situation can be differentiated further by
means of a collective observation.
647

Tbl. 4-5: Correlation between on-time deliveries and
perfect order rate
Correlation N R P() M
on-time delivery percentage
inbound & perfect orders rate
73 +0.16
non-
signif.
I-
P
on-time delivery percentage
outbound & perfect orders rate
73 +0.48
<
0.001
I-
P

Thesis 4:
The thesis of a counter-rotating
correlation between the manufacturing
cycle-time on the one side and the
percentage of on-time deliveries
inbound or outbound on the other side
could be corroborated by correlation
analysis.The negative PM-correlation
coefficients mean in this context that
with a high manufacturing cycle-time, the
percentage of on-time deliveries
decreases. Seen from the other side, it
increases with decreasing manufacturing
cycle-time, and this points towards the
presence of a reversible variable
relationship. As a result of this, only the
correlation for the outbound-
component was to be deemed to be
substantial.

Diag. 4-1: On-time deliveries (inbound or outbound)
and perfect customer orders

On the basis of these results, a
counter-rotating relationship can be
assumed between the amount of on-time
outbound deliveries and the
manufacturing cycle-time. In the case of
inbound deliveries, a purely marginal
correlation could be noted.

Tbl. 4-6: Correlation between on-time deliveries and
manufacturing cycle-time
Correlation N R P() M
on-time delivery percentage inbound
& average manufacturing cycle time
73

0.09
non-
signif.
I-
P
on-time delivery percentage
outbound & average manufacturing
cycle time
73

0.22
< 0.05
I-
P

The reliable delivery of purchase
orders was therefore unequivocally
bound to defect-free (perfect) customer
orders on the basis of the empirical data,
and as a result of this a positive
relationship of both parameters could be
corroborated.

Thesis 5:
A positive correlation between the
percentage of purchased orders received
on time and complete and the perfect
orders rate was confirmed as
statistically significant. Therefore, a
deterministic variable relationship could
be proven.

Tbl. 4-7: Correlation between perfect purchase orders
and perfect order rate
Correlation N R P() M
percentage of purchased orders
received on time and complete & perfect
orders rate
73 +0.27
<
0.05
I-
P

As a result, the respective
correlation level lay in an area which
already allowed for the conclusion of a
measurably narrow parameter-
coupling.
648

Thesis 6:
It was possible to find a significant
degree of support for the models
concept that a counter-rotating
coupling exists between average MPS
plant delivery performance work
orders and average manufacturing
cycle time.

High average MPS plant delivery
performance work orders
accompanied shorter average
manufacturing cycle times. Contrary to
this low average MPS plant delivery
performance work orders
accompanied an increase in average
manufacturing cycle time to a
significant degree. An opposing
relationship could therefore be proven
between the two parameters, and this
relationship can also be seen as
deterministic in nature.

Tbl. 4-8: Connection between MPS plant delivery
performance (work orders) and manufacturing cycle-
time
Correlation N R P() M
average MPS plant delivery
performance work orders average
manufacturing cycle time
73 0.26
<
0.05
I-
P

Thesis 7:
The position that a short average
purchase requisition to delivery cycle
time determines a high lines on-time fill
rate could not be empirically
corroborated to a sufficient degree. The
correlation of the two parameters can,
for the most part, be characterized as
unsystematic.

Tbl. 4-9: Correlation between delivery cycle-time for
purchase requisitions and perfect customer order lines
Correlation N R P() M
average purchase requisition to
delivery cycle time & lines on-time fill
rate
73 +0.09
non-
signif.
I-
P

4.1.1.2 Performance attribute
Flexibility
Thesis 8:
In a similar fashion, no empirical
confirmation could be found for the
assumption that a high inventory
stockout percentage leads to a high
backorders value. Both parameters
stood in a positive relationship, but
conclusively had to be characterized as
purely unsystematic (Tbl. 4-10).

Tbl. 4-10: Correlation between stockout and
backorders
Correlation N R P() M
inventory stockout percentage &
backorders value
73 +0.06
non-
signif.
I-
P

4.1.1.3 Performance attribute Cost
Thesis 9:
It was expected that a positive
relationship would be found between
purchasing cost as a percentage of
revenue and inventory management
cost as a percentage of revenue. On the
basis of the data gathered, this
assumption received sustained
confirmation.

Tbl. 4-11: Correlation between revenue-related
purchase and inventory management cost
Correlation N R P() M
purchasing cost as a percentage of
revenue & inventory management cost
as a percentage of revenue
73 +0.34
<
0.01
I-
P

H i g h purchasing cost as a
percentage of revenue therefore
occurred significantly with high
inventory management cost as a
percentage of revenue. On the other
hand, low purchasing cost was
respectively present with low inventory
management cost.

The unison of both parameters
involved and the associated
deterministic relationship can also be
convincingly corroborated by collective
observation, as can be taken from Diag.
4-2.

Diag. 4-2: Revenue-related purchase and inventory
management cost

Thesis 10:
Only tendencial indications were given
by PM-correlation to support the thesis
that a high inventory management cost
as a percentage of revenue would
accompany a high inventory
management cost per FTE. In
accordance with this, the calculated
relationship cannot be described as
significant. However, a slightly positive
correlation could be proven.

Tbl. 4-12: Correlation between revenue and FTE-
related inventory management cost
Correlation N R P() M
inventory management cost as a
percentage of revenue & inventory
management cost per FTE
73 +0.16
non-
signif.
I-
P

Thesis 11:
The assumption of a positive correlation
between high transportation cost as a
percentage of revenue and high
transportation cost per FTE was
corroborated. Both parameters indicated
an extremely homogeneous and
statistically significant relationship.

Tbl. 4-13: Correlation between revenue and FTE-
related transport cost
Correlation N R P() M
transportation cost as a percentage of
revenue & transportation cost per FTE
73 +0.67
<
0.001
I-
P

The unambiguous deterministic
relationship of both parameters is also
apparent in the following graphical
illustration (collective observation
mode).

Thesis 12:
A counter-rotating relationship was
expected between the expression of
transportation cost as a percentage of
revenue and the amount of damaged
shipments. As can be seen from the
following table, a negative correlation
was calculated on the basis of the
empirical data for both parameters
involved. The latter was, though, finally
marked as unsystematic when measured
upon the height of the PM-Correlation.

Diag. 4-3: Revenue and FTE-related transport cost

Tbl. 4-14: Correlation between revenue-related
transport cost and damaged shipments
Correlation N R P() M
transportation cost as a percentage of
revenue & damaged shipments
73

0.06
non-
signif.
I-
P

Thesis 13:
The thesis that a high purchasing cost as
a percentage of revenue accompanies a
hi gh purchasing cost per FTE was
empirically confirmed. Despite the
unusually strong correlation, the
criterion of statistical significance was
still achieved.

Tbl. 4-15: Correlation between revenue and FTE-
related purchase cost
Correlation N R P() M
purchasing cost as a percentage of
revenue & purchasing cost per FTE
73 +0.20
<
0.05
I-
P

A deterministic variable
relationship was therefore proven upon
the basis of the examined data, as can be
taken from Tbl. 4-15.

Thesis 14:
An empirical confirmation could not be
produced for the correlation of a high
customer service cost per FTE with a
low number of customer disputes.
Absolutely no factual relationship
between customer service cost per FTE
and amount of customer disputes exists
in the submitted data pool.

Tbl. 4-16: Correlation between FTE-related customer
service cost and customer disputes
Correlation N R P() M
customer service cost per FTE &
customer disputes
73

0.01
non-
signif.
I-
P

Thesis 15:
As was the case with thesis 14, a
completely unsystematic result arose
here and therefore offered no
justification for acceptance of the model
assumption. In the end, purely a non-
correlation was given between the
parameters transportation cost per FTE
and the amount of damaged shipments.

Tbl. 4-17: Correlation between FTE-related customer
service cost and damaged shipments
Correlation N R P() M
transportation cost per FTE &
damaged shipments
73

0.03
non-
signif.
I-
P

4.1.1.4 Performance attribute Assets
Thesis 16:
A counter-rotating relationship was
expected between the parameters
inactive inventory percentage and
average inventory turnover. The
tendencial contrary relationship of both
parameters could, in fact, be empirically
proven. The criteria of statistical
significance were, however, missed
(albeit narrowly) (Tbl. 4-18).

Tbl. 4-18: Correlation between inactive inventory
percentage and inventory turnover
Correlation N R P() M
inactive inventory percentage &
average inventory turnover
73

0.18
non-
signif.
I-
P

As a basic tendency, it can be
assumed from the results that a high
inactive inventory percentage would
accompany a low average inventory
turnover.

Thesis 17:
No empirical confirmation could be
found for the thesis according to which a
high inactive inventory percentage was
coupled with a high average
warehousing space utilization. Both
parameters extensively stood in an
unsystematic relationship with one
another.

Tbl. 4-19: Correlation between inactive inventory
percentage and warehousing space utilization
Correlation N R P() M
inactive inventory percentage &
average warehousing space utilization
73 +0.08
non-
signif.
I-
P

Thesis 18:
The presumption that a high average
inventory turnover accompanies a low
average warehousing space utilization
could not be empirically corroborated
either. The respective PM-correlation
did show a negative prognosis, but the
correlation lay within a completely
unsystematic area.

Tbl. 4-20: Correlation between inventory turnover and
warehousing space utilization
Correlation N R P() M
average inventory turnover & average
warehousing space utilization
73 +0.04
non-
signif.
I-
P

4.1.2 Results of the theses of
the SCOR model group
intra-competence (I-C)
4.1.2.1 Customer-facing indicators
Thesis 19:
A counter-rotating relationship was
expected between the on-time delivery
percentage inbound or outbound and
the backorders value. In this respect, a
high amount of on-time deliveries should
accompany a low value of back orders
(assumption of a negative correlation).

Positive correlations as to this
question formulation could still be seen
tendentially as a threshold value, even if
this was in a direction contrary to that of
the model. Nevertheless, the coupling of
both components of on-time delivery
(inbound and outbound) with the
respective value of backorders was not
sufficiently unequivocal. It must
therefore be noted that the results
obtained did not precipitate in a model-
conformant manner, although this itself
was not in a significant way.

Tbl. 4-21: Correlation between on-time deliveries and
backorder value
Correlation N R P() M
on-time delivery percentage
inbound & backorders value
73 +0.13
non-
signif.
I-
C
on-time delivery percentage
outbound & backorders value
73 +0.12
non-
signif.
I-
C

Thesis 20:
It is significant with this thesis that in the
case of the inbound-component, the
postulated correlation between a low
inventory stockout percentage and a
high on-time delivery percentage could
not be substantiated. In the case of the
outbound-component, the postulate
was more than meaningfully illustrated.

Tbl. 4-22: Correlation between stockout and on-time
deliveries
Correlation N R P() M
inventory stockout percentage & on-
time delivery percentage inbound
73 0.05
non-
signif.
I-
C
inventory stockout percentage & on-
time delivery percentage outbound
73 +0.46
<
0.001
I-
C

In this way, it must be noted that the
said counter-rotating variable
correlation exists overtly and primarily
for the outbound-situation, i.e.,
outgoing inventory or customer side
respectively. Diag. 4-4 illustrates the
factual situation in a graphical form.

Diag. 4-4: On-time deliveries (inbound or outbound)
and inventory stockout
649

Thesis 21:
The thesis according to which a high
percentage of purchased orders
received on time and complete would
contribute to a low backorders value
was confirmed for the empirical data
pool. The respective contrary
correlation appeared to be moderately
revealed, but not statistically
unambiguous. It could therefore be
proven that both parameters stood in a
counter-rotating relationship with one
another.
650

Tbl. 4-23: Correlation between perfect purchase orders
and backorders
Correlation N R P() M
percentage of purchased orders received
on time and complete & backorders value
73

0.21
<
0.05
I-
C

Thesis 22:
The data situation with regards to this
thesis can be compared to the one for the
next thesis, the content of which is
similar: A strongly evident percentage
of purchased lines received on time and
complete significantly contributed to a
low backorders value.
651

Tbl. 4-24: Correlation between perfect purchase order
lines and backorders
Correlation N R P() M
percentage of purchased lines received
on time and complete & backorders value
73

0.37
<
0.01
I-
C

It can be taken from the associated
Diag. 4-5 that this relationship may be
characterized as thoroughly unequivocal
(grouped view).

Thesis 23:
The correlation analysis for the postulate
of a counter-rotating correlation
between stockout and MPS plant
delivery performance (work orders)
produced a supportive corroboration.

In actual fact, both parameters
characteristics showed themselves to be
extremely contrary to one another. This
means that a high stockout percentage
and a reduced average MPS plant
delivery performance accompanied
each other (and vice versa for low
stockout percentage, i.e., reversible
variable relationship). The constellation
of the results was therefore unequivocal,
as is clearly expressed in the associated
Diag. 4-6.

Diag. 4-5: Perfect purchase order lines and backorders

Tbl. 4-25: Correlation between stockout and MPS plant
delivery performance (work orders)
Correlation N R P() M
inventory stockout percentage &
average MPS plant delivery performance
(work orders)
73

0.63
<
0.001
I-
C

Thesis 24:
Although not expressed so strongly as
was the case with the last thesis, this
postulate of a counter-rotating
relationship between perfect customer
order lines and backorders was also
confirmed as statistically significant.
High lines on-time fill rates were in this
way empirically proven to contribute to
a reduced backorders value. In this
case, both parameters appeared to react
in a distinctly contrary manner to one
another.

Diag. 4-6: Stock out and MPS plant delivery
performance (work orders)

Tbl. 4-26: Correlation between percentage of perfect
customer order lines and value of backorders
Correlation N R P() M
lines on-time fill rate average MPS plant
delivery performance (work orders)
backorders value
73

0.19
<
0.05
I-
C

Thesis 25:
The model assumption whereby a low
inventory stockout percentage would
accompany a perfect orders rate was
convincingly confirmed. A counter-
rotation of both the parameters was
clearly evident. The contrary
constellation of both parameters is also
highlighted by the graphical illustration
in Diag. 4-7.

Tbl. 4-27: Correlation between stockout and perfect
customer orders
Correlation N R P() M
inventory stockout percentage & perfect
orders rate
73

0.63
<
0.001
I-
C

Diag. 4-7: Stock out and perfect customer orders

In accordance with this, low
percentages of stockout were very
clearly coupled with the increased
probability of perfect customer orders.
The reverse appeared to be the case for
increased stockout, i.e., a reversible
variable relationship was present.

Thesis 26:
Thesis 26, whose content was closely
related to that of thesis 25, whereby a
l o w inventory stockout percentage
contributed to a high lines on-time fill
rate, was unequivocally corroborated.
Both parameters stood in a markedly
contrary relationship to one another.
652

Tbl. 4-28: Correlation between stockout and perfect
customer order line
Correlation N R P() M
inventory stockout percentage & lines
on-time fill rate
73

0.49
<
0.001
I-
C

The non-ambiguity of the contrary
relationship (deterministic variable
correlation) also becomes apparent in
the respective visualization, as can be
taken from the following Diag. 4-8.

Diag. 4-8: Stock out and perfect customer order lines

Thesis 27:
The thesis by which a low average
manufacturing cycle time contributes to
a decreased backorders value was not
confirmed by the calculated correlation.
Moreover, a rather counter-rotating
relationship was shown by both these
parameters. The relationship, though,
proved itself to be relatively weak. A
conclusion of statistical significance
was therefore respectively eliminated.

Thesis 28:
No empirical confirmation could be
reached for the model assumption of a
positive correlation between the
inventory stockout percentage and a
high average manufacturing cycle time.
The relationship of both parameters was,
in fact, proven to be positive, but
nevertheless measured by the
correlation level calculated it also
appeared totally unsystematic.

Tbl. 4-29: Correlation between manufacturing cycle-
time and backorders
Correlation N R P() M
average manufacturing cycle time &
backorders value
73

0.15
non-
signif.
I-
C

Tbl. 4-30: Correlation between stockout and
manufacturing cycle-time
Correlation N R P() M
inventory stockout percentage &
average manufacturing cycle time
73 +0.03
non-
signif.
I-
C

4.1.2.2 Internal-facing indicators
Thesis 29:
The postulated model relationship
between inventory management cost as
a percentage of revenue and average
received finished goods turnaround
time was given clear confirmation on the
basis of the data pool. Both parameters,
in fact, stood in an expressly positive
relationship.

In this respect, high inventory
management costs, expressed as a
percentage of revenue, accompanied an
increase in average received finished
goods turnaround time to a marked
degree.

Tbl. 4-31: Correlation between inventory management
cost and received finished goods turnaround time
Correlation N R P() M
inventory management cost as a
percentage of revenue & average
received finished goods turnaround
time
73 +0.41
<
0.001
I-
C

On the strength of this a synchronous
(and therefore also a deterministic)
variable relationship could be proven
between the two parameters. The factual
situation is graphically illustrated in
Diag. 4-9.

Diag. 4-9: Inventory management cost and received
finished goods turnaround time

Thesis 30:
The thesis according to which a parallel
would seem to exist between increased
inventory obsolescence cost as a
percentage of revenue and a similarly
increased inactive inventory percentage
proved itself to be empirically stable.
Both parameters substantially correlated
positively with one another.

A coupling of the inventory
obsolescence costs with the inactive
inventory percentage was therefore
considered as proven.

Tbl. 4-32: Correlation between inventory obsolescence
cost and inactive inventory percentage
Correlation N R P() M
inventory obsolescence cost as a
percentage of revenue & inactive
inventory percentage
73 +0.29 <0.01
I-
C

Thesis 31:
No enduring confirmation was found for
the model assumption that a high
inventory obsolescence cost as a
percentage of revenue would return a
low average inventory turnover. On the
one hand, the expected negative
correlation between the two parameters
was apparent. On the other hand, this
correlation expressed itself in an
equality i.e., a correlation level that
did not allow the evaluation
substantially narrow in the last
analysis.

Tbl. 4-33: Correlation between inventory obsolescence
cost and inventory turnover
Correlation N R P() M
inventory obsolescence cost as a
percentage of revenue & average
inventory turnover
73 0.13
non-
signif.
I-
C

Thesis 32:
No supporting evidence was produced
based on the evaluated data material for
the thesis of a counter-rotating
relationship between inventory
management cost per customer order
and a low average warehousing space
utilization. In this case, one was not
dealing with a systematic correlation.
Both parameters showed the absence of
systematic coupling, absent in both a
positive and negative direction. In
accordance with this, the existence of a
non-correlation was proven.

Tbl. 4-34: Correlation between inventory management
cost/customer order and warehousing space utilization
Correlation N R P() M
inventory management cost per
customer order & average
warehousing space utilization
73 +0.03
non-
signif.
I-
C

Thesis 33:
In the same way, no convincing
empirical proof could be found for the
thesis wherein a high inventory
management cost per FTE would be
present with a high average received
finished goods turnaround time. The
calculated correlation did show a slight
positive indication. In the last analysis
the correlation level lay, however, in a
range that could only be marked as
unsystematic.

Tbl. 4-35: Correlation between FTE-related inventory
management cost and received finished goods
turnaround time
Correlation N R P() M
inventory management cost per FTE
& average received finished goods
turnaround time
73 +0.05
non-
signif.
I-
C

Thesis 34:
The postulate of a negative coupling of
the inventory management cost per FTE
with the average inventory turnover
was confirmed in a statistically
significant way. Although this contrary
correlation was not abundantly evident,
a significantly increased occurrence-
probability of high inventory
management cost per FTE simultaneous
with a low average inventory turnover
was found.

Tbl. 4-36: Correlation between FTE-related inventory
management cost and inventory turnover
Correlation N R P() M
inventory management cost per FTE &
average inventory turnover
73 0.21
<
0.05
I-
C

Thesis 35:
The thesis that a high average
throughput per FTE would correlate
with a high average plant capacity
utilization for finished products could
not be corroborated sufficiently or with
any certainty. Both parameters
correlated, as expected, in a positive
way. Nevertheless, in the face of the
correlation level found, a meaningful
correlation could not be assumed. All
the same, at least, a rudimentary positive
relationship could be proven.

Tbl. 4-37: Correlation between FTE-related throughput
and plant capacity utilization
Correlation N R P() M
average throughtput per FTE &
average plant capacity utilization
73 +0.11
non-
signif.
I-
C

Thesis 36:
No certain statistical significance could
be produced for the assumption of a
counter-rotating relationship between
the inventory management cost per FTE
and the average warehousing space
utilization. In a similar manner to the
case of thesis 35, the expected (in this
case negative) direction in the
relationship of both parameters was
apparent. However, measured upon the
correlation level, the variable
correlation could not be viewed as
substantial.

Tbl. 4-38: Correlation between FTE-related inventory
management cost and warehousing space utilization
Correlation N R P() M
inventory management cost per FTE
& average warehousing space
utilization
73 0.12
non-
signif.
I-
C

Thesis 37:
A far-reaching unsystematic diagnosis
was apparent with regards to thesis 37,
whereby a degree of unison between a
l o w average order-to-shipment lead
time and a low amount of customer
disputes was assumed. The correlation
level lay within the marginalized area,
as illustrated in Tbl. 4-39.

Tbl. 4-39: Correlation between order to shipment lead
time and customer disputes
Correlation N R P() M
average order-to-shipment lead time &
customer disputes
73 0.05
non-
signif.
I-
C

4.1.3 Results of the theses of
the SCOR model group
Inter-Competence/
Performance Attribute (I-
CP)
4.1.3.1 Customer Service (reliability ?
and responsiveness) vs. cost
Thesis 38:
The model assumption that a high
inventory management cost as a
percentage of revenue would
accompany a low value in backorders
could not be empirically supported. The
correlation identified between the two
parameters could only be marked as
unsystematic in the last analysis. The
respective correlation values can be
taken from Tbl. 4-40. ?In view of these
facts, a systematic coupling of the
parameters involved was assumed on the
basis of the examined data.

Tbl. 4-40: Correlation between inventory management
cost and backorders
Correlation N R P() M
inventory management cost as a
percentage of revenue & backorders
value
73 +0.03
non-
signif.
I-
CP

Thesis 39:
It was assumed that a positive
correlation exists between customer
service cost as a percentage of revenue
and the on-time delivery percentage
inbound and outbound. Analysis of the
correlation could not, however, confirm
this. Negative relationships were found
between the cost for customer service on
the one hand, and on-time deliveries on
the other. However, in the face of the
empirically identified correlation levels,
the contrary constellations were not to
be viewed as substantial.

Thesis 40:
With regards to the thesis whereby a
hi gh customer service cost per FTE
would correlate with a high on-time
delivery percentage inbound and
outbound, no strict pattern of
correlation became apparent. Having
said that, the correlations on the whole
consistently fell positively in the
expected direction. The criteria for
statistical significance were met in the
case of the inbound-component.

Tbl. 4-41: Correlation between customer service cost
as a percentage of revenue and on-time deliveries
Correlation N R P() M
customer service cost as a
percentage of revenue & on-time
delivery percentage inbound
73 0.03
non-
signif.
I-
CP
customer service cost as a
percentage of revenue & on-time
delivery percentage outbound
73 0.08
non-
signif.
I-
CP

Tbl. 4-42: Correlation between FTE-related customer
service cost and on-time deliveries
Correlation N R P() M
customer service cost per FTE & on-
time delivery percentage inbound
73 +0.19 < 0.05
I-
CP
customer service cost per FTE & on-
time delivery percentage outbound
73 +0.03
non-
signif.
I-
CP

It could be collectively recorded in
this case that high FTE-related costs for
customer service do positively
accompany a higher degree of on-time
deliveries.

Thesis 41:
No convincing empirical proof was
found for thesis 41, according to which a
low amount of revealed customer
disputes was assumed to accompany a
high customer retention rate.

The respective correlation
direction was negative and therefore
counter-rotating as expected, but
measured by the correlation level the
correlation could not be described as
anything other than unsystematic.

Tbl. 4-43: Correlation between customer disputes and
customer retention rate
Correlation N R P() M
customer disputes & customer
retention rate
73 0.04
non-
signif.
I-
CP

Thesis 42:
The model assumption of a positive
relationship between cycle count
accuracy percentage and inventory
management cost as a percentage of
inventory value was not corroborated
with empirical certainty in the last
analysis. On the one hand, a parallel-
running of both parameters was present
(positive correlation). On the other hand,
the correlation level did not lie in an
area that would have allowed the
assumption of a substantial correlation.

Tbl. 4-44: Correlation between cycle count accuracy
percentage and inventory management cost
Correlation N R P() M
cycle count accuracy percentage &
inventory management cost as a
percentage of inventory value
73 +0.06
non-
signif.
I-
CP

Thesis 43:
A non-uniform result was noted as far as
the model assumption is concerned, by
which a high percentage of purchased
orders received on time and complete
would correlate with a high purchasing
cost as a percentage of revenue.

The correlation prognosis of the
two parameters proved itself to be
negative, whereby however the
respective counter-rotation was, after
the last analysis, to be classified as
unsystematic in the face of the
correlation level.

Thesis 44:
For the thesis of a positive correlation
be t we e n percentage of purchased
orders received on time and complete
and purchasing cost per FTE, it was
possibly to derive at least rudimentary
confirmation from the empirical data
used for analysis.

Tbl. 4-45: Correlation between perfect purchase orders
and purchasing cost as a percentage of revenue
Correlation N R P() M
percentage of purchased orders
received on time and complete &
purchasing cost as a percentage of
revenue
73 0.09
non-
signif.
I-
CP

Both parameters correlated
positively with one another, i.e., a high
percentage of perfect purchase orders
increasingly accompanied high FTE-
related purchasing costs. However, in
the case of the correlation present,
statistical significance was not reached.

Tbl. 4-46: Correlation between perfect purchase orders
and FTE-related purchasing cost
Correlation N R P() M
percentage of purchased orders
received on time and complete &
purchasing cost per FTE
73 +0.14
non-
signif.
I-
CP

All the same, a fundamentally
positive coupling of both parameters
could be considered proven.

Thesis 45:
The relationship between the
manufacturing cost per FTE and
average MPS plant delivery
performance took shape in the direction
of the prognosis, i.e., resulted in the
expected positive correlation
coefficient. Despite the significance of
the diagnosis, a narrow correlation
between the two parameters could not be
assumed in the face of the empirically
discovered correlation level. On the
whole, though, a degree of parallel-
running could be assumed by means of
the evaluation results between FTE-
related production costs and average
plant delivery performance.

Tbl. 4-47: Correlation between FTE-related
manufacturing cost and MPS plant delivery
performance (work orders)
Correlation N R P() M
manufacturing cost per FTE & average
MPS plant delivery performance (work
orders)
73 +0.20
<
0.05
I-
CP

Thesis 46:
The thesis whereby a strongly marked
measure of percentage of purchased
orders received on time and complete
would preferentially occur in
conjunction with a reduced amount of
damaged shipments was completely
confirmed in the submitted data pool.
Reliably carried-out purchase orders
and damaged shipments therefore stood
in a positive way to one another in the
postulated negative relationship.

Tbl. 4-48: Correlation between perfect purchase orders
and damaged shipments
Correlation N R P() M
percentage of purchased orders
received on time and complete &
damaged shipments
73 0.27
<
0.01
I-
CP

In accordance with this, the
contrary relationship of both variables
was convincingly proven.
653

Thesis 47:
A contrary relationship between the
average MPS plant delivery
performance and the number of
customer disputes was convincingly
corroborated on the basis of the
empirical data material. Although not
drastic, a significant negative correlation
did exist between both parameters, i.e.,
a high average MPS plant delivery
performance occurred in significant
conjunction with a reduced number of
customer disputes. The correlation can
be taken from Tbl. 4-49.

Thesis 48:
The thesis that a high inventory
management cost per customer order
correlates with a high perfect orders
rate was confirmed in the empirical data
pool. A significant, but not strictly
deterministic relationship existed in the
expected positive direction between
both parameters, as highlighted in Tbl.
4-50.

Tbl. 4-49: Correlation between MPS plant delivery
performance (work orders) and customer disputes
Correlation N R P() M
average MPS plant delivery
performance & customer disputes
73 0.22
<
0.01
I-
CP

Tbl. 4-50: Correlation between inventory management
cost/customer order and perfect order rate
Correlation N R P() M
inventory management cost per < I-
customer order & perfect orders rate 73 +0.19 0.05 CP

Thesis 49:
The assumption, according to which a
positive relationship was to be expected
between inventory management cost
per customer order and perfect
purchase order lines, might be
considered empirically secured. The
postulated positive relationship between
both parameters was apparent in a
significant way.

High inventory management costs
per customer order therefore
accompanied equally high perfect
purchase order lines, and a deterministic
variable relationship could be
proven.
654

Tbl. 4-51: Correlation between inventory management
cost/customer order and perfect purchase order lines
Correlation N R P() M
inventory management cost per
customer order & lines on-time fill rate
73 +0.25
<
0.05
I-
CP

Thesis 50:
The expected parallelism between
customer service cost as a percentage
of revenue and a high perfect orders
rate could not be confirmed. Contrary to
such an assumption, a counter-rotating
relationship was present between both
parameters. In the face of the identified
correlation level, the correlation could,
on the whole, rather be classified as
unsystematic.

Tbl. 4-52: Correlation between customer service cost
as percentage of revenue and perfect order rate
Correlation N R P() M
customer service cost as a
percentage of revenue & perfect
orders rate
73 0.07
non-
signif.
I-
CP

Thesis 51:
It was assumed that a positive
correlation between the customer
service cost per FTE and a lines on-
time fill rate would be identified. In
actual fact such a positive correlation
was present between both parameters.

Tbl. 4-53: Correlation between FTE-related customer
service cost and perfect purchase order lines
Correlation N R P() M
customer service cost per FTE &
lines on-time fill rate
73 +0.13
non-
signif.
I-
CP

The correlation, however, lay
within an area which did not show
conclusively that high FTE-related
customer service costs contribute to a
high lines on-time fill-rate in the sense
of a strict and unambiguous accordance
to rule. Therefore, based upon the
fundament of the data observed, only a
tendencial synchronous relationship
between the variables concerned could
so far be presumed. Consequently, at
least a rudimentary synchronous
correlation might be assumed upon the
basis of the examination results.

Thesis 52:
The thesis of a counter-rotating
correlation between the perfect orders
rate and the number of customer
disputes was not corroborated by means
of the empirical data. The respective
correlation level moved within a
statistically almost completely
unsystematic range. In actual fact
therefore, no substantial or even
tendencial correlation existed between
the two parameters.

Tbl. 4-54: Correlation between perfect customer
orders and customer disputes
Correlation N R P() M
perfect orders rate & customer
disputes
73 +0.04
non-
signif.
I-
CP

Thesis 53:
A synchronism was expected between
a low average purchase requisition to
delivery cycle time and a high inventory
management cost as a percentage of
revenue. However, the correlation-
analytical investigation brought forward
no adequate proof for the suitability of
such an assumption. No factual and
recognizable correlation existed
between the two parameters. On the
contrary, the calculated correlation
showed itself to be unsystematic.

Tbl. 4-55: Correlation between purchase requisition to
delivery cycle time and inventory management cost as
a percentage of revenue
Correlation N R P() M
average purchase requisition to
delivery cycle time & inventory
management cost as a percentage of
revenue
73 +0.03
non-
signif.
I-
CP

Thesis 54:
No unequivocal confirmation was found
upon an empirical level as regards the
thesis that a high average purchase
requisition to delivery cycle time would
correlate with low order-related
purchase costs. On the one hand, the
correlation direction was, as expected,
negative and therefore indicated a
counter-rotating relationship between
both parameters. On the other hand,
measured by the correlation level, it
would not have been suitable to
conclude that a substantial correlation
existed.

Tbl. 4-56: Correlation between purchase requisition to
delivery time and order-related purchase cost
Correlation N R P() M
average purchase requisition to
delivery cycle time & purchasing cost
per purchase order
73 0.08
non-
signif.
I-
CP

Thesis 55:
The thesis gave unambiguous support to
the presence of a positive relationship
between purchasing cost per FTE and
t h e average purchase requisition to
delivery cycle time.

Both parameters correlated
significantly positively with one another
and produced a respective pattern of
correlation. As far as this is concerned,
increased FTE-related purchase costs
actually did appear in conjunction with
an increasing purchase requisition to
delivery cycle time.

Tbl. 4-57: Correlation between FTE-related purchase
cost and purchase requisition to delivery cycle time
Correlation N R P() M
purchasing cost per FTE & average
purchase requisition to delivery cycle
time
73 +0.25
<
0.05
I-
CP

Thesis 56:
With respect to the thesis that a
counter-rotating correlation existed
between manufacturing cost per FTE
and the average manufacturing cycle
time, a picture of a threshold value was
found within the data material. As
expected, both parameters correlated
negatively with one another, i.e.,
increased manufacturing cost per FTE
accompanied a reduced average
manufacturing cycle time (Tbl. 4-58).

Nonetheless, the identified
correlation coefficient missed albeit
narrowly the criteria of statistical
significance, so that a substantial
correlation could not be presumed in the
final analysis.

The accumulated evaluation results did,
however, permit the conclusion that, on
the whole, a contrary relationship exists
between the two parameters.

Tbl. 4-58: Correlation between FTE-related
manufacturing cost and manufacturing cycle time
Correlation N R P() M
manufacturing cost per FTE &
73 +0.16
non- I-
average manufacturing cycle time signif. CP

Thesis 57:
A threshold value also resulted in the
case of thesis 57: A homogeneous
relationship was expected between
average purchase requisition to
delivery cycle time and an equally
reduced number of customer disputes.
The empirical data indicated an exactly
opposing coupling, as both parameters
correlated negatively with each other, as
can be taken from Tbl. 4-59.

Tbl. 4-59: Correlation between purchase requisition to
delivery cycle time and customer disputes
Correlation N R P() M
average purchase requisition to
delivery cycle time & customer
disputes
73 0.17
non-
signif.
I-
CP

Despite this fact, a substantial
effect could not be assumed in the face
of the explicit correlation level. For all
that, this thesis could not be supported
(for an attempted explanation, see also
the comments and explanations
following the presentation of the
theses).
655

4.1.3.2 Flexibility vs. cost
Thesis 58:
With thesis 58, a counter-rotating
relationship between inventory
management cost as a percentage of
inventory value and the backorders
value was assumed. The empirical
examination of the facts produced an at
least rudimentary indication of the
suitability of this thesis.

Tbl. 4-60: Correlation between inventory management
cost as a percentage of inventory and backorder value
Correlation N R P() M
inventory management cost as a
percentage of inventory value &
backorders value
73 0.13
non-
signif.
I-
CP

Both parameters correlated
negatively with one another as expected,
i.e., strongly marked inventory
management costs as a percentage of
inventory actually accompanied a rather
reduced amount of backorders. A secure
proof of the tendencial model-
conformant constellation was, however,
not found.

Thesis 59:
The thesis by which an increased
manufacturing cost as a percentage of
revenue would accompany a low
backorders value was enduringly
confirmed. The identified correlation-
analytical diagnosis underlined the
counter-rotation of both parameters in
a significant way, as can be taken from
Tbl. 4-61.

Tbl. 4-61: Correlation between manufacturing cost as a
percentage of revenue and backorder value
Correlation N R P() M
manufacturing cost as a percentage of
revenue & backorders value
73 0.30
<
0.01
I-
CP

The following Diag. 4-10
emphasizes the opposing course
directions ?of manufacturing cost as a
percentage of revenue and the backorder
value.

Thesis 60:
The empirical proof necessary in order
to support thesis 60, ?in which a low
customer service cost per FTE
increasingly appears in conjunction with
a high backorders value, could not be
produced with sufficient security. It was,
however, apparent that both parameters
correlated negatively with one another,
as expected. But in the last examination,
the relationship lay in a far-reaching and
statistically unsystematic area.

Diag. 4-10: Manufacturing cost as a percentage of
revenue and backorder value

Tbl. 4-62: Correlation between FTE-related customer
service cost and backorder value
Correlation N R P() M
customer service cost per FTE &
backorders value
73 0.06
non-
signif.
I-
CP

Thesis 61:
The thesis by which a low backorders
value would accompany a low number
o f customer disputes could not be
adopted. A negative correlation
consequently existed between both
parameters. However, the level of
correlation lay within an area of value
that would only permit the conclusion
that an extensively unsystematic
relationship exists between both
parameters.

Tbl. 4-63: Correlation between backorder value and
customer disputes
Correlation N R P() M
backorders value & customer
disputes
73 0.05
non-
signif.
I-
CP

Thesis 62:
The model assumption suggested a
positive relationship between inventory
stockout percentage and inventory
obsolescence cost as a percentage of
revenue. A positive correlation of both
parameters was actually calculated.

Tbl. 4-64: Correlation between stockout and
percentage of inventory obsolescence cost as a
percentage of revenue
Correlation N R P() M
inventory stockout percentage &
inventory obsolescence cost as a
percentage of revenue
73 +0.13
non-
signif.
I-
CP

It could therefore be confirmed that
a high stockout percentage accompanied
high inventory obsolescence cost.
Nevertheless, the correlation did not lie
at a level that could be described as
substantial.

Thesis 63:
It was expected that a low inventory
stockout percentage would appear in
conjunction with a high manufacturing
cost as a percentage of revenue. The
negative correlation assumed thus far
was actually to be found upon the basis
of the empirical data material.

Tbl. 4-65: Correlation between stockout and
manufacturing cost as a percentage of revenue
Correlation N R P() M
inventory stockout percentage &
manufacturing cost as a percentage
of revenue
73 0.14
non-
signif.
I-
CP

In the case of this inferential-
statistical investigation, however, no
level of correlation extent was present
which would have justified the
respective conclusion of clearness or
stringency of the (counter- rotating)
correlation between both parameters.

Thesis 64:
The model expectation for thesis 64 also
comprised an opposing relationship
between the two parameters. It was
assumed that a high manufacturing cost
per FTE would correlate with a low
inventory stockout percentage. The
model expectation could be
corroborated using the data pool. The
relationship between the two parameters
did not manifest itself as expressly
narrow, but it was statistically
significant, as can be taken from Tbl. 4-
66.

Tbl. 4-66: Correlation between FTE-related
manufacturing cost and stockout
Correlation N R P() M
manufacturing cost per FTE &
inventory stockout percentage
73 0.19
<
0.05
I-
CP

Thesis 65
The thesis, whereby a high customer
service cost per FTE should often
appear in conjunction with a low
inventory stockout percentage could not
be confirmed with sufficient certainty.
This result can, though, be seen
tendentially as a threshold value. On the
one hand, the expected negative
correlation was apparent, i.e., counter-
rotation of both parameters was
present. On the other hand, however, the
correlation level had not reached a
statistically significant mark, as can be
taken from Tbl. 4-67.

As a result of this, the classification
as unequivocal within the basic
tendency of a model-conformant
correlation had to be disregarded.

Tbl. 4-67: Correlation between FTE-related customer
service cost and stockout
Correlation N R P() M
customer service cost per FTE &
inventory stockout percentage
73 0.12
non-
signif.
I-
CP

4.1.3.3 Customer Service (reliability ?
and responsiveness) vs. assets
Thesis 66:
No empirical support could be found for
the thesis that a high on-time delivery
percentage inbound and outbound
would correlate with a low inactive
inventory percentage, as reflected in the
following Tbl. 4-68.

Tbl. 4-68: Correlation between on-time deliveries and
inactive inventory percentages
Correlation N R P() M
on-time delivery percentage
inbound & inactive inventory
percentage
73 +0.02
non-
signif.
I-
CP
on-time delivery percentage
inbound & inactive inventory
percentage
73 +0.07
non-
signif.
I-
CP

Therefore, the analysis of the data
material produced the result that the
percentage of on-time deliveries in the
case of both components (inbound and
outbound) did not stand in the assumed
negative relationship with inactive
inventory percentage. It was rather a
largely unspecific correlation, and
showed therefore an unsystematic
pattern of correlation.

Thesis 67:
An increased appearance-probability of
a high average inventory turnover in
conjunction with a reduced backorders
value was expected. The identified
correlation was in accordance with this
assumption and turned out to be
negative.

However, in the face of the
resulting correlation level only a
tendencial, as opposed to a strongly
marked, correlation could be concluded.

Tbl. 4-69: Correlation between inventory turnover and
backorder value
Correlation N R P() M
average inventory turnover &
backorders value
73 0.15
non-
signif.
I-
CP

Thesis 68:
The thesis of a counter-rotating
correlation between average order-to-
shipment lead time and a high on-time
delivery percentage inbound and
outbound was convincingly confirmed
based on the empirical material.

In the case of both components
inbound and outbound a high
degree of on-time execution
accompanied a reduced average order-
to-shipment lead time, i.e., a
deterministic variable relationship was
proven.

Tbl. 4-70: Correlation between order to shipment lead
time and on-time deliveries (inbound or outbound)
Correlation N R P() M
average order-to-shipment lead time &
on-time delivery percentage inbound
73 0.22
<
0.05
I-
CP
average order-to-shipment lead time &
on-time delivery percentage
outbound
73 0.43
<
0.001
I-
CP

Diag. 4-11: On-time deliveries (inbound or outbound)
and order to shipment lead time
656

In turn for both named
components the contrary relationship
also proved itself to be statistically
significant. The counter-rotation for
the outbound component, i.e., on the
customer side, became especially
apparent. The Diag. 4-11 serves the
purpose of further visualization.

Thesis 69:
The thesis whereby a counter-rotating
relationship existed between cycle count
accuracy percentage and inactive
inventory percentage was, on the
whole, confirmed. The correlation upon
the basis of the empirical data was
negative. With this, the data
relationships presented themselves in a
model-conformant manner. The
correlation was not proven to be
strongly expressed or stringent.
However, the criteria of inferential-
statistical significance were met, as Tbl.
4-71 indicates.

Tbl. 4-71: Correlation between cycle count accuracy
percentage and inactive inventory percentage
Correlation N R P() M
cycle count accuracy percentage &
inactive inventory percentage
73 0.20
<
0.05
I-
CP

Thesis 70:
The model assumption according to
which a high percentage of purchased
lines received on time and complete
would appear in conjunction with a low
average order-to-shipment lead time
could not be corroborated by means of
the empirical data.

No unambiguous counter-rotation
of the two parameters could be
identified. They stood moreover in a
widely unsystematic relationship with
one another (non-correlation).

Tbl. 4-72: Correlation between perfect purchase order
lines and order to shipment lead time
Correlation N R P() M
percentage of purchased lines
received on time and complete &
average order-to-shipment lead time
73 0.02
non-
signif.
I-
CP

Thesis 71:
The thesis by which an increased
occurence probability of a high inactive
inventory percentage would be present
together with a high lines on-time fill
rate could not be confirmed. According
to the data situation the relationship
between the two parameters was even
shown as negative, as illustrated in the
following Tbl. 4-73.

Tbl. 4-73: Correlation between inactive inventory
percentage and perfect customer order lines
Correlation N R P() M
inactive inventory percentage & lines
on-time fill rate
73 0.09
non-
signif.
I-
CP

However, in the face of the
identified correlation level only the
assumption of an unsystematic
correlation could be adopted.

Thesis 72:
A stringently positive relationship was
expected between the average order-to-
shipment lead time and perfect
customer order lines. The calculated
correlation of the two parameters did not
confirm this assumption. A recognizable
negative correlation was present, but
this did not meet the criteria of statistical
significance, as reflected in Tbl. 4-74.

Tbl. 4-74: Correlation between order to shipment lead
time and perfect customer order lines
Correlation N R P() M
average order-to-shipment lead time
& lines on-time fill rate
73 0.14
non-
signif.
I-
CP

Nevertheless, the conclusion may
be drawn from this that within the
empirical data pool, a high average
order to shipment lead time does not
accompany a similarly high amount of
perfect customer order lines, but
tendentially rather accompanies a
reduced amount. In accordance with this,
the constellation has a tendentially
model-contrary character, as the
evaluation results above showed.

Thesis 73:
In the case of thesis 73, a stringently
negative relationship between
transactions processed via web/EDI
and the average received finished
goods turnaround time was assumed.
The data observed, however, showed
that a reversed and therefore
positive correlation existed between
the two parameters, via the web as well
as EDI. Both correlations appeared as
recognizably positive, although not
expressly stringent, as can be taken
from the following Tbl. 4-75.

Tbl. 4-75: Correlation between purchasing transactions
processed via web/EDI and received finished goods
turnaround time
Correlation N R P() M
transactions processed via web &
average received finished goods
turnaround time
73 0.13
non-
signif.
I-
CP
transactions processed via EDI &
average received finished goods
turnaround time
73 0.20 < 0.05
I-
CP

During the correlation of the
transactions processed via web/EDI
and the received finished goods
turnaround time, a statistically
significant result was actually identified.
Possible explanations of this so far
basically model-contrary diagnosis will
be commented upon in detail
elsewhere.
657

Thesis 74:
With regards to thesis 74, according to
which a high percentage of sales via
web would correlate with a low average
order-to-shipment lead time, the
tendencial negative relationship of the
two parameters was present in the
empirical data pool, as expected.
However, the correlation level was
situated in a value range that was
regarded as totally unsystematic, as
emphasized in Tbl. 4-76. The conclusion
of a confirmation of the model
assumption in a substantial way would
therefore not have been justifiable.

Tbl. 4-76: Correlation between sales transactions
processed via web and order to shipment lead time
Correlation N R P() M
percentage of sales via web &
average order-to-shipment lead
time
73
0.00
658
non-
signif.
I-
CP

4.1.3.4 Flexibility vs. assets
Thesis 75:
In the case of thesis 75, conformity of the
bivariate parameter relationship was
expected. This is to say that a low
average received finished goods
turnaround time was assumed to
correlate with a low backorder value
(vice versa for high values of both
parameters).

Tbl. 4-77: Correlation between received finished goods
turnaround time and backorder value
Correlation N R P() M
average received finished goods
turnaround time & backorders value
73 0.02
non-
signif.
I-
CP

The thesis could not be
corroborated by means of the observed
data, as can be seen in the above Tbl. 4-
77. The received finished goods
turnaround time and the backorder value
stood, moreover, in an almost totally
unsystematic statistical relationship to
one another (as such, a non-
correlation existed).

Thesis 76:
No convincing empirical confirmation
could be produced for the thesis that a
high average inventory turnover would
establish itself parallel to a reduced
backorder value. A negative correlation
existed between the two parameters. The
respective correlation level, however,
reached only a poorly expressed (and
therefore unsystematic) value range, as
can be taken from Tbl. 4-78.

Tbl. 4-78: Correlation between inventory turnover and
backorder value
Correlation N R P() M
average inventory turnover &
backorders value
73 0.08
non-
signif.
I-
CP

Thesis 77:

The model assumption that a low
inventory stockout percentage would
accompany a low average received
finished goods turnaround time (and
vice versa for a high value of the two
parameters) could be unequivocally
confirmed by the data. In accordance
with this, a reversible deterministic
variable relationship could be proven.

Tbl. 4-79: Correlation between stockout and received
finished goods turnaround time
Correlation N R P() M
inventory stockout percentage &
average received finished goods
turnaround time
73 +0.27
<
0.05
I-
CP

The characteristics of the
percentage of stockout and the received
finished goods turnaround time indicated
the model-conformant synchronism, as
illustrated in Tbl. 4-79. In addition to
this the respective correlation was
statistically significant.

Thesis 78:
A parallel-running relationship was
expected between the inventory
stockout percentage and the average
order-to-shipment lead time. According
to this, a low percentage of inventory
stockout should appear in conjunction
with a reduced average order-to-
shipment lead time (synchronism also
in the reverse case, i.e., high values of
both parameters).

A model-conformant correlation
was in fact present within the data pool.
Beyond this, the applicability of the
model assumption was corroborated as
statistically significant, and a reversible
deterministic variable correlation could
be proven.

Tbl. 4-80: Correlation between stockout and order to
shipment lead time
Correlation N R P() M
inventory stockout percentage &
average order-to-shipment lead time
73 +0.24
<
0.05
I-
CP

Thesis 79:
In accordance with the model idea, a
counter-rotating relationship was
expected between the inventory
stockout percentage and the average
inventory turnover. This relationship
allowed itself to be corroborated as
model-conformant based on the
submitted data material. The respective
correlation coefficient also proved to be
statistically significant, as can be seen
from Tbl. 4-81.

Tbl. 4-81: Correlation between stockout and inventory
turnover
Correlation N R P() M
inventory stockout percentage &
average inventory turnover
73 0.21
<
0.05
I-
CP

Thesis 80:
A counter-rotating relationship
between the inventory stockout
percentage and the average operating-
equipment efficiency rate (OEE) for
finished products was assumed. The
identified correlation did in fact show
that such a contrary relationship existed
between the two parameters: Weakly
marked stockout percentages therefore
increasingly appeared in conjunction
with an increased degree in operating
equipment efficiency rate.

Tbl. 4-82: Correlation between stockout and operating
equipment efficiency rate (OEE)
Correlation N R P() M
inventory stockout percentage &
average operating-equipment
efficiency rate (OEE)
73 0.10
non-
signif.
I-
CP

Nonetheless, the result could only
be considered a threshold value, as the
empirical parameter correlation was not
present to an extent that could be judged
as stringent or meaningful. The criteria
of statistical significance were
respectively not met, as illustrated in the
above Tbl. 4-82.

4.2 Rating of the
Examination Results of the
Single Hypotheses
In the present section the following
questions are to be answered upon the
basis of the described examination
results:

Which theses could be confirmed,
and how are these results to be
classified?
659
Which theses were not confirmed
or had to be rejected? What are the
possible reasons for this?
Which theses should be changed
and in what way, so that they can be
either confirmed or validated in
future empirical examinations?

4.2.1 Consequences from
the respective differences
and conformities between
the theses and actual results
Of the 80 single theses evaluated, about
60 percent were confirmed as
significant, or at least indicative of the
prognosis of correlation direction.
Roughly 35 percent proved themselves
to be unsystematic, 5 percent were
factually model-contrary and therefore
had to be unconditionally rejected
(falsified). The details of the confirmed
theses may be taken from the aforesaid
evaluation results. The theses
conformant with the SCOR model
corroborate the central assumption
established at the beginning of Chapter 3
and the system of hypotheses found
there.

In the following, the second and
third categories will be dealt with in
detail. During this, the four model-
contrary theses will be individually
discussed and explanations for their
status will be sought. The unsystematic
theses will be discussed in expedient
blocks of topics.

4.2.2 Approaches to
clarification ?of the
unsystematic theses
The statistically totally unsubstantial and
therefore unsystematically classified
theses do not, in the last instance,
disprove the respective adopted central
assumption or the fundamental system of
hypotheses. It was moreover not
possible to confirm or reject them in a
statistically unambiguous way. In the
following, possible explanations are to
be found for the unproven correlations
(non-correlations) of each involved
parameter for those theses.

Factors will be discussed here
which could have contributed to create
an unsystematic picture. In this context,
the limitations (boundaries) of the SCOR
model highlighted in Chapter 2 are also
considered.

In accordance with this, the model
does not lay claim to explicitly include
every company process or every
activity.
660
Unsystematic results can
therefore quite possibly manifest
themselves for the performance
measures respective to that type of
company process. The cases in which
this correlation is possible with
unsystematic results will be specifically
indicated. Based on the results, the
unsystematic theses allow themselves to
be allocated to the following four
categories: Customer order management,
inventory management, transport, and
purchasing.

4.2.2.1 Customer order management
Fifteen theses fell beneath this heading,
namely:

Within the SCOR model group
Intra-Performance Attribute (I-
P):Nos. 7, 8, 14
661
Within the SCOR model group
Intra-Competence (I-C): Nos. 27,
37
662
Within SCOR model group Inter-
Competence/Performance Attribute
(I-CP): Nos. 8, 39, 41, 50, 52, 60,
61, 70, 74, 75.
663

In the category customer order
management, the theses could be further
allocated to two sub-categories:

Time: On-time deliveries, lines on-
time fill rate, order to shipment
lead time, backorders
Quality: Perfect customer orders,
customer disputes.

Both the further competitive factors
in Supply Chain Managements so-
c a l l e d strategic square, cost and
flexibility, are implicitly contained
within those factors which are allocated
to the formerly-named parameters time
and quality.
664
The following
correlations could not be individually
proven:

On-time deliveries, lines on-time
fill rate, backorders and:

Order to shipment lead time: It
could be possible that the
allocation of both variables to
differing SCOR processes (Deliver
on the one side and Source on the
other side) represents the reason
for the fact that only an
unsystematic correlation could be
proven between both the variables.
The correlation would otherwise
have to extend over the whole
Supply Chain, so to speak.
665
It is
possible that in order to prove the
correlation and receive a
sufficiently strong indication, a
larger sample size would be
necessary.

Stock out: A possible reason could
be that the examined companies had
built-up a sufficient inventory or
applied powerful production and
inventory stock planning systems in
order to make themselves
independent from delivery
bottlenecks at least partially. In
conjunction with the companies to
which this does not apply this
could, in actual fact, lead to an
unsystematic picture on the whole,
and thus contribute to a correlation
that cannot be proven.
666
Customer service costs: It is
possible that delivery reliability is
so strongly influenced by further
parameters that higher assets alone
cannot possess a significant
influence. An unsystematic total
picture could result from this. This
train of thought is based upon the
assumption that delivery reliability
alone is not sufficient in order to
secure the customer service
necessary to uphold a competitive
position.
667
Another potential
explanation could lie in the present
efforts to be in a position to ensure
a better customer service by means
of suitable Supply Chain concepts,
with simultaneously low costs.
668
An opposing, yet also interesting
question would be whether
companies would be better off
investing in other areas and should
save on customer service costs.
669
This factual situation will be dealt
with more closely in Chapter 5.
Inventory management costs: The
failure of the study to prove this
correlation could be attributed to
the fact that some of the companies
examined already work with the
previously described concept of
Vendor Managed Inventory (VMI) .
Larger amounts of unfinished or
delivered material would then only
have a restricted influence upon the
inventory costs. To be more exact,
the costs would be shifted onto the
supplier and externalized, as it
were.
670
Similar conditions should
be valid for the correlation with
turnaround times: Longer
turnaround times do not adequately
equate to higher inventory
management costs, because
respective inventory strategies are
applied to counteract this.
671
Average received finished goods
turnaround time: The company-
internal turnaround time has a
substantial influence upon the final
delivery of the finished product to
the customer, and with this the on-
time contract fulfillment. Under
normal circumstances, the
performance indicators for the
Supply Chain contain this internal
component as a constituent of the
delivery performance.
672
It can
therefore be presumed that the data
material in conjunction with this
was not consistent.

Customer disputes: This correlation
falls under the aspect of customer
service after delivery which the
SCOR model takes, amongst other
things, as a given entity. A possible
way to operationalize this
correlation could be a
questionnaire to investigate the
customers opinion of the delivery
performance.
673
It must be assumed
that further parameters have a
substantial influence upon the
frequency of customer disputes.
On-time purchase orders: It can be
presumed that the procurement
strategy and the associated
objective of on-time purchase
orders have an influence upon the
delivery performance.
674
However,
purchase orders alone probably do
not have a sufficiently large
influence upon the total order
processing duration. One reason
could lie in the fact that the
companies have built up enough
inventory stock in order to balance
out delivery fluctuations. This in
turn would indicate potential
savings. Another approach at
explanation could lie in respective
procurement strategies for
cooperation with suppliers
Strategic Sourcing, for example.
675
Sales via the internet: The internet
has apparently not been able to
contribute to the acceleration of
order processing cycle time.
According to this, internet usage in
sales seems to have made a sales
channel available which can
contribute to increasing market
shares and revenues, but does not
necessarily have to lead to a
substantial shortening of process
lead time.
676

Perfect customer orders and:

Cost of customer service: Those
issues mentioned above for the on-
time deliveries also apply here.
Perfect customer orders are
possibly so strongly influenced by
other parameters that high capital
expenditure alone has no
identifiable influence. The question
also arises here as to whether
companies would be better advised
to invest in other areas and save on
customer service costs. This will
be more closely dealt with in
Chapter 5.
Customer disputes: If perfect
customer orders have no
identifiable positive influence upon
the number of customer disputes, it
would mean in reverse that
imperfect customer orders do not
have to lead to ?an increased
number of disputes. This would
suggest the conclusion that some of
the examined companies apply
large sums in order to mend or
touch-up their systems, as it
were, in order to avoid disputes.
677

Similarly, no identifiable
correlation could be proven
between the amount of customer
disputes and customer service
costs. Also, no significant
correlation between customer
disputes and customer retention
could be proven. This correlation
however, falls under the category
of customer service after delivery,
which the SCOR model as
explained above takes as a given
entity. On the one hand,
improvement possibilities with
regards to the SCOR model result
from this. On the other hand,
possibilities for process
optimization arise for the
respective companies.
678
Both
cases will be addressed in the
course of Chapter 5.

4.2.2.2 Inventory management
Eight theses fell within this category,
namely:

Within the SCOR model group
Intra-Performance Attribute (I-
P):Nos. 17, 18
679
Within the SCOR model group
Intra-Competence (I-C): Nos. 28,
32, 33
680
Within SCOR model group Inter-
Competence/Performance Attribute
(I-CP): Nos. 42, 53, 66.
681

Sub-categories could be constructed
within the category of inventory
management:

Effectiveness: Inventory turnover
frequency, material availability
Efficiency: Warehousing space
utilization, inventory turnover
periods, inventory management
costs.

The following correlations could not be
proven:

Warehousing space utilization and:

Inventory turnover frequency: It can
be assumed that the same applies
here as in the above mentioned case
with regards to the relation
between the ability to deliver and
inventory management costs.
Inventory turnover frequency has
probably no identifiable influence
upon warehousing space efficiency,
because some of the examined
companies work with the concept
of Vendor Managed Inventory
(VMI). In this case too, the costs
would be shifted onto the suppliers
and externalized, so to speak.
682
This would also apply for the
inventory management costs:
Inventory management costs would,
in this case, be displaced and
uncoupled, as it were, from the
warehousing space utility. That
would also explain why no
identifiable correlation between
inventory management costs and
cycle count accuracy percentage
could be proven: The responsibility
for the cycle count accuracy would
lay at least partially with the
supplier.
683

Inactive stored material: A
possible reason for the fact that no
significant correlation could be
identified may be the fact that some
of the examined companies
specialize in products with a
relatively short life cycle. The life
cycle of stored material has a direct
influence upon inventory aging: The
shorter the life cycle is, the more
frequently old or inactive material
must be replaced by new.
684
In
addition to the life cycle, however,
the service level strived for is also
relevant: The higher this is, the
higher the risk of building up
inactive material.
685
Inventory management costs: The
non-proven correlation could
represent a further indication of the
fact that the examined companies
already enlist to a greater extent the
use of the concept of Vendor
Managed Inventory (VMI) or
related concepts.

Stock out and manufacturing cycle time:

It can be presumed that amongst the
examined companies a partial
uncoupling of the stocking levels and the
production process has already taken
place.
686
As a result of this, the
dependency or respective correlation
between the factors would be minimal,
and the correlation therefore not
identifiable.

4.2.2.3 Transport
Two theses were allocated to this
category and fall into the SCOR model
group Intra-Performance Attribute (I-P):
Nos. 12 and 15.
687

Both theses could be allocated to
costs. Concretely, no correlation was
found between transport costs (as
percentage of revenue and per FTE) and
the extent of damaged shipments. This
may be because a number of the
examined companies are already
cooperating with external logistics
services (Third-Party Logistics Service
Provider, 3PL) . This would be
consistent with present tendencies,
whereby the cooperation with a 3PL
plays a great role for an increasing
number of companies.
688

4.2.2.4 Purchasing
Two theses fell within this category in
the SCOR model group Inter-
Competence/Performance Attribute (I-
CP): Nos. 43 and 54.
689

In this case, both theses also allow
themselves to be allocated to costs. In
accordance with this, no significant
correlation could be proven between
purchasing costs and:

On-time purchase orders: Higher
costs in the purchasing area did not
seem to contribute to guaranteeing a
better processing of purchase
orders. This could be because a
major problem within the
procurement process normally lies
in the expense involved in
information retrieval, complex
process chains, and the multitude of
manual tasks.
690
Purchase requisition to delivery
cycle time: As in the previous case,
the same would be applicable here:
The reason for the inability to
prove the correlation may lie in
high procurement process
complexity.
691

4.2.3 Clarification
possibilities of the model-
contrary theses
In the case of those hypotheses that
proved to be model-contrary in a
significant or at least tendencial way, a
factual more exact reverse correlation
was found than was presumed during the
initial thesis development. In this
respect, the original theses had to be
represented in the shape of new
counter-theses, in order to draw the
model closer to the empirical reality
(model-conformant correlation).

The derivation and suitability (or
rather the non-defensibleness of the
content) of such counter-theses will be
dealt with more closely here in
conjunction with the possible reasons
for the model-contrary result
constellation. Recommendations for
improvement of the SCOR model result
from the extrication of potential reasons,
which will be dealt with in detail in
Chapter 5.
692

The model-contrary cases
undoubtedly represent the most
problematic group, as they can
invalidate the adopted central
assumption. However, the percentage
they represent of the total amount of
theses investigated is less influential
than it would need to be to cause serious
problems. In this study they account for
somewhere in the proximity of five
percent, which is way short of the
amount that would be necessary in order
to consider the basic hypotheses system
as fundamentally unsuitable.
693
One
thesis fell within the SCOR model group
Intra-Competence (I-C): No. 19. The
other three theses had to be allocated to
SCOR model group Inter-
Competence/Performance Attribute (I-
CP): Nos. 58, 72 and 73.

4.2.3.1 Model-contrary thesis of SCOR
model Group ?Intra-Competence (I-C)
The counter-rotating correlation
within the customer-facing indicators,
i.e., between customer service
(reliability and responsiveness),
concr etel y delivery performance
inbound or outbound, and flexibility,
concretely supply chain response time,
had to be rejected as model-contrary.
The respective correlations were exactly
reversed. The resulting counter-thesis
would be as follows:

A high on-time delivery
percentage inbound and outbound
accompanies a high backorders value.

The counter-thesis content does not
make sense from the aspect of
plausibility, because it is the primary
intention of on-time deliveries to avoid
backorders.
694
As far as this is
concerned, the counter-thesis cannot
therefore be theoretically supported
within the model. It is to be assumed that
inconsistencies within the data material
available account for this examination
diagnosis. In addition to this, it must be
noted that in the face of the empirical
constellation, the model-contrary
counter-rotation was to be derived
from the original theses. However, the
correlation fell short of being
significant. The conclusion that
inconsistencies or random fluctuations
exist within the data material was
therefore corroborated.

4.2.3.2 Model-contrary theses of SCOR
model group Inter-
Competence/Performance Attribute (I-
CP)
The (positive) correlation between
customer service (reliability and
responsiveness), concretely order
fulfillment lead time, and cost,
concretely warranty cost or returns
processing cost adopted in thesis 57 had
to be rejected.

The constellation upon the basis of the
empirical data proved itself to be
counter-rotating. The counter-thesis
can therefore be formulated as follows:

A low average purchase
requisition to delivery cycle time
appears in conjunction with a high
number customer disputes.

From the point of view of the
content, such a counter-thesis would
seem highly plausible: The high
complexity of the procurement process
determines that, even with procurement
of the simplest or respectively low-
value products, several departments
must be involved within the procurement
process.
695

The SCOR model in its present
form obviously does not (yet) make
enough allowance for the influence of
present-day procurement process
complexity upon customer satisfaction.
A possible reason for this could be that
SCOR represents a respective function-
or process-orientated model, as opposed
to a data-orientated model. Data-
orientated models are in a position to
illustrate data and relationships, under
which for example the relationship
between delivery data and customer data
would fall. One possibility for further-
development of the SCOR model in that
direction could be the extension of the
process model to illustrate associated
material and information flows between
customers and suppliers.
696

The (positive) correlation adopted
in thesis 72 between customer service
(reliability and responsiveness),
concretely perfect order fulfillment, and
assets, concretely inventory days of
supply, had to be rejected, as a
recognizably contrary relationship
existed between both parameters upon
the basis of the empirical material. The
possible counter-thesis is therefore:

A low average order-to-
shipment lead time correlates
with a high lines on-time fill
rate.

Such a counter-thesis may be
justified on the following bases: It can
be assumed that the reduction in order to
shipment lead time ranks high in the
importance of todays Supply Chain
strategies. A possible effect of this
would be the achievement of a perfect
orders rate.
697

The optimization of the processes
regarding order to shipment lead time
already represents a substantial
component of the respective Supply
Chain and competitive strategy
respectively for a multitude of
companies.
698
And if one presumes that
beyond this fact a high rate of perfect
orders has a positive influence upon
payments on the customer side, the
process acceleration in the sense of a
decrease in average order-to-shipment
lead time is of substantial importance for
the competitive factor time in the context
of contemporary competitive
strategies.
699

It may be concluded that the SCOR
model does not yet make sufficient
provision for the circumstance whereby,
due the contemporary prioritizing of
decreased average order-to-shipment
lead times, a counter-rotating
influence upon the order completion rate
is no longer present.
700
The correlation
adopted in thesis 73 between customer
service (reliability and responsiveness),
concretely order fulfilment lead time,
and assets, concretely cash-to-cash
cycle time, was rejected on the grounds
of the significantly counter-rotating
diagnosis. The possible counter-thesis
in accordance with this is as follows:

A high number of transactions
processed via web/EDI
accompanies a high average
received finished goods
turnaround time.

A possible explanation for the
justification of this counter-thesis could
lay in the fact that although the
electronic processing of procurement
procedures, according to industry
affiliation, can make possible cost
savings of 10 to 20 percent of process
costs and 3 to 12.5 percent of total costs
the savings are probably not achieved
via the shortening of process cycle time.
Moreover, a lack of networking and
synchronization between the departments
involved leads to redundant stages of
work which mainly have to be manually
carried out, and are therefore relatively
personnel- and time-intensive.
701
The
SCOR model does not account enough
for this and attaches too little importance
to this factor. A reason for this fact
could be that the concept of E-Business
was only first introduced into the model
in Version 6.
702

4.2.4 Summary of the
examination results
accumulated for the single
hypotheses
Of the 80 evaluated single theses,
roughly three fifths were proven to be
significant or at least model-
conformingly indicative of the
correlation direction in the prognosis.
703
About a third of the theses were proven
to be unsystematic in the defined
sense.
704
A small amount of roughly a
twentieth had to be classified as
significant or at least tendentially
contrary to the model and presumed
correlation direction.
705

By the enlisted use of pure binary
division according to p()-error
probability (significant vs. non-
significant), roughly 37 percent of the
theses were to be classified as
significantly model-conformant and
about 1.5 percent as significantly model-
contrary.
706

In connection with this it must be
considered that a summarizing string of
single theses is only restrictedly suitable
for the purpose of confirming a theory
understood as a hypotheses system in a
statistical-methodical sense. Several
hypotheses or a system of hypotheses
belong to a theory in this sense.
707
As
was made clear at the beginning of the
study, the objective here was, amongst
other things, to make an initial
contribution towards a theory of this
kind. This study does not, however,
claim to have conclusively investigated
a theory.
708
Rather, it adopted an
exploratory approach, in which a
successive accumulation of knowledge
stood in the foreground. Such an
approach must be continued beyond this
study by means of further iterative
examinations building upon it.
709

Furthermore, a multitude of
alternative illustration options for the
model exist in addition to the one
developed in the context of the work at
hand. The inference to the SCOR model,
in a general sense, must really be seen
with this as a background. Beyond this,
interfering influences occurring with
probable certainty and the limitations
present during the examination must not
be disregarded. These will be dealt with
at the end of the present chapter. The
derivation of respective
recommendations for improvement or
innovative indications with regards to
the SCOR model and its application,
gained on the basis of the accumulated
results, needs to continue. This aspect
will be addressed in Chapter 5.
710

4.3 Attempt at Application of
Structure-analytical
Procedures ?to Verify the
Meta Theses
4.3.1 Design of the
examination
Directly after the investigation of the
single theses by means of inferential-
statistical procedures, an attempt was
made to examine the seven established
Meta theses
711
using a structure-
analytical procedure. During this,
concretely the AMOS procedure came
into use.
712
Because the Meta theses
focus upon a superior level, the
assignment of this procedure seemed
appropriate. It is important to note in this
instance, though, that the single theses
subsumed beneath a Meta thesis for the
purpose of structural analysis may in no
way be allocated to the same extent of
the respective Meta theses. This can
already be seen by the fact that some
single theses were emphatically model-
conformant, whilst others were
unsystematic and, in their turn, some
were even partially model-contrary. The
possible reasons for this state of affairs
were equally described.

The attempt to apply the structure-
analytical procedure must be seen with
this as a background: It should serve to
clarify whether the results accumulated
within the framework of the detailed
(inferential-statistical) examination and
(interpretative) observation and
regarding the single theses can be
tendentially confirmed and, if not, what
the possible reasons for this could be.
During this it should not be about, as it
were, hastily confirming (or rejecting)
blocks of theses (on Meta theses level)
using structural analyses.

Firstly, the focus of the study lay
clearly in the detailed investigation of
bivariate assumptions of correlation
based on the compiled single
hypotheses. Secondly, the sample size of
N = 73 would in no way have been
sufficient for the exclusive dependence
upon the support of structural equation
modeling procedures.
713
Within the
framework of the additional structure-
analytical calculations respectively
split according to the seven Meta theses
it was decided to transpose the present
parameters. Up to that point, these had
been calculated on a bivariate level.
Now, they were transformed into more
complex models, or rather models on a
more aggregated level. The investigation
of these partial models for sufficient
compatibility with the empirically
identified data situation, was made
possible by means of the previously-
mentioned AMOS program.

With regards to the partial models
to be tested, it must be noted that
patterns of correlation should only be
extracted when they fulfill the following
two conditions:

1. The partial models arise logically
from each single theses allocated to
one Meta thesis. They therefore
comprehend the bivariate correlations
postulated by means of single
hypotheses.
2. The partial models actually extend
beyond the level of complexity of
single hypotheses which exist
exclusively upon a bivariate level,
and at least illustrate the correlation
presumptions associated with a Meta
thesis.

The second condition therefore
contained the illustration of a pattern of
correlation comprising several
parameters. Modeled upon pertinent
literature,
714
the theoretical measurement
supportability was assumed if certain
indicators
715
could be identifiably
allocated to a factor or respective
fundamental dimension, and this
statistical allocation was durable going
by factor-analytical conventions, i.e.,
had a substantially high intercorrelation
of the respective indicators amongst
themselves.
716
Because more than two
variables were principally involved,
advanced variable relationships were
present.
717

A degree of orientation by
structure-analytical conventions,
according to which the following
symbols are customarily used, was
sought during the illustration of the
formed partial models:
718

An ellipse represents respective
dimensions or factors consisting of
indicators (single measures). In
statistical literature, they are
described as hypothetical
constructs or latent, non-
measurable dimensions, depending
on the field of use.
Rectangular boxes represent so-
c a l l e d indicators as an
operationalization of factors.
Arrows visualize relationships
which are postulated as substantial,
whereby the arrows direction
shows the direction of dependency
(assumed causal direction) and
gives an indication as to whether
the observed measures converge or
diverge.

A variety of information can be
found in literature with regards to the
acceptance or rejection of structure-
analytical models, whereby the
orientation takes place by means of the
previously mentioned Goodness-of-Fit
Index (GFI) or Adjusted Goodness-of-
Fit Index (AGFI).
719
In some cases, a
GFI or AGFI of 0.9 is required, and in
others a value of 0.8 in conjunction
with a positive degree of freedom
720
of
the model.
721

4.3.2 Verification of the
suitability ?of the Meta
theses for creation ?of
structure-analytical partial
models
As already introduced and outlined
elsewhere,
722
it is necessary to make use
of so-called hypothetical constructs in
order to investigate a structure-
analytical model and the causal
dependencies postulated therein with the
support of suitable measurement
indicators. In scientific methodology,
reference is made in this respect to a
theoretical and an observational
language. The theoretical language or
language on a general model-descriptive
level works primarily in conjunction
with hypothetical constructs, whilst the
observational language uses terms that
refer to the directly observable
empirical phenomena.
723

In order to describe the correlation
between the hypothetical constructs, one
cannot avoid defining every latent
variable by means of an indicator or,
better still, several indicators: The
indicators as explained above
represent the empirical illustration of the
non-observable latent variables. The
mapping takes place with the aid of
corresponding hypotheses, which
connect the theoretical terms with the
terms of the observational language.
724

The AMOS approach at causal
analysis, useful for model evaluation in
the submitted work, is also founded upon
the previously-mentioned concepts: A
structural model is formed, which
illustrates theoretically or subject-
logically derived relationships between
hypothetical constructs. The dependent
latent variables are represented as
endogenous, and the independent
variables as exogenous measures.
Subsequent to this, a measurement model
is determined for the latent exogenous as
well as for the latent endogenous
variables. The acquisition of the latent
variables can only take place via the
empirical indicators (constructional
operationalization). Causal
dependencies between the indicator
variables are defined under AMOS by
covariances and correlations. During
this, differentiations can be established
between latent variables and their
indicators, as well as above all else,
between latent endogenous and
exogenous variables. On the whole,
AMOS comprises an analysis on the
level of aggregated data material
(covariance and correlation data) and is
intended to evaluate a given hypotheses
system en bloc, i.e., as a complete
entity.
725

In the work at hand and built upon
the AMOS guidelines, an exemplary
partial model allows itself to be drafted
in the form of a graph, as depicted in the
following illustration. In this case, we
are actually dealing with the
representation of the partial model
belonging to Meta thesis VI.
726
In this
context, the postulated latent dimensions
and overt indicators are pictured,
whereby the Performance Attributes
fundamental to the Meta theses which
cannot be immediately measured
represent latent dimensions. A bottom-
up mapping of (immediately
measurable) Performance Measures
therefore takes place in the shape of
overt indicators (illustrated by
rectangular boxes) to Performance
Attributes in the form of hypothetical
constructs (illustrated by ellipses). A
representation of residual variables or
measurement errors has been excluded
for reasons of lucidity.
727

After determination of the model
structure by AMOS, it is necessary to
investigate the extent to which the
mathematical estimation of the model
parameters is actually possible, or
whether the degrees of freedom are
appropriate for the parameters to be
estimated. In accordance with this, the
number of degrees of freedom required
in order to solve a structural equation
model must be larger than, or equal to,
zero. The following formula expresses
this factual situation:
729

t = p
*
= 1/2 (p+q) (p+q+q)

With: t = number of
parameters to be estimated

p = number of the y-variables

q = number of the x-variables

Tbl. 4-83: Legend to Diag. 4-12: Index of the applied
performance measures
728
Index Performance Measure
CS-1 Customer retention rate
CS-2 Backorders value
CS-3
On-time delivery percentage (inbound and
outbound)
CS-4
Percentage of purchased orders received on time
and complete
CS-5
Percentage of purchased lines received on time and
complete
CS-6
Average MPS plant delivery performance (work
orders)
CS-7 Cycle count accuracy percentage
CS-8
On-time delivery percentage (inbound and
outbound)
CS-9 Perfect orders rate
CS-
10
Lines on-time fill rate
CS-
11
Customer retention rate
CS-
Average purchase requisition to delivery cycle time
12
CS-
13
Transactions processed via web/EDI
CS-
14
Average manufacturing cycle time
CS-
15
Percentage of sales via web
A-1 Average received finished goods turnaround time
A-2 Inactive inventory percentage
A-3 Average order-to-shipment lead time
A-4 Average inventory turnover
A-5 Average operating-equipment efficiency rate (OEE)
A-6 Average plant capacity utilization
A-7 Average warehousing space utilization

The testing for the model
structures ability to be identified is
guaranteed by AMOS itself (by
automatic parameter estimation),
because in the case of non-identifiable
models, the model does not complete the
calculation, in so far as that no
unequivocal solution for the equation
system is given. Also, the models
quality is questionable in the presence of
negative variances, correlations 1
(excluded anyway according to the
convention) or very high standard errors,
as such effects would suggest the
conclusion of problems during
identification of the model.

Diag. 4-12: Mapping of structure-analytical partial
model to Meta thesis VI

The implementation of structure-
analytical calculations using AMOS is
principally made easier by satisfactorily
high levels of sample sizes.The
Unweighted-Least-Squares method has
sometimes verified its ability for the
purpose of parameter determination.
730
Unlike alternative estimation
procedures, such as the Maximum-
Likelihood-Variant, this method offers
the advantage that consistent estimates
are possible and do not depend upon a
minimum sample size.
731

With a sample size compatible with
the presently implemented examination,
reliable and valid results with
consideration to the previously-
mentioned reservations and in view of
albeit rather simpler model structures
could be attained in other structure-
analytical studies.
732
It was also clear
from the beginning that the achievable
sample size for the work submitted lay at
best at or even under the minimum limit
required for the complete testing of a
model.
733
For this reason, the
investigation of the model structure for
the partial models was not successfully
realizable, in as much as all relevant
single theses for this purpose had been
processed. Sample sizes of at least N =
100, or possibly even larger samples as
recommended by Backhaus et al. and
other researchers, would have been
necessary here. Consequently, an
investigation of the total model, i.e., the
complete combination of all the
individual partial models, was not
possible. It may be summarized that, in
the present case, it was not possible to
develop a structure-analytical model
which, with regards to the associated
variables, would have provided
sufficient coverage and simultaneously
fulfilled the necessary assumption
conditions to meet scientific
requirements. It would perhaps have
been principally possible to compose
partial models which contain purely a
restricted number of variables. By doing
this, however, the significance of the
statements would have been further
reduced, in addition to the already
critical sample size (N = 73) necessary
for structure-analytical evaluations
under application of strict scientific
measures.

Furthermore, it must be considered
that structural equation models also
demand, in addition to statistical
criteria, certain content requirements
from the data material to be examined
for example, the presence of a secured
theory (at least to a rudimentary
degree).
734
Because this study is of an
exploratory nature, it cannot sufficiently
account for this requirement and must
only make an initial contribution
towards it. This train of thought is
captured again elsewhere in Chapter 6 in
conjunction with the possibilities of the
assignment of structure-analytical
procedures within future studies.
735

4.4 Identification of
Interfering Influences and
Errors
4.4.1 Criticism of the
selection procedure
The procedure of typical case selection
applied in the study shows several
known disadvantages. The first problem
comprises determining those criteria in
accordance with which the elements
observed are to be classified. These
criteria can only be defined by the
examination objective, and the influence
that this can have upon the examination
results may prove difficult to estimate.

Secondly, the procedure already
predetermines respective prior
knowledge of the total population. One
must know in advance, for example, how
the relevant characteristics (according to
which the typical cases are defined) are
distributed within the total population.

Thirdly, in the empirical context,
the selection cannot be adjusted to the
characteristics of actual interest, but
substitute characteristics have to be
enlisted in order to determine the typical
cases. During this, it must be considered
that the substitute characteristics must
also be typical with regards to the actual
characteristics of interest.
736
The first
disadvantage is appropriate in this case,
but it must be noted that the examination
objective was clearly known.
Disadvantages two and three are only
restrictedly valid, because with the type
of information retrieval in question, one
is dealing with a case of secondary
research. As a result of this, knowledge
of the total population was already
present and a typical selection was
simplified. The person conducting the
secondary analysis is similarly
restricted during the hypotheses testing
by the quality of the material used,
which is determined by factors such as
the method of the primary research, the
sample, etc.
737
In addition to this, the
actual characteristics of interest were
known at the time of the examination
implementation, so that no substitute
characteristics had to be defined. It must
still be recorded, though, that the
sampling method applied does not lay
claim to representing the examination
results.

4.4.2 Blurring of the
hierarchical assignment ?of
performance indicators
Blurring is possible with regards to
the allocation of performance indicators
from latterly to formerly situated levels
(i.e., performance measures to level 1
metrics). The Supply-Chain Council
admits that within the SCOR model, the
performance indicators may not be, or
are not always clearly able to be,
assigned to the SCOR main processes
(chevrons).
738
In addition to this,
overlapping sometimes occurs, which is
due to the comprehensive detail of the
model.
739
On the other hand, the
performance indicators used within the
framework of the examination refer
directly to a SCOR main process.
740

An attempt was made to confront
this disadvantage by means of
investigating where the reasons lay in
case of the rejection (falsification) of a
thesis. Within the context of this
additional and interpretative attempt at
explanation, the blurring in assignment
already mentioned was taken into
consideration.
741

4.4.3 Realization of the
examination ?as a
secondary analysis
The examination submitted was
implemented as a secondary analysis,
which conceals advantages as well as
disadvantages. The biggest advantage
can almost certainly be seen in the fact
that the necessary data did not need to be
accumulated, but was already present.
The aspects of research economy and
time were decisive criteria during the
selection of the analytical procedure.

A substantial disadvantage of
secondary analysis exists, however, in
the fact that the evaluation must
inevitably be restricted to the data
already present. The researcher planning
the examination therefore needs, in all
cases, an example of the questionnaire
assigned within the primary survey, the
interview instructions, and the resulting
data.
742

In this study, the required
information was unrestrictedly available
to the author. For this reason, an
assessment on the extent to which the
data could be used was possible to a
sufficient extent. The complete
questionnaire and the instructions for
completion may be taken from the
appendix;
743
the data material in its
entirety is available from the author.
744

4.4.4 Scope of the examined
sample
The sample selected for the purpose of
the secondary examination contained the
data from 73 (typical) companies. The
scope of this sample seemed thoroughly
adequate for meaningful descriptive-
statistical and correlation-analytical
results. With the given scope, the risk of
the correlation level being substantially
blurred by extreme values is also
minimized.
745

However, as has already been
mentioned, a sample size of over 100 is
usually favored for structural equation
models similar to the applied AMOS
procedure.
746
A two-stage approach was
chosen to counter this possible point of
criticism: First, a correlation analysis
was carried out and, following this and
purely for selected special cases
concretely for investigation of the Meta
theses an attempt was made to apply a
structural equation model. The
restriction therefore only refers to those
cases in which the second stage was
applied. Beyond this, the second stage
primarily served as the attempt at an
additional corroboration of the results
previously compiled by means of
inferential-statistical methods and
descriptive-analytical descriptions.
747

4.4.5 Inadequacies in the
terminology ?for the
performance terms
In Chapter 3, the insufficiencies present
concerning the definition of terms in
conjunction with the SCOR model were
dealt with in detail.
748
An attempt was
made to confront this problem by
adopting Seibts incitement and creating
a consistent definition of terms, which
was adhered to throughout the study.
749

Chapter Five

Summary of conclusions
and innovative
assessments

This chapter addresses the context of
realization, as seen within the
framework of the course of research
logic according to Friedrichs. This
context, which has consistently been
identified as a central theme from the
point of view of critical social-scientific
research theory,
750
may usefully be
described as follows:

Under context of realization,
the effects of an examination
are to be understood, as is its
contribution to solving the
initially posed problem. The
examination has a knowledge-
theoretical function, in that it
expands our knowledge of
social connections.
751

5.1 Overall Appraisal and
Interpretation of the SCOR
Model due to the Results of
the Examination
In this chapter the empirical results are
collectively analyzed once again by the
use of single theses blocks within the
SCOR model groups. This is done with
the aim of undertaking a complete
evaluation of both the illustration
developed within the framework of the
work submitted, and the SCOR model
operationalized by means of the derived
theses model. Consequently, a
hermeneutic observation
752
of the single
theses results can take place upon an
aggregated level. Together with the
detailed explanation of the examination
results and the interpretational work in
Chapter 4, it accounts for the postulate
according to which the analysis is
constituted by (statistical) evaluations
and (content-theoretical) interpretations,
together with the data collected by
means of empirical instruments (in other
words: the empirical material present in
the form of numbers).
753

Chapter 4 also contains a
discussion on the possible reasons for
results that are barely or definitively not
compatible with the model concepts.
754
As emphasized in the introduction, this
study cannot (and does not wish to) lay
claim to having investigated the
suitability and validity of the SCOR
model per se. Rather, it represents an
exploratory contribution in this field,
which must be taken up and continued by
further studies. The following
explanations must be seen with this
premise in mind.

5.1.1 Reflection of the
SCOR model based upon
the results of the SCOR
model groups
The first Meta thesis established
referred to the SCOR model group Intra-
Performance Attribute (I-P).
755
In this
thesis, the performance measures within
a performance attribute conform to one
another, and thus a degree of consistency
must exist between these performance
measures. The Meta thesis was
unambiguously confirmed by the
empirical data. Of the eighteen single
theses subsumed beneath this Meta
thesis, eleven could be classified as
significantly or at least tendentially
model-conformant. An unsystematic
diagnosis was reached for seven of the
investigated theses; i.e., a non-
correlation had to be correlation-
analytically assumed.
756
Consequently, a
clear model-contrary relationship was
not identified for any of the examined
parameters of the (single) hypotheses
associated with this Meta thesis.

During the application of pure
binary division according to
the p(a)-error probability
(significant vs. non-
significant), 38 percent of the
theses were therefore
classified as significantly
model-conformant, and 0
percent classified as
significantly model-
contrary.
757

The SCOR model group Intra-
Performance Attribute (I-P)
could therefore be validated
as tentatively confirmed.

The second and third Meta theses
referred to the SCOR model group Intra-
Competence (I-C).
758
The second Meta
thesis contained the correlation between
customer service and flexibility. In this
area it was expected that the general
statement that a high (low) customer
service would accompany a high (low)
flexibility would be confirmed. This
statement may be considered as
supportively corroborated upon the
basis of the observed factual
connections. For the ten single theses
relevant here, in two cases a tendencial
not statistically meaningful model-
contrary constellation was present, and
in one case a totally unsystematic
constellation was given. The results of
all other theses were covered on the
whole by the model postulate
represented by Meta thesis II.

During the application of pure
binary division according to
the p(a)-error probability
(significant vs. non-
significant), 58 percent of the
theses were therefore
classified as significantly
model-conformant, and 0
percent classified as
significantly model-
contrary.
759

Meta thesis III assumed a parallel
correlation between costs and assets. In
the case of the nine single theses
established, a model-contrary diagnostic
situation (even if it was tendencial or
rudimentary in nature) was not
unexceptionally present. Only in the case
of three single theses did a conclusion of
largely unsystematic circumstances have
to be drawn in the face of an explicit
correlation level within the area of 0.00
to 0.10 (absolute). On the whole,
however, nothing contradicted the
fundamental suitability of the respective
Meta thesis.

During the application of pure
binary division according to
the p (a)-error probability
(significant vs. non-
significant), roughly 33
percent of the theses were
therefore classified as
significantly model-
conformant, and 0 percent
classified as significantly
model-contrary.
760

With this, the SCOR model
group Intra-Competence (I-C)
could therefore be validated
as tentatively confirmed.

Finally, Meta theses IV to VII
referred to the SCOR model group Inter-
Competence/Performance Attribute (I-
CP).
761
A comparatively high number of
single theses were assigned to these
Meta theses, according to which a high
(low) customer service correlates with
high (low) costs. Of these twenty single
theses, half proved themselves to be
significantly model-conformant. The
majority of the remaining single theses
were more or less statistically classified
as unsystematic. A model-contrary
parameter relationship could only be
identified for one single thesis (expected
synchronization between purchase
requisition to delivery cycle time and
number of customer disputes).
762
On the
whole therefore, a model-compatible
diagnostic situation existed for Meta
thesis IV, even if this compatibility was
not as strongly expressed as in the case
of theses I to III.
763

During the application of pure
binary division according to
the p(a)-error probability
(significant vs. non-
significant), roughly 32
percent of the theses were
classified as significantly
model-conformant, and 0
percent classified as
significantly model-
contrary.
764

Meta thesis V, which assumed that
a positive correlation existed between
flexibility and costs, included eight
single theses. Only a quarter of these
single hypotheses were classified as
unsystematic, and a model-contrary
correlation was not given. All other
theses proved themselves to be model-
conformant in the face of the identified
parameter relationship directions, albeit
with an emphatic and only tendentially
model-compatible percentage. So far,
this Meta thesis seemed an acceptable
measurement based upon the empirical
facts.

During the application of pure
binary division according to
the p(a)-error probability
(significant vs. non-
significant), roughly 25
percent of the theses were
classified as significantly
model-conformant, and 0
percent classified as
significantly model-
contrary.
765

A different conclusion had to be
drawn with respect to the sixth Meta
thesis. In this case, a positive correlation
or a parallelism between customer
service and assets was assumed.
Roughly half of the respective nine
single theses were judged as model-
adequate. Two single theses, on the
other hand, proved themselves to be
substantially, or at least rudimentarily,
model-contrary, and the remaining single
theses proved themselves to be
unsystematic to the largest extent. Faced
with this empirical diagnostic situation,
it has become necessary to reflect more
closely upon the possible reasons for
such a model inadequacy (even if it was
partial), and to work out respective
options for innovation. This occurs in
the following paragraph.

During the application of pure
binary division according to
the p(a)-error probability
(significant vs. non-
significant), roughly 25
percent of the theses were
classified as significantly
model-conformant, and 8
percent classified as
significantly model-
contrary.
766

In the case of Meta thesis VII,
whereby a positive correlation was
assumed between flexibility and assets,
a model-conformant pattern became
apparent at large. Of the six single theses
assigned to this Meta thesis, half were
model-conformant in a statistically
significant way. Two single theses could
be tendentially confirmed, only one was
statistically unsystematic.
767

During the application of pure
binary division according to
the p(a)-error probability
(significant vs. non-
significant), 50 percent of the
theses were classified as
significantly model-
conformant, and 0 percent
classified as significantly
model-contrary.
768

With this, the SCOR model
group Intra-
Competence/Performance
Attribute

(I-CP) could therefore also be
validated as tentatively
confirmed.

Consequently, the following
statement arises regarding the central
assumption, which was established for
the purpose of the empirical
examination:
769

After consideration of the
aforementioned restrictions,
and for the developed
depiction of the SCOR model
in hypotheses form, it can be
considered as tentatively
confirmed that the
Performance Metrics assigned
to the Performance Attributes
within one of the two Supply
Chain competences
(performance capability and
efficiency) are consistent with
one another, i.e., point in the
same direction. The
performance metrics assigned
to the Performance Attributes
between the two competences
mutually compensate each
other, i.e., they guarantee a
balance between the various
objectives.

This assessment rests upon the
substantial predominance of
theses confirmed in a
statistically significant way
over significant model-
contrary theses. Empirically,
the last named case hardly
played a role.

Based on the attained examination
results, and in addition to the derivation
of the above-mentioned conclusions,
further conclusions may be drawn in the
form of recommendations. These will be
spelt out in the following paragraph. As
already mentioned, it must be borne in
mind that the recommendations refer, in
the first instance, to the
operationalization of the SCOR model.
As previously indicated, other forms of
model operationalization are
possible.
770
An inference to the
(abstract) SCOR model must therefore
be seen in the respective context. As a
result, generalizations are only possible
in a restricted manner and must
inevitably be seen with the premise of an
exploratory approach.
771

5.1.2 Potentials for
improvement and
recommendations
Above all, the results of Meta theses VI
indicated that potential for improvement
to the SCOR model seems to exist with
regards to the connection between
customer service and assets. In detail,
the Meta thesis assumed that a high
(low) customer service correlates with
high (low) assets.

As already mentioned, the SCOR
model does not attempt to describe
every company process or activity
within the Supply Chain.
772
The
components consciously omitted are
marketing and sales (i.e., demand
generation), research and technology
development, product development, and
some areas of post-delivery customer
service.
773
The results of the submitted
examination suggest that in the context
outlined here, the inclusion of marketing
and sales would be necessary,
especially as these represent a
substantial component of customer
service in the present-day competitive
environment.
774
Modern Supply Chain
strategies
775
assume the existence, as a
rule, of sales and distribution-controlled
delivery ability.
776
Inevitably,
consequences arise for the stock levels
and range of stock.
777
In conjunction
with this, it is important to note that the
simultaneous requirement for a high
customer service, especially with
respect to high delivery reliability and
short delivery lead times, has a decisive
influence upon the SC strategy and with
that also upon the required assets,
especially the inventory days of
supply.
778
Additionally, the step from
traditional Supply Chain Management
towards a value-generating approach is
introduced previously described
elsewhere as the Value Chain.
779

The value generating approach
focuses upon the gradual increase in
value and, accordingly, it explicitly
includes marketing- and sales-orientated
elements in addition to the actual
physical availability, disposal, usage
and exploitation of goods.
780
However,
no efforts have been made by the
Supply-Chain Council to change the
SCOR model in Version 7.0 and 8.0 in
this direction.
781
Hence, the
recommendation below can be derived.

First recommendation: Due
to the results of the
examination as well as
present-day developments in
the competitive company
environment, tendencies are
apparent whereby the
inclusion of marketing and
sales into a future SCOR
model version could
contribute to address
weaknesses and therefore
further optimize the model.

As explained in Chapter 4 in the
context of the interpretation of model-
contrary diagnoses,
782
potential for
improvement obviously exists upon the
basis of examined Version 6.0 of SCOR
with regards to the procurement
processes. This situation has not
changed in Version 7.0 and 8.0 of
SCOR.
783
Consequently, the following
recommendation is derived from this:

Second recommendation:
The examination results
suggest that the SCOR model
in its present form does not
(yet) fully account for the
influence of todays
procurement process
complexity upon customer
satisfaction. A possibility for
further development of the
SCOR model could, therefore,
be the expansion of the
process model to include the
illustration of associated
material and information
flows between customer and
supplier.

Another finding of the study, also
reached through the model-contrary
results, was that the electronic execution
of the procurement processes does not
seem to be sufficiently expressed within
the SCOR model Version 6.0.
784
There
were also no significant changes made in
this regard in the subsequent versions of
SCOR.
785
Thus, a further
recommendation may be made:

Third recommendation: The
inclusion of the concept of E-
Business into the SCOR
model, which began with
Version 6.0, should be
consequently continued with
specific regard to the
electronic execution of
purchasing processes. By
these means and amongst other
things, the requirement for an
increasing network and
synchronization between the
departments involved in
procurement could be better
accounted for. In addition to
this, suggestions for best
practices would offer support
for the realization of
improvements in process
execution.

It must be borne in mind that, in the
case of the aforesaid recommendations,
we would not be dealing with an
extension to the SCOR model structure,
but rather a continuative
supplementing of the model structure
already present. This aspect will be
invoked again at a later stage within the
framework of the recommendations for
further research.
786

5.1.3 Recapitulatory
appreciation of the
operationalization of the
SCOR model
The three SCOR model groups
illustrated above mutually cover the
developed operationalization of the
SCOR model as a whole, with the SC
c ompe t e nc e s customer-facing and
internal-facing on the one side, and the
hierarchically arranged key performance
indicators (performance attributes
level 1 metrics performance measures)
on the other side.
787
A hermeneutic
appraisal
788
of the results of the seven
aggregated Meta theses and the
associated blocks of single hypotheses
respectively allow the conclusion that
those are to be deemed to be supportive.
Based on the examination results, the
depiction of the SCOR model developed
within the framework of the work can be
seen respectively as suitable, or as
having a close proximity to the truth.
789

In this case, it must be borne in
mind that we were dealing with an
exploratory examination of the model.
As a result of this, a universally valid
statement as to the suitability or close
proximity to the truth of the model as
such can in no way be made based upon
the accumulated knowledge. The
findings rather represent an initial
contribution in the form of a confirmed
central assumption
790
towards a
universally valid statement.
791

On the whole, noticeable
discrepancies could not be found
between the model concept and
empirical reality.
792
However, certain
deficits became apparent in the case of
Meta thesis VI, which contained the
relationship between customer service
and assets, and in the case of which
possible areas for improvement were
indicated. A representation of modern
concepts and tools will now be
initialized for Supply Chain formation
under application of the SCOR model
and based on the accumulated
examination results. For this purpose,
the following continuative questions are
formulated and raised:

Which innovative approaches for
the Supply Chains formation and
optimization are currently being
discussed in academic science and
company practice?
Which possibilities and modern
tools exist that could be applied for
the improvement of the SCOR
models usage and consequently the
formation and optimization of the
Supply Chain?
793

As described earlier, this study
was particularly concerned with
answering the following research
questions:
794

How could the SCOR model be
transposed onto a thesis model and
operationalized based on the
model-immanent performance
indicators?
How could the SCOR models
conveyed depiction be submitted to
an exploratory examination based
on empirical data?

This study had the explicit
objective of developing a special form
of SCOR model operationalization and
investigating its adequacy and proximity
to truth. It is therefore to be left to
advanced studies to undertake an attempt
at more exhaustive answers to the
aforementioned questions, as well as
other questions resulting from them in a
similar exploratory context, and to
corroborate them by means of scientific
investigation. In Chapter 6, an attempt is
made to derive concrete suggestions as
to in which areas and in which form this
could take place.
795

5.2 Innovative Approaches
for the Formation and
Optimization of the Supply
Chain
5.2.1 Representation of the
Adaptive Supply Chain
It has become apparent since around the
year 2000 that the Supply Chains
performance capability and efficiency
represent necessary conditions for
companies success in the contemporary
competitive environment, especially in
sectors of the production industry like
wholesale and retail. To ensure the
fulfillment of these conditions, so-called
Adaptive Supply Chains or Adaptive
Business Networks are currently being
discussed.
796

Adaptive Supply Chains (ASC)
highlight known redundancies in order to
help companies cope with unforeseen
events. They are at present (beginning of
2007) in the process of replacing the
traditional SC approaches outlined
earlier, including the advanced virtual
SC networks. ASC possess the
flexibility to continuously adjust
themselves to changing market
requirements and therefore react in an
optimal way to environmental variables,
i.e., with maximum efficiency and in
real-time.
797
In order to fulfill these
requirements, ASC combine order
management, planning, production and
distribution management procedures into
integrated business processes and
provide the SC network with real time
information. In this way, they enable
quick decisions in addition to their
efficient and effective execution.
798
The
advantages of ASC may be collectively
set down as follows:

Adaptive Supply Chains
provide a cohesive process
infrastructure that connects
network participants, provides
visibility, and monitors for
changing conditions. When
conditions change, the
consequences are immediately
determined and affected
parties are notified with
recommended courses of
action for optimal results.
Once approved, a new action
is executed and the plan is
adapted within context of this
new process. The result is
improved performance across
the global supply chain
network.
799

The transformation of a traditional
Supply Chain into an ASC necessitates
the investigation of and necessary
changes to the basic Supply Chain
processes in order to remain
competitive. The Supply Chain then no
longer represents a static system, but
moreover a dynamic, self-changing and
adaptive, high-performance network.
The changes to market conditions
determined by the internet play a major
role in this case.
800
The definition of the
ASC resulting from this must be seen in
context with the presently available
internet-based possibilities.
801
For this
purpose, the definition of the
Information Management View, as well
as the E-Business concept according to
Seibt already mentioned elsewhere, is
called-upon:
802

An Adaptive Supply Chain
(ASC) is based upon a Supply
Chain integrated by means of
information technology, in
which the flow of information
between diverse parties
represents the integration
factor. In this sense, it
possesses a communal
information basis, in addition
to mechanisms enabling an
exchange of this information
amongst the participants. For
this purpose, several to all of
an organizations processes
with reference to the Supply
Chain

within a company
between it and its business partners
between it and a third party (e.g.,
authorities)

are totally or partially realized
by electronic communication
networks, and supported by
the assignment of Information
and Communication
Technology (ICT) systems.
803

Having set down what an ASC
involves, the way in which this kind of
Supply Chain can be put into action or
rather, can be realized is to be
addressed in the following paragraph.

5.2.2 Realization of
Adaptive Supply Chains
The realization of ASC stems from an
existing Supply Chain and can be best
explained in the form of a staged
process. Heinrich and Betts, for
example, describe the procedure to
achieve an ASC by means of a four-
stage process:
804

First stage: Visibility: Exchange of
information with SC partners,
standard processes for most routine
transactions with SC partners,
information exchange by means of
internet-based technology, and
additional insight into a companys
processes and data problems.

Second stage: Supply Chain
Community: Execution of regularly
occurring transactions by means of
so-called portals,
805
introduction of
minimum and maximum monitoring
values (for example for inventory
stocks), reduction of inventory
stock, and increased efficiency of
process flows by means of
automation.
Third stage: Collaboration:
Exchange of customer requirement
information amongst SC
partners,
806
determination of target
inventory replenishment
measures,
807
transferal of
responsibility for stock
replenishment to the suppliers,
808
and the possibility of allocating
stock in accordance with order
receipt to fulfill the maximum
amount of orders.
809
Fourth stage: Adaptability:
Significant reduction of process
times, multiple elimination of work
stages, significant reduction of
inventory levels and working
capital, release of new market
chances through strategic
partnerships, and the introduction
of new products.

Stages one to three were previously
developed and applied in the past within
the framework of traditional Supply
Chain and Value Chain strategies. The
substantial difference in the ASC lies in
the presence of the fourth stage, as
conventional Supply Chains are of a
static nature. Only the fourth stage
enables the development up to and into
an ASC.
810
Heinrich and Betts
characterize this fourth stage and the
changes accompanying it as follows:

In step four, companies begin
to automate many more
business processes (). In
addition, the move from step
three to step four involves
increased technology
complexity and a heightened
degree of automation among
an expanding number of
network partners.
811

Lawrenz and Nenninger also call
the transition from a linear Supply Chain
to an ASC, i.e., from stage three to stage
four, a transition to E-Business
Networks.
812
In agreement with this,
Schfer, in his empirical study, arrives
at the conclusion that nearly 97 percent
of companies surveyed agreed with the
statement that the internet as an
instrument of E-Business offers
completely new possibilities of
arranging business processes in a
company-spanning manner.
813

The special challenges with
regards to ASC result from the
requirement to exchange information
within a company, as well as with
relevant SC partners. To arrange the
creation of electronic partnerships and
alliances effectively, firms must link-in a
variety of information systems in order
to avoid inefficiencies and
redundancies. The SC environments
presently found are of a progressively
complex nature and comprise a multitude
of sub-processes and activities. In this
case, industrial companies do not
represent the only group that has the
optimization of the company processes
in general and the SC processes in
particular as their objective. The same
applies to the public sector, as
described elsewhere by the example of
the US Department of Defense, DoD.
814

The requirements on the
competitive side literally force
revolutionary changes to the existing SC
processes. The result is the mutation of
traditional linear and static Supply
Chains into dynamic value chains, or in
other words, ASC.
815
Radjou et al.
postulate as follows in conjunction with
this:

To cope with volatility firms
need to migrate their static
supply chains to adaptive
supply networks.
816

The existing tools and applications
for management of the Supply Chain, as
already described elsewhere within the
context of Supply Chain Management,
are often no longer (or only restrictedly)
capable of keeping up with the changes
that are required in order to achieve
higher efficiency.
817
The modern tools to
remedy this will be outlined in the next
section. Because these tools are based
upon the SCOR model, it would also
have been plausible to imagine them in
correlation with the present condition of
the SCOR models development.
818
However, as will be emphasized, since
they are founded upon the Adaptive
Supply Chains discussed in the previous
section, it seemed more appropriate to
introduce them subsequent to these. For
this reason, an illustration of existing
established Supply Chain concepts and
SCOR applications may be found at the
beginning of the work, whereas in the
previous chapter an actual outlook upon
new, although not yet further diffused
and tested concepts and assignment
possibilities, is presented.

5.3 Modern Tools for
Improvement of the
Assignment and Application
Possibilities of the SCOR
model
As already often mentioned, the SCOR
model represents a descriptive but not a
formative model of the Supply Chain.
The model does highlight Supply Chain
weaknesses and therefore potential areas
for optimization, but these must then be
removed or realized by using other
measures. Such a measure for Supply
Chain improvement is represented by
Business Process Reengineering
(BPR).
819
Within the framework of BPR
literature, Information Technology (IT)
is often seen as an essential enabler
820
for the change process. No other factor
is said to possess such large potential
for the achievement of radical process
improvements.
821

Hofmann collectively and tersely
unites the requirement for a continuous
(re-) design in the face of a permanently
changing Supply Chain or ASC as
follows:

The faster the supply chain
changes, the more important
supply chain design
becomes.
822

The SCOR model does not deal
closely with levels beneath the third
level. This can, for example, be seen in
the fact that the SCC describes the fourth
level as the Implementation Level, upon
which companies implement specific
Supply Chain flows.
823
On these lower
levels of the SCOR model, process,
design and modeling tools for analysis
and documentation can be assigned.
Tools are available today for static, as
well as dynamic simulations of such
modeling.

Most companies begin to analyze
their existing Supply Chain for potential
improvements using the SCOR model, as
well as definitions and performance
indicators contained within it. In this
way, gaps in processes and
inefficiencies in process performance
can be revealed. Improvements can then
be executed by means of a Supply
Chain-related BPR initiative. As a rule,
this includes the definition,
implementation, and continuous
measurement of performance indicators.
During this, there is a dominating
aspiration to achieve a leading level of
performance in all relevant SC
processes that would set the company
above the competition.
824

5.3.1 The concept of Supply
Chain Design Management
(SCDM)
Supply Chain Design Management
(SCDM) is based upon a given SC
model and aims at the simulation and
continuous optimization of the ASC. It is
a new kind of tool that seeks to help
firms to identify and improve SC
processes, performance indicators, and
information flows within companies and
with other SC partners.
825
In the
following, the focus is exclusively
placed upon such applications and tools
as are based upon the SCOR model.

SCDM primarily has the following
objectives:
826

Validation of the present SC model
by means of existing or actual
company processes (As-Is business
processes);
Simulation and prediction of the
influence upon SC performance in
the case of changes to the SC
structure, up to the To-Be
configuration;
Application of performance
indicators in accordance with
industrial standards for the
execution of the analysis of
alternative SC scenarios (What-if
impact analysis);
Measurement, prediction, and
monitoring of SC influence factors
for the identification of
improvement potentials;
Connection of those corporate and
SC processes upon lower levels
which are relevant for the
monitoring of operational
procedures and systems.

A Supply Chain model is above all
highly effective if it is recognized and
accepted not only internally (i.e., within
the company) by executives responsible
for decisions, but also by external SC
partners. In this way, changes in demand
and alternative scenarios resulting from
them can be quickly analyzed in order to
determine what influence they have upon
corporate-policy, financial, and Supply
Chain specific performance
indicators.
827

The result is a clear comprehension
of the options, risks and effects upon the
Supply Chain. In this way, SCDM
creates greater flexibility and
adaptability for companies. On a
strategic level, SCDM serves not only to
initially design, but also to continuously
redesign the complete Supply Chain, and
therefore to enable the support of an
ASC.
828

The benefit of a SCDM, dependent
upon the planning level, can be
described as follows:
829

On a strategic level, it serves for
example to analyze the Supply
Chains performance capability by
means of the application of
alternative scenarios to analyze
possible effects of changes in SC
structure in the context of redesign,
the identification of optimal SC
strategies beneath which for
example the previously mentioned
Postponement Strategies fall and
the investigation of the influence of
new systems and applications to
support SC processes, i.e., ERP
systems or APS.
On an operational level, it serves
for example to forecast demand and
the analysis and simulation of
possible changes in demand, the
support of the Collaborative
Planning, Forecasting and
Replenishment (CPFR) concept, the
identification of available
capacities to react to changes in
demand, and the determination of
best practices in the case of
delivery failure by suppliers.

With consideration to these
premises and with the inclusion of the
listed ASC definitions, SCDM can be
embedded into this context as follows:

Supply Chain Design
Management (SCDM) makes a
universally valid language
convention available as a
minimum requirement for
Supply Chain processes
(preferably upon the basis of
the SCOR model), illustrates
the extended (i.e., company-
internal and company-
spanning) Supply Chain,
enables an analysis of
possible effects in the case of
changes in supply and demand
factors in addition to the
simulation of changes in
Supply Chain structure and
processes. It therefore serves
to realize and support
Adaptive Supply Chains
(ASC) and their design and
redesign. It must, as a
component of E-Business
systems and in the total system
life cycle, be continuously
adjusted to market
developments and altered
business requirements.
830

The following sections relate to an
evaluation undertaken into which IT-
based applications are available today
in order to fulfill the aim of supporting
SCDM.

5.3.2 Applications for
Supply Chain Design
Management
The applications for Supply Chain
formation are not to be confused with
applications for planning of company
procedures. This latter group includes,
amongst others, Enterprise Resource
Planning (ERP) solutions.

Some manufacturers of such integrated,
SC-orientated solutions as for example
International Business Systems (IBS)
831
or Business Objects
832
state that their
products orientate themselves or are
respectively based upon the SCOR
model.
833

These applications are also not to
be confused with those that are assigned
to the initial design and possible
sporadic redesign of the Supply Chain.
These are for instance the previously
named ERP systems or the Advanced
Planning Systems (APS).
834
Until a short
while ago, no electronic tools for the
continuous design or redesign of the
Supply Chain existed. For the further
course of the work, the term SCDM
application was used for tools of this
kind. The objective of the SCDM
applications is to design complex
Supply Chains for strategic, tactical and
operational predictions. The research
company Gartner
835
assumes the market
for SCDM applications is presently
gaining in importance, and that this will
carry on in the future.
836

The authors research revealed that
at the beginning of 2007 only a few
applications existed which immediately
supported Supply Chain formation
within the framework of SCDM. The
following three manufacturers and
applications, which may be taken
seriously and are based in unison upon
the SCOR model, fall within these
applications:
837

e-SCOR by Gensym
ARIS EasySCOR by IDS
ADOLog by BOC.

The applications that are to be
explored in more detail below share the
explicit purpose of supporting the
respective formation or design and
continuous redesign of the Supply Chain
upon the SCOR model basis, as stated in
the previous paragraph. This is not an
appraisal of the applications, but rather
an exemplary overview of the scope of
their functions and their main assignment
possibilities.
838

5.3.2.1 e-SCOR by Gensym
The software manufacturer Gensym
839
has developed an application by the
name of e-SCOR. This application
designs, simulates and controls
graphically-supported SC scenarios. e-
SCOR is based upon the SCOR model
with its associated processes and
performance attributes.

Its main strengths are perceived to be its
ability to simulate SC structures and
affect the Supply Chains behavior, in
addition to being able to analyze the
exactness of an existing SC model. This
takes place by means of description of
the SC structure, processes and
information flows upon an aggregated
level, and spans the extended Supply
Chain. The aggregated analysis level is
connected to the SCOR models lower
levels (below the third level).

After each respective role has been
determined (in the sense of SC
participants and functions) and the SC
processes have been recorded, the
existing model (As-Is Model) can be
represented and validated by using
performance indicators and information
about the work course. In this way, a
basis for comparison (Baseline) is
created for investigating the effects of
changes.
840

Furthermore, alternative To-Be
scenarios can be simulated, which
automatically project the SCOR-based
performance indicators into the future.
This includes the measurement and
simulation of effects of changes to the
SC structure and processes upon the
relevant performance indicators (What-
if scenarios). Apart from that, model
changes can be undertaken parallel to
this in order to demonstrate their effects
in real-time. Additional, distinctive
characteristics of e-SCOR are the
analysis possibilities with regards to
order fulfillment and distribution
strategies, planning and procurement
strategies, as well as financial
performance.
841

Due to the fact that the performance
indicators correspond with the SCOR
performance indicators, customer-facing
indicators are included on the one side,
such as delivery ability and order
execution performance. On the other
side, internal-facing performance
indicators are taken into consideration,
as for example cash-to-cash cycle time
and Return on Assets (ROA). In this
way, the known conflict in objectives
(trade-off) between the performance
indicators can be analyzed and their
effects can be highlighted.
842

5.3.2.2 ARIS EasySCOR by IDS
The consultancy IDS
843
distributes an
application by the name of ARIS
EasySCOR. This product belongs to the
ARIS family of products, which serve
the purpose of Business Process Design
in the general sense.

According to IDS, Business Process
Design means that companies adjust
their business processes according to
their own requirements and necessities
and to those of the market in three stages.
The associated section in the Continuous
Improvement cycle is comprised of the
three aspects design, analysis, and
optimization. The process design, i.e.,
the graphical representation of existing
procedures, answers the questions as to
who does what and in which order,
which services are provided, and which
software systems are assigned for this
purpose.
844

The next stage is concerned with
the analysis and appraisal of the actual
processes. During this, weaknesses in
the procedures are revealed and
improvement potentials are exploited.
The adjoining derivation of To-Be
processes, i.e., the ways and means by
which these are to support the company
with value generation in the future, is
based upon the results of the prior
analysis and rounds off this approach.
845
ARIS EasySCOR especially focuses
upon the Supply Chain field and contains
the following functionalities:
846

Design of the companys processes
Design of dynamic business
process models
Implementation of simulations with
regards to changes in the SC design
Continuous monitoring and, if
necessary, adjustment (redesign) of
the business processes
Integration of automated decision
processes into the existing
(subjective) procedures for
decision making.

EasySCOR therefore represents an
application for the analysis, design and
continuous redesign of Supply Chains. It
combines a companys process design,
which may be already present within
ARIS, with the SCOR model. The
combination resulting from this is
supposed to enable efficient design,
analysis, and optimization of SC
processes in accordance with the SCOR
model and the standards defined by the
SCC. The application ARIS EasySCOR
comprises process definitions, best
practices, and performance indicators
for the SCOR main processes Plan,
Source, Make, Deliver, and Return.
847
EasySCOR is supposed to simplify and
accelerate the identification of
bottlenecks, weaknesses and
improvement potentials within the
Supply Chain by use of predefined and
standardized elements.

Beyond this, it allows the
comparison of a companys specific SC
processes and their performance
capability with those of competitors
based on the SCOR performance
indicators and within the framework of
benchmarking. Furthermore, existing
processes can be defined and
documented in an easy way, and most
various scenarios of SC models can be
simulated and investigated before
changes are undertaken within the
framework of a required SC redesign.
848
The following illustration gives an
insight into the application. The strong
integration with SCOR is visually
reflected by the models known
constitutional elements (process
elements, performance indicators, and so
on).

Version 6.0 of ARIS EasySCOR is
consistent with Version 6.0 of the SCOR
model. It is already being assigned by
several previously named organizations,
as for example Intel and the US
Department of Defense (DoD).
850

5.3.2.3 ADOLog by BOC
The SW provider BOC
851
has developed
another SCDM application by the name
o f ADOLog. This application is based
upon the SCOR model and is consistent
with the processes and performance
indicators contained therein. It offers
support during strategic planning and
decision processes with the framework
of Supply Chain Management. ADOLog
is supposed to offer support for the
Supply Chain manager and the
employees in the SCM field, in order to
achieve the desired profitability and
performance targets more efficiently.
The modeling of the SC processes upon
the basis of the SCOR model should, in
connection with this, serve as a basis for
Supply Chain optimization.

The description and representation
of the SC processes present in the
application should enable the process
integration and the undertaking of so-
called transversal analyses
852
from the
point of view of each individual
company. These analyses aim to abolish
the separation of individual business
areas. During this, a connection is
created with the documented processes
within the SCOR model that therefore
function as reference processes.
853
Because the modeling method
implemented in ADOLog is based
completely upon the SCOR model, the
application also contains all concepts
developed by the SCC in order to be in
accordance with SCOR and the
corresponding descriptions and
evaluation standards for Supply Chains.

Diag. 5-1: Representative example from ARIS
EasySCOR
849

It is presumed that SCOR
represents the best option of undertaking
a thorough investigation (audit) of the
Supply Chain, even if some companies
possess their own developed
applications for the evaluation of
internal processes.

In conjunction with this, all
advantages of the SCOR model are used,
for example, a standard terminology,
company-spanning Supply Chain
descriptions, predefined performance
indicators as a basis for benchmarking,
and best practices as an orientation
guide. Building upon this, ADOLog
should corroborate decisions pertinent
to the Supply Chain by facts and
numbers, identify deviations from the
performance metrics strived for, and
enable adjustments to the SC design
resulting from this.
854
ADOLog is
highlighted by the following four
progress stages.
855

1. Geographic Product Flow: Locations
and infrastructure:
The so-called Geographic
Product Flow (GPF) models serve
the purpose of regional-geographical
illustration of locations and
infrastructure. The user has a number
of plans available for this purpose,
with the aid of which the physical
positioning and the distance of
individual locations can be visualized
and illustrated. As far as locations in
the GPF model are concerned,
production plants and procurement
and distribution activities are of
interest. Material and information
flows can also be visualized. In
addition to this, the specification of
the resources necessary for individual
material flows (methods of transport)
is supported.

2. SCOR Level II: Configuration:
In this case, the physical
illustration of the Supply Chain is
transposed from the GPF model into
the SCOR models process-orientated
terminology, i.e., transferral into the
SCOR standard processes by means
of the known process categories takes
place. Products thereby go through a
series of ideal and typical SCOR
basic processes (Source, Make and
Deliver), as well as various
alternative editions of the Supply
Chain from make-to-stock right up
to make-to-order. The depth of the
modeling depends upon the
importance of the formerly and
latterly situated production stages. In
this way, continual Supply Chains can
be modeled (i.e., from suppliers
supplier to customers customer).

3. SCOR Level III: Decomposition:
Here the results gained in Level
II are broken down into single,
standardized process elements. Each
process category contains a reference
to a particular Level III model.


The process elements represent SCOR-
defined standard processes, which
concretely describe Supply Chain
activities. Input and output
information, performance indicators
and best practices are defined for
each process element.
4. Level IV: Processes and organization:
Level IV models illustrate the
individual, company-specific
procedures and generate data for the
optimization of SC configuration by
means of simulation. In conjunction
with this, Level IV process models
are supposed to enable the detailed
illustration of the individual company
processes. In this case, each stage of
work is represented by an activity.
The various procedural variants are
illustrated and later simulated with the
aid of variables and alternative
decisions. Beyond this, Level IV
organizational models represent the
necessary personnel and business
resources. Apart from this, the
organizational model comprises
business resources, such as IT
infrastructure and production
equipment.


5.3.2.4 Recapitulating observation of
the SCDM applications
Conventional applications only support
decision making by means of simple,
static business rules, which are
embedded into the companies
procedures. The majority of decisions,
as well as the fundamental business
processes, still require expertise and
specialized knowledge, which includes
the continuously changing environmental
variables. For this reason, many of the
events associated with this cannot be
automated at present, which results in
the fact that organizations decisions still
primarily lie with respective experts
and, at least in a partial degree, are
consequently of a subjective nature.

In order to ensure an automated
execution within the context of SCDM,
the associated applications must enable
transparency with regards to the rules
for business operations processing,
dynamic modification, scenario planning
and continuous improvement. Existing
applications, like ERP systems and APS
applications for example, are at present
not in a position to provide the required
functionality.
856
The SCDM applications
described go beyond this and have the
main objective of continuously analysing
and improving business processes, or
more exactly: Supply Chain processes.
As a result of this, they should support
the SCOR model-based Supply Chain
competences customer-facing
performance capability and internal-
f a c i ng efficiency and therefore
contribute towards an improvement of
performance.
857
Schfer and Seibt
collectively describe the corresponding
situation as follows:

A decisive factor for future
company success will be the
competence to be able to
manufacture top quality,
innovative products at
marketable prices and faster
than the competition. In order
to realize this, company
processes must be
continuously improved and
formed more effectively and
efficiently by the integration of
new, innovative ideas.
858

The SCDM applications, as well as
the underlying ASC, will be examined at
the end of Chapter 6 within the
framework of suggestions and
possibilities for further research. Now,
however, again focus needs to be placed
upon the SCOR model, and its present
limitations discussed.

Chapter Six

Limitations of the
presently available
SCOR model

Organizations today face multiple
environmental forces affecting their
survival, growth, and success. In such a
complex reality it is desirable to see an
organization as a social, technological,
economic, and human system. In this
context, it is important to see the
interrelationship of individual, group,
and organization development processes
as needed for organization renewal.
Renewal, in this context, implies
purposeful and planned change.
859

6.1 Observation of the
Formation Dimensions of
Organization and Personnel
in the Submitted Context
The general weaknesses and limitations
of the SCOR model have been addressed
in Chapter 2.
860
Chapter 5 discussed
potential areas for improvement as
identified in the results of the empirical
examination.
861
A comparison of the
general limitations and the potential
improvements shows that the functional
areas given as preconditioned by the
Supply-Chain Council the respective
employee or personnel areas of Quality
Assurance and Training
862
did not
produce any indicators worth mentioning
with regards to the examination results.

This is self-explanatory to the point
that the quantitative questionnaire
developed for the primary data survey
did not in keeping with the SCOR
model deal closely with these
functional areas. The issue of quality
assurance was, however, implicitly
questioned by means of performance
measures, as for example damaged
shipments and customer disputes.
863

Having said this, the area of employee
and personnel matters (Human
Resources, HR)
864
was not dealt with at
all. The same applies to the issue of
training which, on account of its
association to personnel development,
can be considered as a component of the
personnel area.
865
An attempt therefore
needs to be made to define the context of
this case more clearly. For this purpose,
the organization is determined by means
of the following framework.
866
According to Leavitt, an organization is
constituted by four independent system
variables:
867

1 . Strategy/task: This means the
preparation of goods and services,
inclusive of all associated operational
sub-tasks.
2 . People/actors: In the main, the
observation of persons or actors and
their respective behaviour falls within
this category.
3 . Structure: Communication systems,
role models and work procedures.
4 . Technology: This is taken to mean
inventions for the immediate solution
of problems for example,
technologies for the measurement of
work performance or computers.

These variables are often used to
categorize differing approaches to
organizational change. Whilst
technology-, organizational- and
structural-based approaches mainly
focus upon mechanisms to solve
problems, the personnel-based approach
concentrates above all upon
organizational change. Ultimately,
however, all the approaches mentioned
seek the improvement of the
performance capability of partial
areas.
868

The personnel-based approaches
assume that a change in the organization
predetermines a change in the behaviour
of the members of the organization, i.e.,
the actors, and therefore attribute a
special importance to the people
variable.
869
In conjunction with this, two
main trains of thought may be
identified:
870

Influencing and changing the
behaviour of the actors themselves:
Guest
871
and OShaughnessy
872
can
be named as advocates of this
school of thought, as they view the
style of leadership as the focal
point. In contrast, Lawrence and
Lorsch focus on the interaction
between the actors, the organization
and the companys environment.
873

Issuing suitable employees with
permission to give instructions in
order to implement changes
(Power-Equalization Theory):
874
Group behaviour also falls within
this category (changing groups), as
portrayed for example by Lippitt.
875
On the other hand, there are those
(like Likert
876
or Litterer
877
) who
observe the changes to the
organization by looking at the
employees issued with permission
to give instructions.

There is not sufficient space here to
discuss in depth the differing approaches
to organizational development.
878
It
should be noted, though, that the system
variable people represents a substantial
factor during the implementation of
organizational changes.
879
As opposed
to the others, however, this variable has
not been closely analyzed for the
aforementioned reasons. If one transfers
the system variables onto the Supply
Chain area, Supply Chain Management
is made up of five elements of
organizational design:
880

1 . Strategy development: This is to
enable the conception of a Supply
Chain based upon company objectives
and market requirements.
881
2. Process formation: Here the tasks are
described that are necessary for the
procedures and management of the
Supply Chain. Included in this are the
relationships between the processes
and the respective best practices.
3. Performance measurement: In order
to measure, assess and monitor the
Supply Chains performance
capability and efficiency, a balanced
selection of process-related
performance indicators is required.
882
4 . Organizational model: This
comprehends the description of the
organizations structure, the
responsibility of the departments, as
well as the tasks and jurisdiction of
the individual employees. The
management of Human Resources also
falls within this category.
883
5 . Technology formation: Integrated
Information Systems (IS) represent a
necessary aid for the planning and
implementation of Supply Chain
processes.
884

It is apparent that the aforesaid
concept by Leavitt, in addition to the
system variables contained within it,
also applies to the management of the
Supply Chain. This is consistent with the
presumption that Supply Chain
Management represents a partial area of
company management and, as a result,
must be adjusted to suit superior
corporate objectives.
885

The special importance of the
people factor in correlation with the
concept of E-Business a field that also
represents, as indicated, the framework
of reference for Supply Chain
Management, and therefore represents
the application of SCOR as well
886

was proven by Schfer in an empirical
examination. More than three quarters of
the companies questioned agreed upon
the fact that the human factor
represents the largest challenge for
successful E-Business. Apart from this,
it became apparent that potential benefits
cannot be fully exploited without a
systematic accumulation of knowledge in
the form of qualifying measures.
887
Kuglin and Rosenbaum accentuate the
people-orientated variable by explicitly
postulating its alignment to the other
system variables:

People are the key to success
in any organization. Therefore,
it is essential that
organizational structures and
performance metrics be
established so that everyone is
working together to achieve
the overall strategic goals of
the company.
888

This view inevitably highlights
limitations to the application of SCOR.
As the human factor is not included
explicitly in the SCOR models
structure, no performance indicators are
ear-marked to enable the measurement of
this particular performance capability.
As a result, only limited improvement
potentials can be identified in this
direction. Finally, no best practices are
contained within the model description
that could contribute to process
improvements. Given the focal point of
this study, the following respective areas
of observation or dimensions of Supply
Chain formation arise:

1 . Strategy/task: Supply Chain
expression
2 . Processes and Organizational
structure: Supply Chain reference
model
3. Technology: Supporting Supply Chain
applications

4. People: The human resources for the
execution of all activities pertinent to
the Supply Chain, as well as their
influence within the framework of the
change process (renewal).
889

The illustration that follows
represents an attempt to place the
observed approaches and procedures
into a frame of reference under the
aforementioned focal point. No claim to
entirety is made in this case; it is
moreover the provision of an overview.
The illustrated time stream purely serves
to provide a rough orientation; flowing
transitions de facto often exist. The
arrow between the system variables
people and structure is deliberately
shown in form of a dashed line in order
to graphically represent the described
problem.

The structural dimensions shown on
the left hand side of the illustration
represent, in a transposed sense, the
organizational transition. The right hand
side describes the concrete structuring of
the changes associated with it, i.e., the
ways and means of the concrete
manifestation of the change process.
From this, it also becomes apparent why
the time stream mainly applies to the
right hand side: Change Management
determines a permanent transition
process.
891

Diag. 6-1: Dimensions of the formation in the context
of the Supply Chain
890

6.2 Consequences of the
Peripheral Conditions and
Errors in Own Work
What follows is an attempt to find
possible answers to the following
questions:

Which respective events or
conditions had a restrictive or
disadvantageous effect during the
execution of the study?
How can the influence of the
aforementioned points be
characterized with regards to the
study, and what steps were taken to
minimize the occurrence of
negative influences?
What could future researchers look
to do better or differently?

Unfortunately, despite intensive
literature research, no previous studies
could be found that both contained an
empirical examination of the SCOR
model and would satisfy scientific
requirements. In the literature reviewed
it was either the case that generally held
optimization potentials founded upon the
value of experience were proven,
892
or
there were respective studies or projects
that applied the SCOR model or built
upon it.
893
One certain reason for this is
that the SCOR model originated from
company practice, rather than from the
scientific or academic environment.
894

As a consequence of that, this study
entered new territory, so to speak, and
was therefore obliged to assume an
exploratory nature.
895
Amongst other
things, a large amount of contemporary
literature was enlisted and evaluated
(both from academic research and from
company practice) in order to take into
account the balance and plurality
required by scientific aspects.

Furthermore, consideration must be
given to the fact that in the case of the
SCOR model, we are dealing with a
relatively new concept that was only
initiated within the last decade.
896
This
may be the reason why, despite
constantly increasing membership
numbers, the model is still not
universally present in science and
practice.
897
The 2002 study by Gpfert
and Neher is significant here, as 85
percent of the firms questioned by the
authors stated that they did not use the
SCOR model or did not plan to assign it
in the future.
898
Although it must be
noted that this study was directed
particularly at the German market, the
percentage is still high.

The examples described in Chapter
2 from the American and Asian regions
show that development there has
progressed substantially further. Apart
from this, it can definitely be assumed
that the SCOR models importance and
diffusion will increase considerably in
Europe, and in particular in Germany,
within the next few years.
899
With
regards to those influences that affect the
context of the empirical examination,
reference is made to the detailed
explanations in Chapter 4.
900
During the
resulting measurement of the empirical
examinations contribution with the
restrictions and insufficiencies,
consideration must be given to the fact
that it is only the first stage towards a
scientific establishment within the
context of an exploratory approach. The
submitted work cannot be generalized to
apply to the industrial or logistic
situation in Europe or even in North
America or Asia. Similarly, it in no way
claims to deliver a conclusive empirical
appraisal of the SCOR model and its
suitability for Supply Chain analysis. On
the contrary, this study stands upon its
claim as the basis for further advanced
studies, as should be emphasized by the
suggested examples in the following
section.

The method of data acquisition in
the form of secondary research, as
chosen within the framework of the
work, inevitably conceals the
disadvantage of a time delay. An
alternative would have been to proceed
with a primary survey. In this case,
however, the research-economical
aspect must be considered, especially as
data was included from companies in the
European, North American and Asian
regions. Apart from this, the influence of
a time delay should only have a
restricted effect upon the quality of the
examination results: Although the SCOR
model finds itself in a continuous
development process, the basic
assumptions on the part of the model are
mainly fundamental in nature, and are
only submitted to changes within a very
limited scope. The aspect of change
applies primarily to further
developments and improvements, as for
example the fully implemented inclusion
of E-Business in Version 6.0 or a
potential innovation in the models
company-spanning aspects that is sought,
yet still outstanding.
901
The
recommendation for optimization with
regards to an explicit inclusion of
marketing and sales into future model
versions would fall within this
sphere.
902

6.3 Suggestions for Further
Research in the Fields of
Supply Chain Management
and SCOR
This study seeks to provide a helpful
insight into the subject matter of Supply
Chain Management in general and the
SCOR model in particular. Given the
complexity, scope, and ever-changing
nature of the field, however, a number of
points inevitably remain unanswered.
These can be more closely addressed in
future studies. One of the postulates in
the context of empirical research is that
a theory should, amongst other things,
provide an indication of gaps in present
knowledge.
903
This study stands, then, as
an initial and exploratory contribution to
the development of such a theory.

Upon the basis of the knowledge
gained within the framework of the
empirical examination the present
developments introduced in Chapter 5,
and the restrictions discussed in section
6.1 an attempt will here be made to
extricate continuative research
suggestions. During this, reference will
be made to existing research, and an
attempt will be made to derive a
concrete example of a theoretically
founded empirical and adjoining
research project.

By enrolling the possible incentives
stated, and also incentives going beyond
them for future research in this field,
further steps can be taken to build upon
and extend the SCOR models scientific
nature above and beyond this study, and
to continue to reduce the uncertainties
associated with it.

6.3.1 Extensive research
suggestions
1. Examination design and thesis
model:
The investigation of the SCOR
model should be repeated in a
similar way in order to validate the
results found. A time related
component is seen as rather
marginal, as the fundamental
validity of the model may only be
restrictedly submitted to temporal
changes. Further developments of
the model represent a restriction to
this, as they take place with every
new version of the model.
Continuative examinations could
also differentiate between
particular criteria, such as company
size or region.
904
A substantial
condition for the consideration of
possible discriminating factors is
represented by the presence of a
respective data basis or a
sufficiently high sample size.
905


In the present case, it was not
possible to achieve a more
unequivocal model adaptation by
means of the additional variables.
Certain indicators, in the sense of
incremental information, were
present for the fact that the SCOR
models illustration particularly
corresponded to the situation of
larger (and partially more
successful) companies.
906
In this
case, however, the results gathered
did not seem sufficient to
generalize this statement.
Continuous empirical work would
seem to be necessary.
A number of theses showed
themselves to be unsystematic upon
the basis of the results. For several
of them, it was only possible to
formulate a rudimentarily
explanation, as explained in detail
in Chapter 4.
907
It would, in any
case, be interesting to investigate
the respective constellations more
intensively in future studies, and
extract explanations for what are at
present inconclusive diagnostic
situations.

2. Modern concepts and tools for
Supply Chain formation:
It remains to be seen whether the
concept of the Adaptive Supply
Chain (ASC) establishes itself, or
whether it is prematurely
superseded by other concepts. At
present, a multitude of articles and
dissertations exist to address this
theme from a practical as well as a
scientific point of view. These
result from the possibilities
provided by new Information and
Communication Technologies
(ICT), for example the internet, by
means of which the structural
possibilities of company-internal as
well as company-spanning
processes were placed upon a new
platform.
908
One effect in the field
of the Supply Chain is the further
development into an ASC. This
must not obscure the fact that, at
present, scientific studies into the
ASC concept and its influence upon
a companys performance abilities
do not exist. There is, then, a clear
need for further studies in this
field.
909
The above point also applies to
Supply Chain Design Management
(SCDM) and the associated
applications. Although the concept
is classified as very relevant, there
is at present little scientific proof
as to the extent of its influence upon
the performance indicators. The
truly substantial applications in this
context are, without exception,
based upon the SCOR model.


Further leading studies could
therefore build upon the results
found within the framework of the
work submitted, and contribute to
the provision of objective and
comparable measures of the
influence of SCDM applications
upon corporate success.
910
Finally, it would be of interest to
investigate the influence of SCDM
upon other E-Business concepts, as
for example Customer Relationship
Management (CRM) or Electronic
Procurement.
911

3. Expansion of the SCOR model
structure:
912
The importance of the Human
Factor within the framework of a
total observation of organizational
system variables has been
discussed in detail. This has
highlighted the case for the
inclusion of this factor into a
comprehensive concept of Supply
Chain Management in general, and
the SCOR model structure in
particular.
913
The additional performance
indicators associated with the new
system variables would also have
to be included into an extended
Supply Chain Scorecard (in the
sense of an approach including the
Human Factor for the
measurement of Supply Chain
performance), in order to make a
continuous monitoring of this new
performance area possible.
914
From
a performance indicator-specific
point of view, it would be practical
to enlist the Balanced Scorecard
(BSC), as this contains a special
learning and growth perspective.
915
Due to its similarity in content to
the SCOR model (with reference to
the performance indicator-specific
SCOR model observation),
916
the
BSC seems predestined to serve as
a basis for the inclusion of
personnel into organizational
performance measurement.
917
It
even explicitly preconditions the
inclusion of the employees and
therefore the Human Factor for
successful assignment.
918
An
extended Supply Chain SCORCard
resulting from this could be used
for the progress monitoring of
Change Management, because this
can be considered to be a special
characteristic of the Human
Factor.
919
The SCOR model comprises, as has
been indicated, non-monetary
measures with regards to the
associated performance
indicators.
920
The disadvantages
connected with this, as for instance
the problem of aggregating non-
monetary indicators, could be
confronted by an expansion of the
SCOR model structure or the
respective inclusion of financial
performance terms. For the
aforesaid reasons, the closest
approach would seem to lie in the
orientation upon the BSC.


The result would be a Supply Chain
SCORCard expanded by one
financial entity that would for
example enable the creation of a
reference between the
improvements sought upon a SCOR
model-based Supply Chain
analysis, and the gains achieved.
921


No referential results exist, at
present, with regards to the suggested
expansion of the SCOR model structure.
If the validity and effects of this
extended model structure are to be
assessed, further research in the field is
needed as a matter of some urgency.

6.3.2 Example of a
theoretically founded
empirical research project
as a possibility for adjoining
research
An attempt is made here to give a
concrete example of a future empirical
research project. As a basis for this, the
examination results accumulated within
the framework of the empirical study
will be called-upon, as will
developments in company practice and
business-economical research. This will
enable the study to justify its claim to
having exploratively contributed to a
step-by-step accumulation of knowledge,
which can then be continued by further
focused investigations.
922

Primarily, the application of
structure-analytical procedures serves to
investigate a thesis model, understood as
a system of hypotheses. In the present
case, however, the necessary procedural
conditions were not sufficiently
available.
923
It would therefore appear
appropriate to allow these procedures to
be assigned within a study building upon
a model. A decisive factor in
conjunction with this is the availability
of a data basis as large as possible (with
a sample size of at least 150 or more).
To what extent this is achievable from a
research-economical perspective must
be concluded individually for each case.
Furthermore, it must be taken into
consideration that structural equation
models, in addition to statistical criteria,
require certain content from the data
material being analyzed.
924

The structural equation model to be
investigated is directly derived from the
thesis model. A substantial difference is,
however, present from the development
of a structural equation model sought in
Chapter 4: The latter-named model set
out to validate the results of the
inferential statistical examination. It
therefore relied upon Meta theses, and
the hypothetical constructs were derived
accordingly. The consequence was that
one was dealing with a bottom-up
approach, so to speak.
925

Contrary to this, and within the
framework of the submitted suggestion,
this should be a superior point of view
and the thesis model observed in its
entirety. For this reason, a top-down
three-stage correlation of hypothetical
constructs is given: Firstly, the (not
directly measurable) Performance
Attributes are mapped to the (also not
immediately measurable) Supply Chain
competences. Then, the (not directly
measurable) Metrics Level 1 are
mapped to the Performance Attributes.
Finally, in the third stage, a mapping of
the (measurable) Performance Measures
to the Level 1 metrics takes place as
overt indicators. The following diagram
represents the level of the hypothetical
constructs for reasons of graphical
representation and legibility. In the
illustration following this, the mapping
of the Level 1 metrics (as the level of
hypothetical constructs) to the
performance measures (as the overt
indicator level) is represented.
926

Diag. 6-2a: Research suggestion for a performance
indicator-based SCOR model represented in a
structure-analytical form (Part 1)
927

Diag. 6-2b: Research suggestion for a performance
indicator-based SCOR model represented in a
structure-analytical form (Part 2)
928

Table 6-1: Legend to Diag. 6-2b: Index of the applied
performance metrics
929
Index Performance Measure
DP-1 Customer retention rate
DP-2 Backorders value
DP-3
On-time delivery percentage (inbound and
outbound)
FR-1
Percentage of purchased orders received on time
and complete
FR-2
Percentage of purchased lines received on time and
complete
FR-3
Average MPS plant delivery performance (work
orders)
FR-4 Cycle count accuracy percentage
FR-5
On-time delivery percentage (inbound and
outbound)
POF-
1
Perfect orders rate
POF-
2
Lines on-time fill rate
POF-
3
Customer retention rate
OFL-
1
Average purchase requisition to delivery cycle time
OFL-
2
Transactions processed via web/EDI
OFL-
3
Average manufacturing cycle time
OFL-
4
Percentage of sales via web

RT-1 Backorders value
RT-2
On-time delivery percentage (inbound and
outbound)
RT-3 Lines on-time fill rate
PF-1 Inventory stockout percentage
PF-2
Average MPS plant delivery performance (work
orders)
TSC-
1
Inventory management cost as a percentage of
revenue
TSC-
2
Inventory management cost as a percentage of
inventory value
TSC-
3
Inventory obsolescence cost as a percentage of
revenue
TSC-
4
Percentage of inbound or outbound cost
TSC-
5
Inventory management cost per customer order
TSC-
6
Percentage of inventory in transit
TSC-
7
Transportation cost per mile (inbound and
outbound)
TSC-
Transportation cost as a percentage of revenue
8
TSC-
9
Inbound transportation cost per supplier order
TSC-
10
Outbound transportation cost per customer order
TSC-
11
Premium freight charges
COG-
1
Purchasing cost per purchase order
COG-
2
Purchasing cost as a percentage of revenue
VAP-
3
Percentage of purchases from certified suppliers
VAP-
4
Manufacturing cost per FTE
VAP-
5
Average first-pass yield rate
VAP-
6
Scrap/rework cost as a percentage of revenues
VAP-
7
Average throughput per FTE
VAP-
Average machine availability rate
8
VAP-
9
Average number of customers orders per FTE
VAP-
10
Customer service cost per FTE
VAP-
11
Inventory management cost per FTE
VAP-
12
Transportation cost per FTE
WC-1 Damaged shipments
WC-2 Customer disputes
CTC-
1
Average received finished goods turnaround time
CTC-
2
Inactive inventory percentage
DOS-
1
Average order-to-shipment lead time
DOS-
2
Average inventory turnover
AT-1 Average operating-equipment efficiency rate (OEE)
AT-2 Average plant capacity utilization
AT-3 Average warehousing space utilization

A modification introduced in
SCOR model Version 7.0 and continued
in Version 8.0 would enable, beyond
this, a (simplified) variant of the
examination design. The new versions
represent an initial attempt to make
calculation operations available, which
should make the calculation of the Level
1 metrics possible.
930
These metrics
will naturally still not be immediately
measurable, because they are ratio
indexes.
931
They could, however, be
identified as indicators in the structure-
analytical analysis, as numerical values
would already be present for them. In
this case, one level of hypothetical
structures would become obsolete. As a
result, it would be possible to perform
an additional comparison of the above-
represented model with the alternative
model, which would allow additional
and enhanced conclusions as to the
examined illustration of the SCOR
models structure.

6.4 Balance Between
Standardization and
Individualization
In the meantime, many companies have
introduced the SCOR model into
operational planning and business
practice. However, the expectations
from the SCOR model must not be set
too high, as it is neither a panacea nor
an end in itself. It is not intended to be
the sole means of realizing effective
monitoring of the Supply Chain. The
application of SCOR by no means
replaces management expertise.
932

The SCOR models application for
the standardization of processes and
structures often also has an ambivalent
character. On the one hand, a number of
companies see a great potential for
optimization in standardization, as
expressed in the following interpreted
quote.
933

The largest potential with
respect to business
improvements and results lies
in the harmonization,
improvement and
standardization of
processes.
934

On the other hand, however, the
standardization of structures and
processes can mean that some strengths,
which resulted directly from the
previous differences, become lost.
935
In
this case, the models application would
not contribute to the achievement of
competitive advantages. In an extreme
case, it could actually lead to
competitive disadvantages.
936
Thus, a
company must find a suitable balance
between standardization and
individualization in order to be able to
supportively improve and expand its
competitive position.
937

In a survey conducted in the year
2001 amongst so-called DAX-
Companies
938
to establish the value of
E-Business concepts and corresponding
activities within corporations, Schfer
came to the conclusion that E-Business
was seen as being particularly relevant.
In that case, it must be taken into
consideration that Supply Chain
Management, and as a result also SCOR,
fall within the E-Business frame of
reference.
939
The activities going on in
this field were, however, comparatively
low-key at the time of this study, and
could certainly be strengthened and
given greater priority.

Furthermore, although an important
value was assigned to the concept of
company-spanning Supply Chain
Management, an evident backlog existed.
In this case, it was the concrete necessity
for detailed information and assistance
in addition to supporting standards and
interfaces required by companies in
order to introduce company-spanning
concepts. The increasing difficulty
regarding the unequivocal
demarcation of company boundaries
was pointed out in this case. The
requirement for adequate measures on an
information technology and
organizational level was consequently
highlighted, which enables companies to
flexibly arrange and integrate inter-
organizational SC processes.
940

Based upon the knowledge
accumulated, the SCOR model as
introduced within the course of the work
represents a good aid for the analysis
and optimization of Supply Chains by
present day standards. Apart from this, it
offers standards for company-spanning
process description and performance
comparison. It has, as indicated, clear
advantages, but does not represent a
form of universal recommendation.
941
Advanced approaches to the realization
and support of Adaptive Supply Chains
(ASC), similar to the introduced Supply
Chain Design Management (SCDM)
and the applications available for it,
indicate possible ways in which future
Supply Chain models will be able to
continuously adapt to market
requirements. At present, due to the
novelty of the subject matter, there is a
lack of sufficient practical experience
and scientifically founded examinations
to produce a conclusive study of those.

Seibt collectively expresses the
requirements that arise for companies in
the predominantly dynamic competitive
environment as follows:

Each organization must learn
to adjust itself to a multitude
of flexible and quickly
changing cooperation with an
ever increasing number of
changing partners, to
comprehend them as a chance.

Only in this way will it
become a valuably
participating cooperation
partner, i.e., in the generation
of value which brings dynamic
changes with it.
942

This statement is particularly
noteworthy with regards to the present
subject matter, and unequivocally
affirms the need for further work in the
field of Adaptive Supply Chains and the
processes and tools necessary for their
management. Such a field is not only
guided by the need to generate value, but
is concerned with continuously
redefining this value throughout the
whole Supply Chain.
943
The final
objective is to manage an evolutionary
process, which enables a balancing
between the (external) customer
requirements on the one side, and the
(company-internal) competences or,
more exactly in the present case, the SC
competences on the other side.
944

The SCOR model can make a
valuable contribution to the continuous
analysis and necessary optimization of
the Supply Chain built upon it. This is
reflected, amongst other things, by its
constantly rising usage. However, in its
present formation it has clear limitations
as to its assignment possibilities with
respect to the Supply Chains design and
redesign.

It has been shown that the SCOR
model initially originated from the
requirement to create a universal
language for the Supply Chains
description in the sense of a
standardization of the SC
nomenclature. It therefore represents a
descriptive model, and in its original
condition does not claim to possess a
structuring character.
945

This, of course, does not mean that
incentives and suggested improvements
can and should arise from it. Their
implementation must just be seen as
external to the SCOR models
application.
946
This correlation is not
always made sufficiently clear by
companies and consultancies.
947
This
study has highlighted the difference as
much as possible, and deliberately
refrained from an appraisal of the
implementation successes in conjunction
with formation measures.

Modern approaches with respect to
the further improvement of the model are
very promising and have the primary
intention of developing the model
further, namely into a combined
descriptive and structural model.
948
However, firm proof of their application
ability and, furthermore, of their
quantifiable success is still absent.
Hence, they require an expansion of their
application in corporate practice, as
well as further scientific foundation. A
continuous improvement of the SCOR
model and its application possibilities
could usefully be produced by a close
cooperation between corporate practice
and academic research. It would also be
a very valuable contribution to the
continuous improvement and advanced
application of the SCOR model.

References

1. (Latham, 1999, p. 91). The author quotes Gerry
Perez, Senior Vice President Technical
Operations of Boehringer-Ingelheim, Inc., the
American subsidiary of the company
Boehringer-Ingelheim (headquartered in
Darmstadt, Germany).
2. The period between 1995 and 2007 is referred to
here.
3. For the usage of the term Supply Chain, cp., for
example, Werner (2002, p. 28). The term
logistical chain or logistics chain is also
sometimes found. The difference lies in the fact
that the focal point of the logistics chain extends
to cover the (physical) activities in a narrower
sense. In addition to this the Supply Chain also
covers the accompanying cash and information
flows and has a substantially wider conception,
cp., for example, Thaler (2003, p. 43) and von
Steincker and Khner (2001, p. 45). The terms
introduced and their meanings will be dealt with
in more detail in the course of the submitted
work.
4. For discussion on Supply Chain Management as a
management discipline in the context of business
economics, see the respective explanations in
sect. 1.2.
5. Cp. Supply & Demand-Chain (2005a, 2005b). A
personal website and a respective magazine
exist for executives from the field of Supply
Chain Management with the title Chief Supply
Chain Officer (CSCO) Insights for the
Supply Chain Executive, cp. CSCO (2005).
6. A method or a procedure is used in order to get
from a defined starting condition to a defined
end condition. In opposition to this, with a model
we have an illustration of a defined starting
structure seen from certain points of view.
Models are each designed for particular question
or problem conditions; they are moulded by the
basis forming question (i.e., by the uses required
of the model) (cp. Kromrey, 2002, p. 204).
7. With reference to the terms Non-Profit Organisation
and Not-for-Profit Organisation, cp., roughly,
Kotler and Bliemel (1992, pp. 30, 42).
8. The respective terms or organizations (SCOR
model, SCC and so on) will be explained in more
detail at a later point in time.
9. Cp., for example, Bolstorff and Rosenbaum (2003,
p. 1).
10. Cp., for example, Huan, Sheoran, and Wang (2004,
p. 23), Lambert and Pohlen (2001, p. 1),
Lockamy and McCormack (2004, p. 1192), and
Gardner and Cooper (2003, p. 37).
11. For the practical applications of the SCOR model,
see chap. 2, sect. 2.4; for assignment within the
framework of scientific examinations see chap.
6, sect. 6.2.
12. For the discussion on an explorative advance to
approaching a research area, cp., for example,
Wollnik (1977). For a respective example of
application, cp., roughly, Schfer (2002).
13. This will be more closely dealt with in chap. 4,
sect. 4.1.
14. This problematic will be dealt with more explicitly
in chap. 5, sect. 5.1.
15. For the term exploration see the explanations at the
beginning of chap. 3.
16. The subject matter will be dealt with in detail in
chap. 3, para. 3.1.1.
17. We are dealing here purely with basic guidelines as
to the methodical layout of the work. Detailed
explanations of the processes, testing
procedures and statistically acknowledged
values are found in association with the
disclosure of findings (see the explanations in
and chap C, sect. 3.4).
18. Cp. Friedrichs (1990, p. 50).
19. Modelled upon Friedrichs (1990, p. 51).
20. The value generation resulting from the
performance process of businesses is
calculatively identified as revenue minus
intermediate inputs; cp., for example, Bcker
and Dichtl (1991, p. 169).
21. Cp. BearingPoint (2003a, p. 1).
22. For the terms bottleneck and bottleneck monitoring,
cp., roughly, Goldrath and Cox (1992, p. 138)
and Heinrich and Betts (2003, p. 14).
23. According to the Balancing Law of Planning
(Ausgleichsgesetz der Planung) formulated by
Gutenberg, the coordinated course of
happenings within a business require the
continuous mutual synchronization of marketing
possibilities, manufacturing capacities,
procurement factors, etc. Resulting from this are
areas which change in the course of time, and
impede as bottlenecks the full quantative and/or
qualitative development of the other operational
partial areas due to their entanglement. For
planning purposes the result is that partial plans
have to be aimed at this minimum sector via
particular synchronization measures. Compare
to this end, for example, Gutenberg (1979, p.
164) and Schierenbeck (2003, p. 129).
24. Cp., for example, Thaler (2003, p. 19).
25. The term Service Level can be defined as follows:
The probability of being able to satisfy any
order during the normal order cycle, from stock
in hand (Stephenson, 2004).
26. Cp. Kuhn and Hellingrath (2002, p. 45).
27. In the past, a number of compositions considered
the basic question as to whether Supply Chain
Management represents a self-contained
management discipline in the context of business
economics, or moreover a type of fashion
appearance of limited duration; cp. to this end
roughly Eig (1999, p. 106), Kieser (1996, p.
21), Mller, Seuring, and Goldbach (2003, p.
429), and Otto and Kotzrab (2001, p. 157).
28. In academic literature, there is an increasing
recognition that Supply Chain Management
actually constitutes a self-contained discipline
within business economics, which needs to be
taken appropriately. Representatively, Ayers
comes to the following conclusion in this context:
SCM is a discipline worthy of a distinct identity.
This identity puts it on a level with other
disciplines such as finance, operations, and
marketing (Ayers, 2002a, p. 8). For further
compositions which advocate a similar
viewpoint, cp., for example, Bechtel and
Mulumudi (1996, p. 1), Cooper, Lambert, and
Pagh (1997, p.1), Gpfert (1999, p. 19), and von
Steincker and Khner (2001, p. 39).
29. In the following, the term Supply Chain and the
abbreviation SC will be used synonymously.
30. Background information: The Council of Logistics
Management (CLM) was originally founded as
the National Council of Physical Distribution
Management (NCPDM) in Americas St. Louis,
in January, 1963. The NCPDM was formed by
a visionary group of educators, consultants, and
managers who envisioned the integration of
transportation, warehousing, and inventory as
the future of the discipline. At that time, physical
distribution was just beginning to edge its way
into the corporate lexicon and make its
considerable presence felt in the business
community. These early founders believed that
high-level executives within their own
companies needed to be made aware of the
critical role that physical distribution could and
should play in improving marketing efficiency
and profits. They determined that there was an
urgent need for an organization that would
facilitate continuing education and the
interchange of ideas in this rapidly growing
profession that came to be known as logistics
management (CLM, 2004a).
31. The original text reads: The supply chain is as all
that happens to a product from dirt to dust
(CLM, 2004c).
32. The product life cycle comprises the main stages
from product evolution through production, right
up to reutilization. Throughout the life cycle
constant changes and improvements must be
implemented, which only then make a continual
success on the market possible; cp., for
example, Whe (1984, p. 626).
33. Cp. Ayers (2002a, p. 5) and Lambert and Pohlen
(2001, p. 1).
34. Cp. Christopher (1998, p. 4) and Hugos (2003, p.
40).
35. Cp. Banfield (1999, p. 3) and Daganzo (2003, p. 1).
36. Cp. Chopra and Meindl (2001, p. 1).
37. Cp. Lambert, Stock, and Ellram (1998, p. 14).
Aitken defines the Supply Chain in this sense as
follows: A network of connected and
interdependent organizations mutually and
cooperationally working together to control,
manage and improve the flow of material and
information from supplier to end user (Aitken,
1998, p. 19).
38. Cp. Govil and Proth (2002, p. 7) and Poirier (1999,
p. 197).
39. Cp., roughly, Kuhn, Hellingrath, and Kloth (1998, p.
7).
40. Cp. Jansen and Reising (2001, p. 197) and
Marbacher (2001). Christopher advocates a
similar approach on the grounds that todays
Supply Chains are mainly driven by the market
(Christopher, 1998, p. 18).
41. In the past the so-called push concept was the
most widely spread. With this approach in the
various stages of the Supply Chain, semi-
completed and completed products are
manufactured and stored until such time as they
can be sold and delivered to the next stage in the
Supply Chain on the basis of customer orders.
Often, long delivery periods and high inventory
stock result from this. In opposition to this, the
demand vacuum approach (pull concept) is
characterized by the fact that the customer
decides to buy a certain product, whereby it
quotes the exact requirements with reference to
the product and delivery time. Building upon this
the necessary resource amount is acquired. The
production and distribution process has then to
lead to a delivery according exactly to the
wishes of the customer (quality, time, etc.). In
order to realize this approach, supply and
demand must be synchronized. This
synchronization represents one of the tasks and
one of the objectives of Supply Chain
Management (SCM), as will still be illustrated in
detail in the course of the work; cp. Landvoigt
and Nieland (2003, p. 4) and Poirier (2000, p.
26).
42. Cp. Hoover, Eloranta, Holmstrom, and Huttunen
(2001, p. 70).
43. Cp. Bovet and Martha (2000, p. 17). For the term
process in the context of the Supply Chain, q.v.
(Schnsleben, 2000, p. 22; Thaler, 2003, p. 17).
44. (Stephens, Gustin, & Ayers, 2002, p. 360).
45. Cp. Premkumar (2002, p. 368).
46. The concept of Collaborative Planning, Forecasting
and Replenishment (CPFR) enables a company-
spanning cooperation for the buyers and sellers
to make demand and marketing prognoses, as
well as a regular actualization of plans, which is
based upon a dynamic exchange of information
and has reduced supplier stock as its objective;
cp., for example, Handfield and Nichols (2002,
p. 298) and Schneider and Grnewald (2001, p.
198).
47. Cp. Chakravarty (2001, p. 402).
48. Cp. Govil and Proth (2002, p. 17).
49. The term internet stands as a synonym for a global
association of local, country-specific and
regional networks. The impression of a complete
network is created via connection to network
centers (backbones) for private, scientific and
commercial users. Due to this, the internet is a
global-spanning, public net that connects
worldwide institutions, businesses and private
users to the so-called Transmission Control
Protocol/Internet Protocol (TCP/ IP) via
Gateway Servers; cp. Rebstock (2000, p. 6) and
Schoder (2004, p. 60).
50. Cp. Kuglin and Rosenbaum (2001, p. 59). For the
Supply Chains penetration of the internet and
the implications thereof, cp., for example, Coppe
and Duffy (1999, p. 521).
51. In this context see the concept of Collaborative
Planning, Forecasting and Replenishment
(CPFR) described earlier in this paragraph.
52. The concept of Vendor Managed Inventory (VMI)
falls within this category and can be described
as follows: Traditional responsibilities have
changed. Large retailers obtain more and more
sending orders to their suppliers, i.e., the
customer goods manufacturers. Instead they
install consignation stores whose contents are
owned by their suppliers until the goods are
withdrawn by the retailer. A supplier is
responsible for filling up his inventory to an
extent which is convenient for both the supplier
and the retailer. Such an agreement is called
Vendor Managed Inventory (Meyr, Rodhe, and
Stadler, 2002a, p. 65).
53. Cp. Gensym (2001, p. 2).
54. In the framework of a Supply Chain Strategy, the
companys desired value generation must be
clarified. This involves answering questions, as
for example: With which products and services
is the business going to compete? Is a standard
product of a certain series going to be offered to
all customers, or are customer-defined series
products going to be on offer? Which magnitude
of numbers is strived for (few, many)? Is purely
a product on offer, or is additional service
performance, such as inventory replenishment,
also offered? To what extent does the depth of
production suffice? Cp. Geimer and Becker
(2001a, p. 26).
55. Cp. Christopher (1998, p. 15) and Geimer and
Becker (2001a, p. 26). The so-called Value
Chain follows a similar approach in thought,
already defined by Porter; cp. Kuglin (1998, p.
106), Porter (1995, p. 126), and Porter (1999, p.
59).
56. (Normann & Ramirez, 2000) Value Chain, p. 186
57. This term allows itself to be operationalized in the
following way: Customer satisfaction is the
degree to which expectations of attributes,
customer service, and price have been or are
expected to be met (Hilton, Maher, & Selto,
2004).
58. Profitability in this context is understood to be the
capability of a business to attain a suitable rate
of interest for invested capital (Return on
Investment, ROI); cp. Horvth (2001, p. 571),
Schierenbeck (2003, pp. 6, 635), and Wild
(2004).
59. The so-called Strategic Triangle describes three
decisive factors of competition: cost, time and
quality; cp. Thaler (2003, p. 12). The Strategic
Square adds the further factor of flexibility; cp.
Werner (2002, p. 10). Due to this, flexibility can
be defined as follows: Flexibility is defined as
the ability of the process to handle changes in its
environment and in the requirements on the
process (Seibt, 1997a, p. 22).
60. The term Information Technology (IT) is to be
defined in the submitted work as () denoting
the technologies used for processing, storing,
and transporting information in digital form
(Carr, 2003, p. 12). For the term Digitalization,
cp., for example, Negroponte (1995) and Rai,
Patnayakuni, & Patnayakuni (2005, p. 2).
61. Cp. Bovet and Martha (2000, p. 4). For the term
Value Net, q.v. Andrews and Hahn (1998, p. 7)
and Cartwright and Oliver (2000, p. 22).
62. A substantial development within the framework of
the Supply Chain is the construction of so-called
virtual networks. A virtual network describes
the temporary melting together of core
competences (i.e., to be in command of special
capabilities or success potentials in particular
fields of the participating businesses q.v.
Prahalad and Hamel (1990, p. 79). The resulting
construction represents itself to the customer as
one unit. Inwardly, a virtual enterprise possesses
no juristic and construction organisational
interlocking; cp. Aldrich and Sonnenschein
(2000, p. 35), Kaluza and Blecker (1999, p. 4),
Schfer (2002, p. 1), and Werner (2002, p. 12).
63. Nickles et al. describe the connection as follows:
Business strategies have traditionally driven IT
development, but IT can now be used to enable
new business strategies. (Nickles, Mller &
Tabacs, 1999, p. 495).
64. Cp. BearingPoint (2004a, p. 2).
65. Cp. Forbath and Chin (2000, p. 3) and Rayport and
Sviokla (1995, p. 75).
66. For background information on the Dell Company
see chap. 3, para. 3.1.2.2.
67. Cp. Dell and Fredmann (1999, p. 101).
68. Cp. Seibt (2000, p. 11).
69. The starting point of the description and
systemization of E-Commerce is the dimension
of business transactions, as for example market
types, market services and people acting within
them; cp. Klein and Szyperski (2004). For the
connection between SCM and E-Commerce,
q.v. Drummond (2002, p. 29). For the integration
of E-Commerce within E-Business and for the
boundaries of the two terms, q.v., for example,
Schfer (2002, p. 11).
70. Cp., for example, Kmpf and Martino (2004). For
the term Electronic Supply Chain Management
(E-SCM), q.v. Hillek (2001, p. 1) and KPMG
(2001, p. 2).
71. For the integration of SCM solutions into the
operational architecture of information systems,
cp., roughly, Gronau, Haak, and Noll (2002, p.
385) and Kmpf and Roldan (2004).
72. Cp. Ross (2003, p. 18).
73. Cp. Ayers (2002c, p. 245).
74. Cp. Hughes, Ralf, and Michles (1998, p. 4). For the
direction of Strategy definition and
implementation, q.v. Fuchs, Young, and
Zweider-McKay (1999, p. 8).
75. The term Competitive Advantage can be
determined as follows: The challenge of
competitive strategy whether it is overall low-
cost, broad differentiation, best-cost, focused
low-cost or focused differentiation is to create
a competitive advantage for the firm.
Competitive advantage comes from positioning a
firm in the marketplace so it has an edge in
coping with competitive forces and in attracting
buyers (Johnson & Strickland, 2004).
76. For the term fixed costs, cp., for example,
Schierenbeck (2003, pp. 233, 654) and QM
(2004a).
77. The fundamental competitive strategy is the
management of costs. The common acceptance
of Porters strategy alternatives Cost
Management (i.e., a strategy that focuses upon
the competitive advantage of lowest cost
compared to competition), Differentiation (i.e.,
the achievement of at least one of the unique
performance attributes) and Concentration (i.e.,
concentration upon a market segment or
demand group respectively) means that a
corporation can only be successful if it
concentrates upon one of the three fundamental
types of strategy and the competitive
advantages resulting from the strategy.
Otherwise the business is in danger of being
stuck in the middle; cp. to this end, Porter
(1995, p. 62) and Porter (1999, p. 19).
78. Cp. Stephens et al., 2002, p. 361). For achievement
of competitive advantages via information
technology, cp., roughly, Porter and Millar (1988,
p. 62).
79. (Christopher, 1998, p. 16). Cp. in this context also
(Unknown Author, 2006, p. 14).
80. For the description of Supply Chain Management
as a unique discipline within Business
Economics, see the explanations at the end of
sect. 1.2. The fields of application demonstrated
in the further course of the work should
moreover highlight the present importance of
SCM for corporate practice.
81. In the further course, the term Supply Chain
Management and the respective abbreviation
SCM will be used synonymously.
82. Cp. Evans and Danks (1999, p. 19). For
implementation of SC strategies, q.v. Easton,
Brown, and Armitage (1999, p. 446).
83. Cp. Beech (1999, p. 92).
84. Cp. Tyndall, Gopal, Partsch, and Kamauff (1998, p.
65).
85. Cp. Raman (1999, p. 171).
86. (Hugos, 2003, p. 2).
87. For background information on the Council of
Logistics Management (CLM) see sect. 1.3.
88. Cp. Novack, Langley, and Rinehard (1995, p. 27).
Cp. also to this end CLM (2004c).
89. Cp. Bowersox and Closs (1996, p. 1).
90. Cp. to this Novack, Rinehard, and Wells (1992, p.
234) and Simchi-Levi, Kaminsky, and Simchi-
Levi (2000, p. 1). A differentiation of the
planning levels can be undertaken as follows:
Operational: short-term (less than one year for
the running accounting or reporting period
respectively) and mainly applicable to one part
of the company or activities respectively.
Tactical: mid-term (time horizon 1 to 3 years)
and mainly for a larger part of the company or
activities respectively. Strategic: long-term (time
horizon longer than 3 years) and mainly
impartial, pertaining to the substantial product
areas, company activities or the company as a
whole, and the aspects critical for success; cp.,
roughly, Albach (2001, pp. 294, 329).
91. Logistics Service Providers can be described as
follows: Third-party logistics involves the use of
external companies to perform logistics
functions that have traditionally been performed
within an organization. The functions performed
by the third party can encompass the entire
logistics process or selected activities within that
process (Skjoett-Larsen, 2000, p. 112).
According to this definition, every relationship
between a carrier and a logistic service provider
is described as Third-Party Logistics.
92. Cp. CLM (2004b).
93. Cp. Kajter (2002, p. 36).
94. Cp. Hellingrath (1999, p. 77). For the terms
effectivity and efficiency in the submitted
context, see para. 1.7.1.
95. Cp. CLM (2004b).
96. Cp. CLM (2004c).
97. Cp. Stephens et al. (2002, p. 360). Werner
differentiates between the business-internal and
the business-integrated Supply Chain, whereby
the latter is directed at the intersections of a
company with its external partners; cp. Werner
(2002, p. 6).
98. For an overview of various term definitions and a
proposal of classifications, cp., for example,
Mller et al. (2003, p. 419) and Schfer (2002,
p. 47).
99. (Schnsleben, 2000, p. 152). The term Advanced
Planning System (APS) can be described as
follows: An APS typically consists of several
software modules (eventually again comprising
several software components), each of them
covering a certain range of planning tasks
(Rohde, Meyr, & Wagner, 2000, p. 10). Cp. also
to this end Meyr, Rodhe, and Stadler (2002b, p.
99) and Poluha (2001, p. 314).
100. As to the various planning levels, especially in the
information management areas, cp., for
example, Schoder (2004, p. 42).
101. For the core competence term, q.v., for instance,
Prahalad and Hamel (1990, p. 79).
102. Cp. Schnsleben (2000, p. 54). Lead time
expresses the amount of time consumed for
each functional transaction. () The main
properties of the lead time of a process are the
length and the predictability or precision of its
executions (Seibt, 1997a, p. 21).
103. Cp. Bowersox and Closs (1996, p. 4).
104. Cp. Ayers (2002a, p. 8).
105. Cp. Premkumar (2002, p. 368).
106. Cp. Kaczmarek and Stllenberg (2002, p. 275).
107. Cp. Handfield and Nichols (2000, p. 2).
108. Cp. Ross (1997, p. 9).
109. The terms Lean Production or Lean Management
respectively, describe the concept of the
increase of efficiency, often in the sense of
decentralization, production displacement
(outsourcing), flat hierarchies, compression of
performances and therefore less personnel. This
concept, as with other variants of Lean-
concepts, stems back to an analysis by the
Japanese car manufacturers in a study of the
Massachusetts Institute of Technology (MIT) at
the end of the 1980s (for background
information about the MIT, cp. the explanations
in para. 1.7.1). According to this, the Japanese
car manufacturers produced twice as efficiently
and flexibly as the European and American
competition, with simultaneously meaningful
better quality. The comparison with lean in the
sense of decentralization, outsourcing, shallower
hierarchies, performance compression and
therefore less personnel is a simplification of the
Japanese concept, which represents embracive
quality management (Total Quality
Management, TQM) and only achieves the
efficiency and flexibility advantages on the basis
of this embracing concept, which are described
as externally visible and are attributed to
organizational changes in the lean sense.
Differentiated interpretations comprise therefore
the substantial elements of quality management,
however there are no unified meanings for the
various concepts connected with lean; cp.
Pollalis (2002, p. 333) and Thaler (2003, p. 113).
110. Distribution represents a partial area of the order
management process, which focuses upon the
final delivery to the customer. For delivery, or
distribution, the products are issued from stock
(commissioning) and prepared for shipment,
required transportation means and
accompanying documents are provided, and
delivery is executed (Schnsleben, 2000, p.
139).
111. Safety stock in the framework of SCM can be
described as follows: Safety stock has to
protect against uncertainty which may arise
from internal processes like production lead
time, from unknown customer demand, and from
uncertain supplier lead time. This implies that the
main drivers for the safety stock levels are
production and transportation disruptions,
forecasting errors, and lead time variations. The
benefit of safety stock is that it allows quick
customer service and avoids lost sales,
emergency shipments, and the loss of goodwill.
Furthermore, safety stock for raw materials
enables smoother flow of goods in the
production process and avoids disruptions due to
stockout at the raw material level. Besides the
uncertainty mentioned above, the main driver for
safety stock is the length of the lead time
(production or procurement), which is necessary
to replenish the stock (Srie & Wagner, 2002,
p. 41).
112. Cp. Hoover et al. (2001, p. 9).
113. Cp. Mentzer et al., no year, p. 18).
114. Cp. Hugos (2003, p. 3).
115. The term indicator applies also to pointer; cp.
Wahrig-Burfeind (2004, p. 164).
116. The business-external or business-integrated
Supply Chains are meant by this, which have
been previously more closely explained, cp.
Werner (2002, p. 6).
117. The connection between actually competing
objectives gives reference to the competitive
strategy of so-called Outpacing. Whilst as
previously explained in sect. 1.3.2 Porter
considers the strategic alternatives as unable to
be unified, Gilbert & Strebel assume that these
alternatives can be combined, if not
simultaneously, then in chronological order. The
so-called outpacing strategy is highlighted by the
fact that a business changes between the two
strategy-alternatives during its strategic
adjustment in order to gain an enduring lead
ahead of the competition. The reason is that if a
corporation has gained a competitive advantage,
it can be assumed that other corporations will
attempt to position themselves on the market
and, under certain conditions, will imitate the
strategy. New bidders will push themselves onto
the market until no more advantages can be
realized and the leaders in cost or differentiating
products can secure no further competitive
advantage. Gilbert & Strebel however, critically
indicate that only the best businesses are in a
position to overcome the conflict in objectives
between customer benefits and low costs and
achieve a low cost level if a customer benefit is
given; cp. Gilbert and Strebel (1987, p. 28),
Hamel and Prahalad (2000, p. 125), and Ekholm
and Wallin (2004, p. 4). Beyond the outpacing
strategy which assumes not a simultaneous, but
more a successive application of varying
strategy alternatives, so-called hybrid
competitive strategies exist within which falls
e.g. the hypothesis of simultaneousness, which
presumes that a combined strategy usage is at
least temporarily possible; cp. to this end
Corsten and Will (1995, p. 1).
118. Cp. Kuglin (1998, p. 3). Cp. also Kuglin and
Rosenbaum (2001).
119. Cp. Hoover et al. (2001, p. 48f).
120. Cp. Hugos (2003, p. 40).
121. Cp. Werner (2002, p. 10).
122. Cp. Schfer and Seibt (1998, p. 365).
123. The competence with special reference to the
Supply Chain has great importance advancing
towards it within the framework of the SCOR
model and the pertinent performance indicators,
which will be dealt with dedicatedly at the
beginning of sect. 1.7.
124. For the term Competitive Advantage see para.
1.3.2.
125. The cash flow is a indicative index of the flow of
capital from the profit process, from which
insights into the solvency and the financial
development of the company can be gained; cp.
Schierenbeck (2003, p. 316) and Whe (1984, p.
740). In the context of the Supply Chain, the
cash flow includes all financial transactions
occurring as a result of the trading of goods,
commodities and services; cp. Thaler (2003, p.
45).
126. The Supply Chain strategy describes what a
business wishes to achieve with the Supply
Chain and which services are achievable with it.
With its SC strategy a business defines how it
can contribute to its competitive capability using
its SC processes and SC infrastructure. The
objective of the strategy definition is the
identification of relevant competitive factors and
their implementation within the Supply Chain.
The SC strategy is subordinate to the respective
business or competitive strategy, or respectively
derived from them and must support them.
Following this, a substantial characteristic of a
successful SC strategy is the adjustment to the
business strategy and therefore to the
organizations strategic core vision; cp. Geimer
and Becker (2001a, p. 21).
127. The following definition of terms is to be used for
OEM: OEM is an acronym for Original
Equipment Manufacturer. An OEM is a
company that builds components that are used in
systems sold by another company called a
Value-Added Reseller or VAR. The practice of
a VAR selling products with components from
OEMs is common in the electronics and
computer industry. Typically an OEM will build
to order based on designs of the VAR. In
common usage, a VAR is sometimes called an
OEM, despite this being a complete reversal of
the literal meaning of both terms. This
misunderstanding arises from use of the term
OEM as a verb. For example, a VAR might say
that they are going to OEM a new product,
meaning they are going to offer a new product
based on components from an OEM. In recent
years, some OEMs have also taken on a larger
role in the design of the product they are
manufacturing. The term ODM, Original Design
Manufacturer, is used to describe companies
that design and manufacture a product that is
then sold under other brand names (WordIQ,
2004b). Cp. also to this end Chakravarty (2001,
p. 334).
128. Cp. Industry Directions (1998b, p. 2).
129. Cp. Goldrath (1999, p. 4) and Heinrich and Betts
(2003, p. 14).
130. For the description of structural and process
organizations, cp., for example, Whe (1984, pp.
156, 171) and Grochla and Wittmann (1974, pp.
1, 190).
131. Cp. Hines, Silvi, Bartolini, and Rachi (2002, p. 55).
132. The term integrated stands for integral, combined
or interlinked; cp. Wahrig-Burfeind (2004, p.
189). Consequently de-integrated can be defined
as non-integral, non-combined or non-
interlinked.
133. Self-representation of the business: Smart GmbH
is a 100% daughter company of
DaimlerChrysler AG. Founded: April 1994,
1,140 employees (as at: Jan. 2003),
administrative central office: Bblingen
(Germany), production location: Hambach
(France), with a presence in 24 countries (as at:
January 2003) (Smart, 2004).
134. The term mass customization represents a further
variety of the hybrid competitive strategies
mentioned in para. 1.4.2. In the core of this
expressis verbis the customer-individual mass
production of products for a large trading market
is understood. In accordance with this, the
products must meet the various needs of the
demanding. During this the costs should roughly
represent those of a mass production of
standardized products. The approach seeks a
balanced association between continually
running mass production and non-continuous
individual production; cp. Piller (1997, p. 16),
Piller and Schoder (1999, p. 3), and Chakravarty
(2001, p. 132). Cp. to this end also Pine (1993).
135. Cp. van Hoek and Weken (2000, p. 3).
136. Cp. Campbell and Wilson (1995, p. 14). Cp to this
end also Jarillo (1993).
137. Cp., roughly, Schnsleben (2000, p. 22).
138. Cp., roughly, Thaler (2003, p. 17). See to this end
also Nippa and Picot (1995), Kuhn (1995), and
Turner and Thaler (1995).
139. For an embracing description of the structure, the
elements and the monitoring principles of a
Supply Chain, q.v. Stewens (2005).
140. Cp., for example, Hagemann (2004, p. 5), Heck
(2004, pp. 1, 48), and Werner (2002, p. 16).
141. The process chain as a basis for the model can be
described as follows: The process chain is
defined as a set of chronological and logical
related activities performed to achieve a defined
business outcome (Beckman, 1999, p. 27).
142. Cp. Banfield (1999, p. 205) and Handfield and
Nichols (2002, p. 40).
143. Cp. Kaczmarek and Stllenberg (2002, p. 275).
144. In the general sense, the term productivity can be
defined as follows: The rate of output per unit
of input. Transposed upon the area of Industrial
Management, this leads to the following
definition of the term: In factories and
corporations, productivity is a measure of the
ability to create goods and services from a given
amount of labor, capital, materials, land,
resources, knowledge, time, or any combination
of those. Since capital goods tend to decline in
value and wear out, most economists distinguish
between gross capital productivity (total yield)
and net capital productivity, which discounts
depreciation (Mintzer, 1992, p. 20). Cp. also,
for example, Schierenbeck (2003, pp. 107, 638).
145. The terms effectivity and efficiency, in addition to
the differences and connections between the
terms, will be dealt with more closely in para.
1.7.1.
146. Cp. Preiner (2003, p. 123).
147. Whereby cost need to be distinguished from
expenses (for the varying terms q.v. Scherrer
(2001, p. 629).
148. Cp. Whe (1984, p. 871).
149. Cp. Kuglin (1998, p. 192).
150. Measurement of cost in the post-costing,
estimation of the cost in the pre-costing (note of
the author).
151. Cp. Stemmler (2002, p. 176).
152. Incremental or marginal costs are defined as the
manufacturing costs of each of the previously
brought out (produced) unit. As long as a the
total cost curve of a product or cost area runs
linearly, the incremental costs for every
manufactured unit are equal and represent the
proportional costs or product costs respectively.
The terms product costs, proportional costs and
marginal costs have the same meaning. For
marginal cost calculation, the terms proportional
cost calculation or Direct Costing are
synonymously used; cp. Schierenbeck (2003, pp.
287, 676) and QM (2004b).
153. Expenses or payments respectively represent a
negative payment flow in the sense of money
outlet. They are compared to respective
incomes or incoming payments; cp. Scherrer
(2001, p. 628).
154. Cp. Govil and Proth (2002, p. 87). For the term
cash flow see the footnote under para. 1.4.3.
155. The term Key Performance Indicator, KPI, can
be defined as follows: A statistical measure of
how well an organization is doing. A KPI may
measure a companys financial performance or
how it is holding up against customer
requirements (ASQ, 2004). Cp. also Srie and
Wagner (2002, p. 32). The term is to serve as a
collective term for other related terms within the
frame of the work submitted, for example
performance attributes, metrics and
performance measures, which will be dealt with
in detail in the further course of the work.
156. A companys success can be identified as the
difference between results and costs or as the
difference between revenues and costs. In profit
and loss accounting it is evidenced by the
difference between earnings and expenses over
a certain period, in the form of profit and loss;
cp. Whe (1984, pp. 873, 1021).
157. Cp. Kerzner (2003, p. 63).
158. Cp., roughly, SAP (2003, 2004, p. 2), Reiner and
Hofmann (2004, p. 1) and PMG (2002, p. 1).
159. Cp. BMA (2004b).
160. Cp. Novack et al. (1995, p. 235).
161. Ibid.
162. As to the term customer satisfaction and the
relevant influencing factors, cp. also Seibt
(1997a, p. 19).
163. For an overview of present developments in the
field of Supply Chain Cost management, q.v.
Cooper and Slagmulder (1999).
164. Activity-based costing is highlighted by the fact
that the allocation of general product costs in the
indirect performance areas does not occur on
the basis of value-measured cost drivers, but
according to the tasks necessary for production
(processes, activities) with given consideration
to the cost drivers influencing the processes;
cp. Scherrer (2001, p. 655). Cp. roughly also
Horvth and Mayer (1989, p. 214) and Cooper
and Kaplan (1991, p. 130).
165. Cp. Dekker and Van Goor (2000, p. 41).
166. Cp. Thaler (2003, p. 89). Cp. to this end also
Weber (1992).
167. For an overview of operational performance
measurements as building blocks of a
Management Information System (MIS), q.v.
Mller-Hagedorn (1999, p. 729).
168. See under para. 1.5.3. Cp. also Novack et al.
(1995, p. 235).
169. The application possibilities and particulars of a
questionnaire within the framework of an
examination under inclusion of performance
indicators will be dealt with in detail in chap. 3.
170. Cp. Novack et al. (1995, p. 235).
171. Self-representation of the organization: Nolan
Norton Institute carries out research in the areas
of business strategy, organization development
and IT strategy and management. The insights
resulting from this are published and used in the
consulting practice of Nolan, Norton & Co. The
Nolan Norton Institute was founded after the
American example in 1988 and since then
became a leader in investigating, creating and
disseminating knowledge on the management of
information age organizations. Nolan Norton
Institute designs and executes research on
corporate and business strategy, corporate and
business governance and management (NNI,
2004).
172. Self-description of the organization: KPMG was
formed in 1987 with the merger of Peat
Marwick International (PMI) and Klynveld
Main Goerdeler (KMG) and their individual
member firms. Spanning three centuries, the
organizations history can be traced through the
names of its principal founding members
whose initials form the name KPMG. KPMG
International is a Swiss cooperational of which
all KPMG firms are members. KPMG
International provides no services to clients.
Each member firm is a separate and
independent legal entity, and each describes
itself as such (KPMG, 2004).
173. Cp. Kaplan and Norton (1997, p. VII). For an
embracing overview of the Balanced Scorecard,
q.v. Fitzgerald and Moon (1996).
174. Cp. Werner (2002, p. 269).
175. Cp. to this end also Kaplan and Norton (1996a, p.
12). For the subject matter of the Balanced
Scorecard, q.v. Weber and Schffer (1999) and
Horvth and Kaufmann (1998).
176. Above all, the large Strategy Advisory Firms,
such as for example McKinsey or the Boston
Consulting Group (BCG), have intensively
assigned this procedure within the framework of
their strategy projects, cp., for instance, Koller
and Peacock (2002, p. 1). Apart from this, there
are however smaller consultancies which have
specialized themselves in the concepts
application. One of the leading firms of this kind
is the advisory company Balanced Scorecard
Collaborative (BSCol), specializing in the
application of the Balanced Scorecard and
founded by Kaplan and Norton, the creators of
the Balanced Scorecard. The business describes
itself as follows: Balanced Scorecard
Collaborative is a new kind of professional
services firm that facilitates the worldwide
awareness, use, enhancement, and integrity of
the Balanced Scorecard (BSC) as a value-
added management process (BSCol, 2004).
177. Cp. Industry Directions (1998a, p. 5). For the
term Return on Investment (ROI) see the
explanations under para. 1.3.1. For the
calculation of the ROI, q.v. Preiner (2003, p.
181).
178. Cp. Kaplan and Norton (1996b, p. 75) and
Werner (2002, p. 169).
179. The strategic core vision describes a companys
task, core competences, competitive orientation
for achieving competitive advantages, future
competitive positioning, future product range,
and financial objectives (growth, profits, etc.).
From this it can be deduced in which areas a
business must reach top performances. The
successful implementation can be interpreted
from the evaluation of the respective
performance on the market; cp. Geimer and
Becker (2001a, p. 22).
180. Cp. Kaplan and Norton (1996b, p. 75).
181. Cp. BMA (2004a). In this context it is important
to understand that the listed perspectives are not
generally valid, but of company-specific nature.
182. Data Warehouses can be defined as follows: A
logically consolidated store of data drawn from
one or more sources within the enterprise and/or
outside the enterprise (Simon & Shaffer, 2001,
p. 9).
183. Cp. Industry Directions (1998a, p. 5), Zeller
(2003, p. 8), and Kummer (2001, p. 81). For a
scientifically founded overview as to operational
and strategic management and controlling
approaches for the measurement of the
performance capability of Supply Chains,
reference is made to Erdmanns work; cp.
Erdmann (2003).
184. Cp. Werner (2000a, p. 8; 2000b, p. 14).
185. Cp. Srie and Wagner (2002, p. 33).
186. Cp. Zimmermann (2002, p. 413). Thaler speaks in
this context of the area of conflict between
manufacturer/customer and supplier, cp. Thaler
(2003, p. 16).
187. Cp. for example, Geimer and Becker (2001b, p.
128), Heck (2004, p. 13), and Kanngieer (2002,
p. 9).
188. Self-representation of the organization: The
Supply-Chain Council was organized in 1996 by
Pittiglio, Rabin, Todd & McGrath (PRTM) and
Advanced Manufacturing Research (AMR),
and initially included 69 voluntary member
companies. The Supply-Chain Council now has
closer to 1,000 corporate members worldwide
and has established international chapters in
Europe, Japan, Australia/New Zealand, South
East Asia, and Southern Africa with additional
requests for regional chapters pending. The
Supply-Chain Councils membership is primarily
practitioners representing a broad cross section
of industries, including manufacturers, services,
distributors, and retailers. The site is divided into
a public and a members only section. Non-
members are welcome to browse the public
section information including the Supply chain
Operations Reference-model (SCOR) Overview
materials, IT vendors, consultants, and
researchers that support SCOR, calendar of
upcoming events, links to other related
organizations, and general information on the
association. For a nominal annual fee members
have access via password to the current version
of SCOR, complete contact information on all
members, email access to committee dialog on
SCOR, given at Supply-Chain Council
conferences, and research study results
conducted by members and others under the
auspices of the Supply-Chain Council (Supply-
Chain Council, 2006c).
189. Cp. roughly Schnsleben (2000, p. 152) and Meyr
et al. (2002a, p. 45).
190. The SCOR monitoring processes will be dealt
with closely in chap. 2.
191. Cp. Schnsleben (2000, p. 152).
192. Trommer combines all the facts as follows:
Various departments are now talking the same
language () thats a notable achievement. The
framework (the SCOR model is referred to
here; note of the author) helped to break down
functional silos and allowed people to look at
real issues and practices holding back supply
chain management improvements. It gave
people the chance to look at the supply chain
with customer-wide needs in mind (Trommer,
1996, p. 59). The author quotes Vinay Asgekar,
head of the Business Process Reengineering
(BPR) group of Rockwell Semiconductors.
193. The term Benchmarking can be defined as
follows: The process of measuring products,
services, and practices against the toughest
competitors or those known as leaders in their
field. The subjects that can be benchmarked
include strategies, operations, processes, and
procedures. The objective of benchmarking is to
identify and learn best practices and then to
use those procedures to improve performance
(SQN, 2004). Cp. also Schfer and Seibt (1998,
p. 365), Schnsleben (2000, p. 95), and
Schumann (2001, p. 102). See for this purpose
also the explanations in chap. 3, para. 3.1.1.2.
194. Cp. Seuring (2002, p. 20) and Werner (2002, p.
24).
195. Cp. Hellingrath (1999, p. 78).
196. Cp. Welke (2003, p. 13). The subject matter was
also closely discussed in a personal conversation
by the author with Welke; see Poluha (2004b).
197. The term best practices can be defined as
follows: 1. Exemplary solutions or methods of
procedure that lead to top performances, are
best practices. 2. The action taken in order to
identify such procedures and to use them for
improvements to ones own processes, often as
an extension to benchmarking. Best practice is a
pragmatic procedure. It systemizes existing
experiences of successful organizations (often
also competitors), users, and so on. It compares
various solutions which are assigned in practice,
evaluates them with the aid of operational
objectives, and determines on this basis which
formations and methods of procedure best
contribute to the achievement of targets; cp.
ODell and Grayson (1998, p. 167).
198. Cp. to this end Burnstine and Soknacki (1979, p.
115). BIAIT originated within the framework of
an IBM research project and was further
developed within IBM. The range of application
comprised the process areas of planning and
execution of application development, marketing
planning and organization analysis. A planning
approach for application development which is
founded upon the BIAIT principles is the so-
called Business Information Control Study
(BICS). The BICS approach leads to an
immediate identification of problem areas that
have a high visibility for business executives and
a large potential for the realization of advantages
in the usage of computers; cp. Carlton (1980, p.
2).
199. Cp. Cremer (2005, p. 35). As to the Klner
Integrationsmodell (Cologne Integration Model),
see also Grochla et al. (1974).
200. See chap. 2, sect. 2.2.
201. Cp. Fettke and Loos (2003b, p. 33).
202. B2B is focused on the interactions of institutional
partner among themselves, B2C on the business
with end customer, and G2C on the interactions
among public sector and end customers; cp., for
instance, Stadler (2002, p. 15f), Kodweiss and
Nadjmabadi (2001, p. 75f), and Schfer (2002,
p. 16).
203. Cp. Werner (2002, p. 113).
204. Cp. Premkumar (2002, p. 367).
205. Cp. Fettke and Loos (2003b, p. 34).
206. See to this end chap. 2, para. 2.4.1.3.
207. (Razvi, 2002, p. 3).
208. Schfer and Seibt define competence as the
ability to be able to manufacture innovative
products in the highest quality at market capable
prices faster than the competition. In order to
realize this, the organizations processes must be
continuously improved and be formed more
effectively and efficiently by the integration of
new, innovative ideas; cp. Schfer and Seibt
(1998, p. 365). In the existing context this
capability, as well as the associated processes
refer specifically to the Supply Chain, which is
emphasized by the term SC competence.
Competence in turn determines the
performance.
209. Cp. Hugos (2003, p. 34).
210. Cp. Hugos (2003, p. 37).
211. Cp. Werner (2002, p. 10). For effectivity Seibt
synonymously uses the term effectiveness with
the following definition: Effectiveness is the
result-factor that is frequently associated with
output quality (Seibt, 1997a, p. 20).
212. Profitability is defined as earnings in relation to
expenses, or results in relation to costs. In
opposition to this, productivity is the amount
produced in relation to the amount of factor
assignment. Profitability is therefore also
described as economic efficiency, and
productivity is described as technical efficiency;
cp. Schierenbeck (2003, p. 593) and Bea, Dichtl,
and Schweitzer (1991, p. 2).
213. Cp. FHTE (2004). For the term business success
see chap. 1, para. 1.5.3. Seibt defines efficiency
as follows: Efficiency is a measure of process
economy and indicates the degree to which the
process is able to produce a higher value of
output with lower levels of cost (Seibt, 1997a,
p. 21).
214. In the general sense, Target Costing respectively
represents a customer- or market-orientated
cost determination of which all relevant cost
flow measures are viewed as variables; cp.
Scherrer (2001, p. 660). For the term Supply
Chain-based marginal costing, cp., for example,
Kajter (2002, p. 35).
215. Cp. Goldbach (2002, p. 94).
216. For the term Activity-based costing (ABC) see
the explanations under para. 1.5.3.
217. Cp. Slagmulder (2002, p. 86)
218. Self-representation of the organization: The
Massachusetts Institute of Technology a co-
educational, privately endowed research
university is dedicated to advancing
knowledge and educating students in science,
technology, and other areas of scholarship that
will best serve the nation and the world in the
21st century. The Institute has more than 900
faculty and 10,000 undergraduate and graduate
students. () A great deal of research and
teaching takes place in interdisciplinary
programs () whose work extends beyond
traditional departmental boundaries (MIT,
2004a).
219. The study named is described by MIT as follows:
The Integrated Supply Chain Management
Program (ISCM) is a consortium of non-
competing companies that was started in
January 1995 by a group of faculty and staff
from the Sloan School of Management and the
Center for Transportation & Logistics, where
the Program is currently managed. The purpose
of the program is to accelerate the
implementation of supply chain management
principles within the sponsor companies, and to
advance the state of the art of supply chain
management. The ISCM Program enables
sponsors to learn about the state-of-the-art and
future supply chain practices in two main ways:
1. Facilitating best-practice-sharing and
exchange among sponsors. 2. Creating new
supply chain knowledge through ISCM and MIT
research projects (MIT, 2004b).
220. Cp. Hoover et al. (2001, p. 7).
221. Self-evaluation of the company: PRTM works
closely with leading companies worldwide to
achieve breakthrough business results. Since
1976, weve delivered measurable value to our
clients, earning one of the highest levels of
repeat business in the management consulting
industry. PRTM is also a recognized thought
leader and innovator. There are 14 PRTM
offices and more than 400 consultants in the
U.S., Europe, and Asia. Our proven
methodologies have become the industry
standard. The widely used Supply Chain
Operations Reference (SCOR) model was
originally developed by PRTM in collaboration
with Advanced Manufacturing Research
(AMR) and the Supply-Chain Council (SCC).
PRTM has practices in product development,
supply chain and operations, customer service
and support, sales effectiveness, and strategic
IT management, as well as a benchmarking
subsidiary (PRTM, 2004b).
222. Cp. PMG (2002, p. 1). Cp. to this end also PRTM
(2001).
223. The following three types of inventory can be
differentiated in association with inventory
management costs: 1. Cycle inventory: is
necessary in order to fulfil product demand
amongst normally planned orders. 2. Seasonal
inventory: represents produced and stored
products in order to satisfy the expected demand
that arises due to seasonal needs. 3. Safety
inventory: is necessary in order to compensate
for uncertain and unpredicted demand and order
cycle times. With this, four fundamental
possibilities exist for the reduction of safety
inventory: Firstly, the lowering of demand
uncertainty by increased prognosis exactness.
Secondly, shorter cycle times, which lead to a
reduced safety inventory for coverage. Thirdly,
a lowering in cycle time fluctuation. And
fourthly, the reduction of uncertain product
availability if demand exists; cp. roughly, Hugos
(2003, p. 62).
224. Cp. Hoover et al. (2001, p. 50).
225. Ibid.
226. Cp. Stemmler (2002, p. 172).
227. (Bovet & Martha, 2000, p. 43).
228. (Hughes et al., 1998, p. 183).
229. For the term shareholder, cp., for example,
Schierenbeck (2003, p. 86).
230. Shareholder Value can be described as follows:
At the end of the business cycle of a company,
after all debts have been paid, money remains.
This money, the free cash flow, is for the
shareholder or shareholders. The free cash flow
is the amount of money that is left after all
creditors are paid within the appropriate period.
The definition of Shareholder Value is the value
of the company (firm) minus the future claims
(debts). The value of the company can be
calculated as the Net Present Value (NPV) of
all future cash flows plus the value of the non-
operating assets of the company (Value Based
Management, 2004). Cp. to this end also Albach
(2001, p. 301) and Accenture (2004, p. 2).
231. Cp. Evans and Danks (1999, p. 20).
232. For the term profitability see para. 1.3.1.
233. Cp., roughly, Schierenbeck (2003, p. 635). The
invested capital plays a large role for the
profitability of an investment, which will be dealt
with more closely in chap. 2, para. 2.3.1.
234. See chap. 2, para. 2.1.4.
235. Cp. Friedrichs (1990, p. 50). In the present
context we are dealing in analogue with
problems regarding business economics and
Supply Chain Management respectively.
236. For background information on the Supply-Chain
Council (SCC) see chap. 1, sect. 1.6.
237. Cp. Hellingrath (1999, p. 77).
238. The process term in the present context allows
itself to be defined as follows: A coordinated
(parallel and/or serial) set of process activity(s)
that are connected in order to achieve a
common goal. Such activities may consist of
manual activity(s) and/or workflow activity(s)
(Hollingsworth, 1995, p. 52). The term
Workflow will be dealt with in sect. 2.2.
239. Cp. Supply-Chain Council (2006b, p. 2).
240. For the term Best Practice see chap. 1, sect. 1.6.
241. Cp. Bolstorff and Rosenbaum (2003, p. 11) and
Geimer and Becker (2001b, p. 116).
242. For the term Key Performance Indicator see
chap. 1, para. 1.5.3 (note of the author).
243. (Industry Directions, 2001a, p. 9).
244. For background information on the copmany
PRTM see chap. 1, para. 1.7.1.
245. Self-description of the organization: As an
independent research analyst firm, Advanced
Manufacturing Research (AMR) is committed
to providing unbiased, frank analysis on the
enterprise software sector, working with both
the users and providers of technology to ensure
that we have a clear, objective picture of a
market or industry before publishing our
research. Our research and advisory services
are focused on the enterprise software
applications and infrastructure including
Enterprise Resource Planning (ERP), Customer
Relationship Management (CRM), and Supply
Chain Management (SCM) (AMR, 2004).
246. Cp. Supply-Chain Council (2006). Cp. also
Werner (2002, p. 15), Handfield and Nichols
(2002, p. 67) and Meyr et al. (2002a, p. 45).
247. Cp. Kaluza and Blecker (1999, p. 21) and
Kanngieer (2002, p. 4).
248. Cp. McGrath (1996, p. 1).
249. The SCCs internet page may be found at
www.supply chain.org
250. The current SCOR model, valid at beginning of
2007, represented SCOR version 8.0.
251. Cp. Supply-Chain Council (2003a, p. 2), Schfer
(2002, p. 48), and Hellingrath (1999, p. 77).
252. Cp., roughly, Bolstorff and Rosenbaum (2003, p.
154) and Hugos (2003, p. 44).
253. (Supply-Chain Council, 2006b, p. 2).
254. Cp. Supply-Chain Council (2006b, p. 2).
255. Cp. Hagemann (2004, p. 6) and Geimer and
Becker (2001b, p. 118).
256. Cp. Werner (2002, p. 21) and Hagemann (2004,
p. 6).
257. Ibid.
258. Cp. Hagemann (2004, p. 6) and Werner (2002, p.
21).
259. Ibid.
260. Cp. Meyr et al. (2002a, p. 48).
261. (Supply-Chain Council, 2006b, p. 10). Detraction
in quality of the illustration result from extraction
from the original document, which can, if
necessary, be accessed from the original for
better legibility.
262. Cp. Corsten and Gssinger (2001, p. 141) and
Becker (2002, p. 68).
263. Cp., roughly, Klaus (2005, p. 79).
264. Cp., roughly, Geimer and Becker (2001b, p. 123),
Werner (2002, p. 26), and Bolstorff and
Rosenbaum (2003, p. 225).
265. (Supply-Chain Council, 2005b, p. 13).
266. Cp. Meyr et al. (2002a, p. 47) and Kanngieer
(2002, p. 6).
267. Cp. Kanngieer (2002, p. 4) and Supply-Chain
Council (2006b, p. 4).
268. The performance terms will be dealt with more
closely in chap. 3.1.1.
269. For an automated SC planning system the term
Advanced Planning System (APS) is often used;
for definition of the term see chap. 1, para.
1.4.2.
270. Cp. Heck (2004, p. 13).
271. Cp. Meyr et al. (2002a, p. 50), Bolstorff and
Rosenbaum (2003, p. 60), and Kanngieer
(2002, p. 9).
272. Ibid.
273. Cp. to this end also Bolstorff (2004, p. 22) and
Geimer and Becker (2001b, p. 128).
274. (Supply-Chain Council, 2003b, p. 9).
275. A detailed representation of the various
performance terms and their connections can be
found in chap. 3. para. 3.1.1.1.
276. Cp. Hugos (2003, p. 154) and Heck (2004, p. 14).
277. Cp. Supply-Chain Council (2003b, p. 4).
278. Ibid.
279. For the term Electronic Business (E-Business),
q.v. Seibt (2001, p. 11) and KPMG (2000, p. 2).
280. Cp. Supply-Chain Council (2003b, p. 11).
281. Cp. Supply-Chain Council (2005b, pp. 1, 8).
282. Cp. Supply-Chain Council (2005b, pp. 1, 9).
283. Cp. Supply-Chain Council (2005b, p. 296).
284. Cp. Supply-Chain Council (2005b, p. 319).
285. As at beginning of 2007.
286. Cp. Supply-Chain Council (2006a, p. 1).
287. Cp. Supply-Chain Council (2006b, pp. 8, 368,
434).
288. Cp. Supply-Chain Council (2006b, pp. 386, 511).
289. The meaning and application of the ISA-95
standard can be collectively described as
follows: Reconciling plant floor system
information with business information is the
biggest benefit manufacturers find in the ISA-95
enterprise and control integration standard,
especially those in the food and beverage and
pharmaceutical industries, where Parts 1 and 2
have been streamlining paper processes into
real-time automated processes and skyrocketing
productivity. Now, with Part 3 in the mix, these
companies can reap the rewards of new
manufacturing execution systems (MES) to help
meet FDA (Food and Drug Association; note of
the author) requirements with tracking and
traceability (ISA, 2006b).
290. Self-representation of the Organisation: Founded
in 1945, ISA is a leading, global, non-profit
organization that is setting the standard for
automation by helping over 30,000 worldwide
members and other professionals solve difficult
problems. Based in Research Triangle Park,
North Carolina, ISA develops standards;
certifies industry professionals; provides
education and training; publishes books and
technical articles; and hosts the largest
conference and exhibition for automation
professionals in the Western Hemisphere (ISA,
2006a).
291. Cp. Supply-Chain Council (2006b, pp. 9, 419).
292. BPM is a systematic approach to improving an
organizations business processes. BPM
activities seek to make business processes more
effective, more efficient, and more capable of
adapting to an ever-changing environment. BPM
is a subset of infrastructure management, the
administrative area of concern dealing with
maintenance and optimization of an
organizations equipment and core operations
(Bitpipe, 2006).
293. The internet page is: www.supply-chain.org.
294. Cp. Supply-Chain Council (2006a, p. 1; 2006b, p.
9).
295. Cp. Supply-Chain Council (2006b, p. 9).
296. By the formulations representation of Supply
Chains and to describe Supply Chains, it
is indicated that the SCOR model is a
descriptive model. It does not therefore
represent a forming model, with the exception
that it can positively contribute to the structuring
of the Supply Chain by identification and
implementation of necessary measures.
297. Cp. Supply-Chain Council (2005a, p. 2).
298. Reference models can be counted as normative
models which are more closely described in
chap. 1, sect. 1.6. The term reference
information model can also be found for these
models: An information model is a model which
represents an organizations information system.
A reference information model (reference
model in short) is a concrete information model
for a business, which is abstracted from a single
case and is used to represent a standardized
section of reality. Reference models support the
development of an organizations individual
information model, cp., for example, Fettke and
Loos (2003a, p. 35). For Supply Chain
Management implementation, company-spanning
information systems are necessary in addition to
the businesses willingness to cooperate and
reveal all processes that enable a prompt
exchange of information; cp. Scholz-Reiter and
Jakobza (1999, p. 7).
299. Cp. Migge (2002, p. 6) and Kmpf and Trapero
(2004). For an exhausting overview of business
process reference models, cp. also Scheer
(1997).
300. (Supply-Chain Council, 2006b, p. 3).
301. Cp. Seuring (2002, p. 20).
302. (Supply-Chain Council, 2005a, p. 1).
303. Workflows and the associated system of
monitoring these workflows (Workflow
Management System) can be defined in the
context of business process reference models as
follows: Workflow: The computerised facilitation
or automation of a business process, in whole or
part. Workflow is concerned with the
automation of procedures where documents,
information or tasks are passed between
participants according to a defined set of rules to
achieve, or contribute to, an overall business
goal. While workflow may be manually
organised, in practice most workflow is normally
organised within the context of an IT system to
provide computerised support for the procedural
automation. () Workflow Management
System: A system that completely defines,
manages and executes workflows through the
execution of software whose order of execution
is driven by a computer representation of the
workflow logic; cp. Hollingsworth (1995, p. 5).
304. Cp. Hollingsworth (1995, p. 20).
305. For the subject matter of structure,
implementation and explanation of business
regulations for the determination of business
transactions in and between organizations within
the framework of SCM, as well as various
implementation aspects of these business
regulations in information systems in support of
SCM, cp. Klaus (2005).
306. Cp. Holten and Melchert (2002, p. 207).
307. Cp. Heinzel (2001, p. 51) and Thaler (2003, p.
48).
308. The Human Factor is dealt with in chap. 6,
sect. 6.1.
309. (Supply-Chain Council, 2006b, p. 4).
310. Cp. Werner (2002, p. 6) and Supply-Chain
Council (2006b, p. 4).
311. The submitted work follows the process-
orientated definition of E-Business according to
Seibt, which was introduced at the end of chap.
1, para. 1.3.1., cp. Seibt (2001, p. 11), because
the submitted reference models in general and
especially the SCOR model are also considered
process models.
312. Cp. Fettke and Loos (2003b, p. 31). Cp. also
Fettke and Loos (2003a, p. 35).
313. Cp. Seuring (2001, p. 26), Kaluza and Blecker
(1999, p. 22), and Hofmann (2004, p. 1).
314. Enterprise Resource Planning (ERP) Systems
follow the primary objective integrating and
making centrally available in one system the
often functionally adjusted solutions for diverse
business areas already present within an
organization, such as procurement, production,
sales and so on, as well as their relevant data.
ERP systems, in that sense, represent
transaction systems which mainly illustrate the
actual condition of a business and administrate
historical data, cp. Kansky (2001, p. 205).
315. (Handfield & Nichols, 2000, p. 53).
316. (Bolstorff & Rosenbaum, 2003, p. 9). Davenport
provides the following further description as to
the qualitative advantages: Hundreds of
organizations () have begun to use the SCOR
model to evaluate their own processes; software
vendors () have begun to incorporate SCOR
flows and metrics into their supply chain
software packages. Some companies have
already benefited greatly from a SCOR-based
analysis of their supply chain processes
(Davenport, 2005, p. 102).
317. For the term profitability see chap. 1, para. 1.3.1.
318. The term project portfolio can be described as
follows: Project portfolio management refers to
the selection and support of projects or program
investments. These investments in projects and
programs are guided by the organizations
strategic plan and available resources (PMI,
2000, p. 10).
319. Cp. Hughes et al. (1998, p. 97).
320. Note of the author: The statement that quality
defects were able to be lowered by 100% must
be considered doubtful, even if this represents
the objective of concepts such as Total Quality
Management (TQM). For the concept of TQM,
cp., for example, Pfohl (1992) and Zink (1989).
321. Cp. Stephens (2000, p. 39). The calculation of the
specified performance indicators have still to be
dealt with in detail in chap. 3, para. 3.1.1.
322. Cp. Stewart (1997, p. 62).
323. Schfer and Seibt speak, in conjunction with this,
of generic benchmarking and provide the
following description: The great advantage of
benchmarking exists in the discovery and
integration of innovative practices, which are not
found in ones own industry. Within the
framework of generic benchmarking a
comparison of business processes takes place
that involve diverse functions and evolves from
a variety of industries; cp. Schfer and Seibt
(1998, p. 376).
324. Business parameters: Year founded: 1968;
Number of employees: 78,000; Revenues: $30.1
bn. (2003); Products and services: over 450;
Fortune 500 ranking: 65; Worldwide offices and
facilities: 294 (Intel, 2004).
325. Cp. Intel Information Technology (2002, p. 6).
326. According to Seibt, the management of
information and knowledge processes represents
one of four core tasks of organizations
information management (4-pillar-model); cp.
Seibt (1993, p. 3).
327. Cp. Intel Information Technology (2002, p. 7).
328. Background information of the company: SAP
(Systems, Applications and Products in data
conversion) was founded in 1972 by five IBM
colleagues and meanwhile has about 30,000
employees. In software-development alone,
worldwide altogether 8,200 colleagues are
employed. Aside from their main development
center at their administrative seat in Walldorf
SAP holds, amongst other things, development
laboratories in Palo Alto (USA), Tokyo (Japan),
Bangalore (India) and Sophia Antipolis (France)
as well as in Berlin, Karlsruhe and Saarbrcken.
With branches in over 50 countries SAP made a
profit of 7.0 bn. Euros in the financial year
2003 (SAP, 2004).
329. For information on PRTM, see chap. 1, para.
1.7.1.
330. Cp. SAP (2003).
331. Notes pertaining to the company: In their five
business segments BASF attained revenues of
33,4 bn. Euros in the year 2003. It is the
strategic objective to continue to grow
profitably. On five continents, roughly 87,000
employees ensure BASFs success (BASF,
2004).
332. Cp. SAP (2003).
333. Self-description of the organization: Meta Group
helps companies () as a leading provider of IT
research, advisory services, and strategic
consulting since 1989. Publicly traded
(NASDAQ: METG) since December 1995,
Meta Group offers proven models to ensure that
organizations are fully prepared to optimize their
use of technology, respond to demand, manage
risk, seize market opportunities, and avoid
expensive mistakes. Serving as each clients
personal radar screen, Meta Group monitors the
IT and business world to deliver an accurate,
independent view (Meta Group, 2004, p. 1).
334. Cp. SAP (2003, p. 3). The different performance
terms and their variations within the SCOR
models context will be dealt with in detail in
chap. 3, para. 3.1.1 (only metrics are spoken of
in the above text for the purpose of simplicity).
335. As for example E-Business, as illustrated in chap.
1, para. 1.3.1 and sect. 1.6.
336. Cp. Harmon (2004, p. 5). Cp. also Supply-Chain
Council (2006b, p. 6).
337. Cp. Supply-Chain Council (2003a, p. 2).
338. This argument can also be found e.g., with
Handfield and Nichols (2002, p. 68).
339. (Harmon, 2004, p. 6).
340. Cp. Carr (2003, p. 5) and Rai et al. (2005, p. 2).
341. Cp., for example, Klaus (2005, p. 79).
342. Cp. Werner (2002, p. 26).
343. This opinion is for example also shared by Seibt;
see Poluha (2003a).
344. Self-description of Hewlett-Packard (HP): HP
delivers vital technology for business and life.
The companys solutions span IT infrastructure,
personal computing and access devices, global
services and imaging and printing for consumers,
enterprises and small and medium business. HP
has a dynamic, powerful team of 142,000
employees with capabilities in 170 countries
doing business in more than 40 currencies and
more than 10 languages. Revenues were $73.1
billion for the fiscal year that ended October 31,
2003 (HP, 2004).
345. The Customer-Chain Operations Reference
Model (CCOR) and Design-Chain Process
Reference Model (DCOR) were initiated by the
SCC. In conjunction with the SCOR model they
can be assigned to improve organizations
transaction processes. The further development
takes place within their own specially purpose-
initiated Special Interest Groups (SIGs)
Design-Chain Council (DCC) and Customer-
Chain Council (CCC); cp. Supply-Chain Council
(2004).
346. Cp. Harmon (2004, p. 3).
347. A merger occurs when two corporations join
together into one, with one corporation surviving
and the other corporation disappearing. The
assets and liabilities of the disappearing entity
are absorbed into the surviving entity; cp. BFI
(2004). Cp. also to this end, for example,
Schierenbeck (2003, p. 427).
348. Additional background information: Hewlett-
Packard completed the largest technology
merger in history by acquiring Compaq
Computer. Closure of the deal was valued at an
estimated $19 billion. () The combined
company (with a combined work force of
150,000) will be the worlds biggest maker of
computers and printers, as well as the third-
largest provider of technology services,
ostensibly able to tackle IBM and Sun
Microsystems, while becoming more competitive
against Dell Computer (CNET, 2002).
349. Cp. Harmon (2003a, p. 7).
350. The term thread is defined in this context as
follows: Configuring a supply chain thread
illustrates how SCOR configurations are done.
Each thread can be used to describe, measure,
and evaluate supply chain configurations. 1.
Select the business entity to be modeled
(geography, product set, organization). 2.
Illustrate the physical locations of: Production
facilities (Make), Distribution activities (Deliver),
Sourcing activities (Source). 3. Illustrate primary
point-to-point material flows using solid line
arrows. 4. Place the most appropriate Level 2
execution process categories to describe
activities at each location (Supply-Chain
Council, 2005a, p. 17).
351. The HP-approach to the First Generation
Business Process Change presupposed that the
teams must fundamentally analyse and renovate
each Supply Chain process.
352. Cp. Harmon (2003a, p. 7).
353. For the SCOR models limitations see
explanations under para. 2.3.2.
354. Cp. Harmon (2003a, p. 7).
355. The term normative model has been dealt with in
more detail under chap. 1, sect. 1.6.
356. (Welke, 2003, p. 30).
357. Information on the company Intel may be found in
para. 2.3.1.
358. Cp. Intel Information Technology (2002, p. 6).
359. Ibid.
360. The ensuring of support and regulation of
responsibilities refers to the role of the so-called
project sponsor. The meaning and tasks of this
role can be described as follows: Sponsor: The
individual or group within or external to the
performing organization that provides the
financial resources, in cash or in kind, for the
project (PMI, 2000, p. 16).
361. Cp. Intel Information Technology (2002, p. 6).
362. Ibid.
363. The mentioned approach has strong similarity with
the concept of Collaborative Planning,
Forecasting and Replenishment (CPFR), which
can be described as follows: CPFR enables the
company-spanning cooperation of buyers and
sellers for demand and supply prognoses as well
as a regular update of plans that is based upon a
dynamic exchange of information via the
Internet and should lead to optimal customer
inventory stock and reduced suppliers inventory
stock. Supplier, manufacturer and customer
develop a communal business plan, which
comprises upcoming events (i.e., promotions) for
the synchronization of supply plans and
forecasts. Businesses achieve effective
advantages by lower inventory levels as well as
the resulting profits, improved financial flow and
lower capital investment, which should enable an
organization to simultaneously improve
profitability and market share; cp. Schneider and
Grnewald (2001, p. 198). Cp. to this end also
Hellingrath (1999, p. 83).
364. The term Postponement can be described as
follows: Postponement refers to product and
supply chain design that allows for last-minute
customizing of a product for delivery (Ayers,
2002b, p. 658). Cp. also Colehower et al. (2003,
p. 1).
365. Cp. Harmon (2003b, p. 1) and Intel Information
Technology (2002, p. 9).
366. The Value-Chain Operations Reference
(VCOR) model describes the business activities
associated with all phases of delivering
maximum value to the end user of value chain
networks. VCOR enables collaboration between
all partners and supports the activities of project
engineers, product developers, marketers,
suppliers, logistics, point of sale and aftermarket
service providers across the extended enterprise
of a product or service (Value Chain Group,
2005b).
367. Self-description of the organization: The Value
Chain Group (VCG) is a non-profit organization
that develops and maintains the Value Chain
Operations Reference (VCOR) model. The
Value Chain Group exists to promote VCOR to
be the Value Chain Reference framework of
preference globally, enabling next generation
Business Process Management (Value Chain
Group, 2005a).
368. Cp. Value Chain Group (2005b).
369. (Intel, 2005).
370. For normative models see chap. 1., sect. 1.6. For
the term value chain see chap. 1., paras. 1.3.1
& 1.4.3.
371. Self-description of the organization: The Supply
Chain Integration Office has primary
responsibility within the Logistics and Material
Readiness secretariat (of the Office of the
Secretary of Defense) for the following: 1. To
facilitate DoD Component implementation of
supply chain management practice. 2. To
identify business process changes which could
be enabled or strengthened through the
implementation of E-Business capabilities. 3. To
lead the development of modern supply chain
policies in DoD, including the integration of
acquisition logistics and e-commerce
capabilities. 4. To develop and maintain DoD
component implementation of supply chain
management and end-to-end distribution
capabilities required to meet 21st century
deployment and sustainment requirements. 5. To
develop and maintain DoD policy regarding
Materiel Management and Supply Distribution,
including supply depot operations, storage and
issue processing. 6. To develop and maintain
DoD policy for Inventory Control, including item
accountability, physical inventories,
reconciliations and security. 7. To develop and
maintain DoD policy regarding Petroleum
Resource Management. 8. To act as the DoD
focal point for DLA (Defense Logistics
Agency) (DoD, 2004c).
372. 80 bn. US-Dollars represented about 65 bn.
Euros, calculated as at July 2006; cp. Tiago
Stock Consulting (2006).
373. The DoD offers the following explanations for the
term Integrated Supply Chain Management:
Vision: The transformation of DoDs logistics
system into a fully integrated supply chain based
on assured accountability and timely, accurate
satisfaction of customer needs. Mission: To lead
the implementation of a modern, integrated
material supply chain process that fully supports
military operational requirements. To promote
customer confidence in the logistics process by
building a responsive, cost-effective capacity to
provide required products and services (DoD,
2004b).
374. Cp. Gintic (2002).
375. Cp. DoD (1998, p. 71).
376. For the various E-Business areas see chap. 1,
sect. 1.6.
377. Cp. DoD (2004a).
378. (DoD, 2004a).
379. Cp. DoD (2000, p. 77).
380. Cp. DoD (2000, p. 14).
381. Cp. (DoD, no year, p. 71).
382. (SCE, 2004).
383. Definition of the so-called Big Five: Traditionally,
the five largest Certified Public Accountants
(CPA) firms in the world. They are: Andersen;
PricewaterhouseCoopers; Deloitte & Touche
LLP; Ernst & Young LLP; and KPMG
(AICPA, 2004). Due to the bankruptcy of the
firm Andersen in the year 2002, one speaks
today of the four remaining organizations as the
Big Four.
384. Self-representation of the company: Business
Objects has incorporated the Supply Chain
Operations Reference model into Business
Objects Supply Chain Intelligence (Business
Objects, 2002).
385. Background information: mi services group is an
IT and management consultancy offering a wide
range of technical and professional expertise,
combined with broad business knowledge. ()
mi Services is an international organisation with
headquarters in Reading, UK and a network of
offices across the UK, USA and New Zealand.
We currently employ more than 200 people
worldwide, of whom the vast majority are
Consultants involved in the analysis, design,
development, implementation and support of
software systems (mi Services Group Ltd.,
2004).
386. The applications named will be dealt with more
closely in chap. 5, sect. 5.3.
387. In this context, a tool can be defined as a
computer-supported system or procedure, of
which at least parts are programmed and made
to run on computers; cp. Seibt (2004, p. 19).
388. The illustrated electronic Balanced SCOR e-Card
represents a respective further development or
automation of the Supply Chain Scorecard, as
shown in chap. 1, para. 1.5.4.
389. The configuration of the Supply Chain is a
substantial component of the SCOR model:
SCOR must accurately reflect how a supply
chains configuration impacts management
processes and practices (Supply-Chain Council,
2005a, p. 13). The tools introduced serve the
automation of the procedure.
390. Cp. mi Services Group Ltd. (2004, p. 2).
391. For background information on PRTM, see chap.
1, para. 1.7.1.
392. Self-representation of the organization: The
Performance Measurement Group, LLC was
formed in 1998 to offer a pioneering
benchmarking service in core business process
areas. Our service gives participants
confidential, customized benchmarking analysis
online. Hundreds of companies use PMGs
benchmarking services to measure their
performance relative to best-in-class companies
and identify opportunities to improve their
business practices and use of IT. PMGs
services are based on PRTMs leading thinking
from 25 years of work in core business process
management (PMG, 2004).
393. Cp. PRTM (2004a).
394. Self-description: BearingPoint is one of the
worlds largest business consulting and systems
integration firms. () BearingPoint provides
business and technology strategy, systems
design, architecture, applications implementation,
network, systems integration and managed
services. () BearingPoint has four industry
groups in which we possess significant industry-
specific knowledge. These groups are Public
Services, Communications & Content, Financial
Services, and Consumer and Industrial
Technology. We have existing operations in
North America, Latin America, the Asian
Pacific region, and Europe, the Middle East and
Africa (EMEA). Our principal executive offices
are located at 1676 International Drive,
McLean, Virginia (BearingPoint, 2004c).
395. Cp. BearingPoint (2004a, p. 8).
396. Becker and Geimer are also of the opinion that
the formation of the Supply Chain spans five
areas of action: Strategy development, process
formation, performance measurement,
organizational development, and technology
formation; cp. Becker and Geimer (1999, p. 25).
397. Cp. BearingPoint (2004b).
398. Cp. to this end BearingPoint (2003b, p. 17).
399. For business information on SAP see para. 2.3.1.
400. Cp. SAP (2003, p. 1).
401. Cash-to-cash cycle time is used to measure how
long a business requires from payment of the
supplier up to receipt of the invoice sum from
the customer. Due to many studies, this
aggregate measurement is a good evaluation
measure for the efficiency of order completion;
cp. Geimer and Becker (2001b, p. 130).
402. Cp. SAP (2004, p. 2).
403. Under application of the so-called Littles Law,
the inventory equals the produced amount in
daily product units, multiplied by the cycle time;
cp. WordIQ (2004a).
404. The reorganization of the planning processes
plays an important role within the framework of
SCM. The assignment of modern software
systems offers great potentials here, which
cannot be made accessible by the (successive)
planning concepts of conventional and
respective PPS or ERP systems. Due to the
introduction of so-called Advanced Planning
Systems (APS), the Supply Chains participants
are integrated by communal data and planning,
and the deficits of the PPS systems have been
removed as extensively as possible, especially in
the capacity planning area; cp. (Rohde et al.,
2000), pp. 10. For an overview of the interplay
of various applications, as for example ERP,
APS, etc., cp. also Ayers (2002d, p. 35).
405. Cp. SAP (2003, p. 11).
406. Additional information: The Singapore Institute of
Manufacturing Technology (SIMTech) ()
contributes to the competitiveness of Singapore
industry through the development of high value
manufacturing technology and human capital. It
is one of the research institutes of the Agency
for Science, Technology and Research
(SIMTech, 2004).
407. Cp. to this end Gintic (2000, 2002) and SIMTech
(2002, 2003).
408. Cp. SIMTech (2003, p. 2).
409. Cp. Friedrichs (1990, p. 52).
410. The terms thesis and hypothesis are being used
synonymously. Under the term hypothesis one
understands in conjunction with empirical
research a presumption which is to be verified
with the aid of empirical data. Within the
framework of respective quantitative or
standardized social research one means above
all a presumption which can be submitted to a
statistical test. This presumption is mainly
directed towards the fact that a connection
exists between two attributes or that a
difference exists between two groups. But there
are numerous further hypotheses possible, such
as about a particular form of connection (linear,
exponential, etc.); cp. Ludwig-Mayerhofer
(2004).
411. Cp. Kromrey (2002, p. 48).
412. Whilst under the term exploration the first
empirical and theoretical orientation within one
research area is often understood, the present
case is to be based upon Wollniks definition, in
which exploration can generally be considered to
be informational exhaustion of systematically
gained knowledge for the purpose of theory
formation; cp. Wollnik (1977, p. 42).
413. For a similar approach within the framework of
an empirical examination, cp., roughly, Schfer
(2002, p. 91).
414. Cp. to this end also Geimer and Becker (2001b, p.
129), Meyr et al. (2002a, p. 50), Schary and
Skjott-Larsen (2001, p. 18), and Grnauer,
Fleisch, and sterle (2000, p. 177).
415. For the term competence or in the present case
the Supply Chain (SC) competence respectively,
see the explanations at the beginning of chap. 1,
sect. 1.7.
416. This interpretation is also supported by Schoder;
see Poluha (2005).
417. Hypothesis-investigative examinations are carried
out with the primary objective of developing new
hypotheses in a relatively unresearched
scientific examination area, or to create
conditional terms; cp., roughly, Bortz (1984, p.
26).
418. Cp. Heck (2004, p. 15).
419. This deficit and the requirement for a
scientifically-founded examination of the
models structure resulting from it are also seen
as relevant by Seibt. He assumes, consistent
with the requirements of exploratory and
hypotheses-testing examinations, that the
submitted empirical examination is a first step in
this direction which may be grasped, deepened
and expanded by further studies; see Poluha
(2003b).
420. Thereby the aspect of a variety of different
scientific and business practice objectives is
addressed.
421. According to the so-called Freedom of Value
Judgement Posit (Werturteilsfreiheits-Postulat)
of empirical science, evaluations pose a problem
for the scientific concept of critical rationalism
from several viewpoints; cp. to this end
Kromrey (2002, p. 77). The Value Neutrality
Posit (Wertneutralittspostulat) refers
exclusively to the association in reasoning which
describes the methodical steps with whose help
a problem is to be examined. To this end and to
the differentiation between the associations to
discovery, reasoning, as well as evaluation and
effects in research, cp. Friedrichs (1990, p. 50).
422. Cp. Bolstorff and Rosenbaum (2003, p. 49). SCE
also uses the term SCORcard and defines it as
follows: The resulting SCORcard provides a
direct connection to the balance sheet.
Performance requirements are established with
respect to your competition and are prioritized
by both definitions of a supply chain product
and channel. These priorities will help in the
design phase of a SCOR project. The
SCORcard also summarizes actual performance
against benchmark performance with a gap
analysis that defines the value of improvements
(SCE, 2004, p. 8).
423. See to this end chap. 1, para. 1.5.4.
424. Cp. Supply-Chain Council (2003a, p. 7).
425. Cp. Supply-Chain Council (2003b, p. 242), Geimer
and Becker (2001b, p. 129), and SIMTech
(2003, p. 3).
426. As to the problematic and meaning of the
conditions of adherence to delivery, cp., for
example, Geimer and Becker (2001b, p. 131).
427. For an overview of the term Management
Information System as well as related terms
such as Business Intelligence, etc., cp. e.g.,
Kemper (1999, p. 25).
428. For the terms indirect and direct costs, the
previously explained terms of fixed and variable
costs are also used; cp. for instance Albach
(2001, p. 252) and Schierenbeck (2003, p. 233).
429. Cp. Supply-Chain Council (2003b, p. 6). See to
this end also Diag. 1-2 in chap. 1 and diag. 2-4
in chap. 2.
430. Cp. Geimer and Becker (2001b, p. 128). As
opposed to these authors, the author of the work
at hand uses the aforesaid term Supply Chain
costs instead of the originally quoted term
Logistic costs. This change was necessary due
to reasons of consistency resulting from the
differentiation between the terms Logistics and
Supply Chain made in chap. 1.
431. Cp. Srie and Wagner (2002, p. 33).
432. Cp. Bovet and Martha (2000, p. 43). See to this
end also chap. 1, sect. 1.7.
433. Cp. Heinzel (2001, p. 54), Supply-Chain Council
(2003b, p. 9), and Kanngieer (2002, p. 9).
434. In this way, for example, the order completion
performance measures the total number of
products delivered complete and on-timely at the
desired time. Beneath this performance indicator
we find, amongst other things, a performance
indicator which measures the backorders value.
For the allocation of Performance Measures to
the Level 1 Metrics and furthermore to the
Performance Attributes, cp. for example,
Bolstorff and Rosenbaum (2003, p. 51) and
Christopher (1998, p. 107).
435. The exact definitions and calculative formulas of
the performance measures may be taken from
the appendix (see sect. 2 and 3 for an overview,
and sect. 4 for the respective detailed
information).
436. A quantitative examination was given preference,
because in the SCOR models case we are
dealing with a relatively known subject matter in
principal, and a basis for universally valid
knowledge and vocabulary was to be expected;
cp. Lamnek (1995, p. 17) and Schnell, Hill, and
Esser (1992, p. 389).
437. Reiner and Hofmann were faced with a similar
task within the framework of an empirical study
and also decided to build upon the SCOR model
for the following reasons: Benchmarking
methods for process improvements are mostly
developed and introduced by practitioners. Many
practitioners use simple techniques rather than
analytical solution methods. That is why a strong
demand for effective methods of analyzing
benchmarking results that can be used for
design, analysis and improvement of processes
exists. () It is important to use an adequate
Performance Measurement System for
empirical research. We use a widely accepted
industry standard, the Supply Chain Operations
Reference (SCOR) model developed by the
Supply-Chain Council (SCC) (Reiner and
Hofmann, 2004, p. 2).
438. Cp. BearingPoint (2003c, p. 5). The so-called
strategic triangle describes three decisive
factors in competition: Costs, time and quality;
cp. Thaler (2003, p. 12). The productivity is
determined by the cooperation and prioritization
between these three factors, i.e., it is a result of
those.
439. Under the term Diagnosis Zetterberg understands
the description of an object or problem within
the framework of a limited number of definitions
and dimensions; cp. Zetterberg (1967, p. 67).
Cp. also Friedrichs (1990, p. 108).
440. In this context, a measure could be considered to
be the improvement in correlation between
request date, commit date and delivery date; cp.
Supply-Chain Council (2003a, pp. 15, 20).
441. The shortcomings mentioned are to be clarified by
several examples, whereby the list would enable
itself to be further continued: Paul uses the
terms Metrics and KPIs synonymously; cp. Paul
(2002, p. 19). Christopher applies the term
integrated supply chain metrics for the measures
described by the Supply-Chain Council as
Performance Attributes; cp. Christopher (1998,
p. 106) and Supply-Chain Council (2003a, p. 8).
Werner states that the respective procedures in
the standardized Supply Chains are measured by
metrics within the SCOR model; cp. Werner
(2002, p. 16), whilst Thaler uses the term
measures in the same connection; cp. Thaler
(2003, p. 48). And Zeller applies the terms
reference numbers, measurement numbers and
metrics synonymously, and uses the term
reference number class to mean performance
attributes; cp. Zeller (2003, pp. 12, 19).
442. See Poluha (2004a).
443. Cp. Ossola-Haring (2003, p. 167).
444. Cp. Backhaus, Erichson, Plinke, and Weiber
(2003, p. 355). Possibilities of immediate
collection and analysis of statistical data for such
hypothetical constructions in conjunction with
the Meta theses will be dealt with later in chap.
3 (see para. 3.4.2.3) as well as chap. 4 (see
para. 4.3.2).
445. Cp. Preiner (2003, pp. 178, 195). See to this end
also the explanations under chap. 2, para. 2.1.4.
446. Ibid.
447. Cp. Schumann (2001, p. 105). See also chap. 1.
para. 1.5.3.
448. Schfer and Seibt describe the issue as follows: It
is not the metrics (stating how large the
identified distance from other companies) that
stand in the foreground of process
benchmarking, but rather the practices which
lead to exemplary results. Only by knowledge of
the superior practices can changes be initiated
which lead to the improvement of ones own
business processes; cp. Schfer and Seibt (1998,
p. 27).
449. See to this end also the statements in chap. 1,
sect. 1.7 for the Supply Chain drivers and
Supply Chain competences.
450. Cp. Ayers (2002b, p. 657).
451. Cp. Geimer and Becker (2001b, p. 129).
452. Cp. Ayers (2002b, p. 657).
453. Background information: Headquartered in
Round Rock, Texas, Dell is a premier provider
of products and services required for customers
worldwide to build their information technology
and Internet infrastructures. Dells climb to
market leadership is the result of a persistent
focus on delivering the best possible customer
experience by directly selling standard-based
computing products and services. Revenue for
the last four quarters totalled $45.4 billion and
the company employs approximately 50,000
team members around the globe (Dell, 2004).
454. The cash-to-cash cycle time shows the time
required by a business until a certain amount has
flowed back into it that was spent upon material
procurement; cp. roughly, Supply-Chain Council
(2003b, p. 262).
455. Cp. Ayers (2002b, p. 659).
456. See to this end also chap. 1, sect. 1.7.
457. Cp. Hoover et al. (2001, p. 9).
458. Cp. Hugos (2003, p. 37).
459. Cp. Meyr et al. (2002a, p. 52).
460. Cp. SIMTech (2003, p. 10).
461. Ibid.
462. Cp. PMG (2002, p. 2).
463. (Schary & Skjott-Larsen, 2001, p. 18). Cp. to this
end also Grnauer et al. (2001, p. 177).
464. For the method of procedure, cp., for example,
Rochel (1983, p. 143).
465. Basically a differentiation can be made between
the following types of variable relationships:
Deterministic (if X, then always Y) or statistical
(if X, then probably Y); reversible (if X, then Y;
if Y, then X) or irreversible (if X, then Y; if Y,
then not X); sufficient (if X, then always Y) or
conditional (if X, then Y, but only if Z is
present); necessary (if X, then and only then Y)
or substitutable (if X, then Y; but if Z, then also
Y); cp. Zetterberg (1967, p. 82) and Friedrichs
(1990, p. 105).
466. For an overview of the approaches represented in
the following, as well as further approaches in
this respect, cp., for example, Barker (1993, p.
4), Kiesel (1996, p. 55), Gleich (1997, p. 358),
Link (1998, p. 185), and Erdmann (2003, p. 59).
467. Cp. Rummler and Brache (1990, p. 143).
468. Cp. Neuhuser-Metternich and Witt (1996, p.
266).
469. Cp. Sellenheim (1991, p. 51).
470. Cp. Beischel and Smith (1991). A very similar
approach is followed by Taylor and Convey
(1993, p. 23).
471. If one attempts to systematize the possible
objective ideas which can influence the objective
functions of a business, a fundamental
differentiation between monetary and non-
monetary objective ideas is available. Under the
term monetary (or financial) objective ideas, one
understands objectives that enable themselves to
be measured in monetary units, i.e., the striving
towards profit and turnover. Further monetary
objective ideas are for example ensuring liquidity
and maintenance of capital. In opposition to this,
the non-monetary objectives contain figures
reflecting the achievement of certain growth or
productivity targets, the striving for increase in
market share, or the insurance of particular
requirements in quality; cp. Whe (1984, p.
110).
472. See to this end chap. 2, sect. 2.2.
473. Cp. Fisher (1995, p. 195).
474. Cp. Fickert (1993, p. 208).
475. Cp. Fisher (1995, p. 196).
476. Cp. Welz (2005, p. 6).
477. Cp. Greene and Flentov (1990, p. 53).
478. The Return on Assets (ROA) is identified by
setting the net profit against the total assets.
Because the asset profitability represents the
return of interest on the capital invested in
assets into the business, it is more capable of
testimony than the Return on Equity (ROE); cp.,
for example, Whe (1984, p. 48). An exact
description of the distribution can be taken from
chap. 4, sect. 4.1.
479. Cp. Berliner and Brimson (1988, p. 161).
480. Cp. Epstein and Manzoni (1997, p. 29; 1998, p.
181).
481. Cp. Sellenheim (1991, p. 52).
482. Cp. Beischel and Smith (1991, p. 25). A very
similar method of procedure is described by
Taylor and Convey (1993, p. 22).
483. Cp. Hendricks et al. (1996, p. 21).
484. Cp. Edvinsson and Malone (1997, pp. 68, 82). For
information about the Skandia-Navigator, q.v.
Skandia (2005).
485. Cp. Brokemper (1995, p. 242) and Werner and
Brokemper (1996, p. 165).
486. Cp. Keegan, Eiler, and Jones (1989, p. 45).
487. Cp. McNair, Lynch, and Cross (1990, p. 28) and
Lynch and Cross (1995, pp. 66, 72).
488. See chap. 1, para. 1.5.4.
489. Cp. Kaplan and Norton (1992, p. 71). With
reference to the Balanced Scorecard see also
the statements in chap. 1, para. 1.5.4. For a
similar categorization, cp. also Horvth and
Lamla (1995, p. 82) and Wuest and Schnait
(1996, p. 101).
490. Jacob roughly states that at the end of 1999, about
60 percent of all US-American businesses had
already introduced the BSC; cp. Jacob (1999, p.
44).
491. Cp. Hronec (1996, pp. 17, 32).
492. See to this end chap. 1, para. 1.5.4.
493. Cp. Heinzel (2001, p. 53), Hagemann (2004, p.
10) and Heck (2004, p. 13).
494. See chap. 3, para. 3.3.5.
495. Cp., roughly, Bolstorff and Rosenbaum (2003, p.
49).
496. The 3Com Company has for example developed
and assigned a so-called Supply chain Scorecard
for 3Com, which is based explicitly upon the
SCOR model, cp. Cohen and Russel (2005, p.
213).
497. As at beginning of 2007.
498. See chap. 6, sect. 6.2.
499. For the general method of procedure for
hypotheses formulation, cp., for example,
Friedrichs (1990, p. 103).
500. As to the derivation of the fundamental coherence
of effects see chap. 3, para. 3.1.2.1.
501. Ibid.
502. Ibid.
503. As to the derivation of the fundamental coherence
of effects see chap. 3, para. 3.1.2.1.
504. As to the derivation of the fundamental coherence
of effects see chap. 3, para. 3.1.2.2.
505. Ibid.
506. Only an indirect coherence exists between the
performance measures in so far as a low
inventory level ties less capital, which conceals
in itself a lower risk of inventory obsolescence.
It can, however, lead on the other hand to
insufficient delivery readiness. This in turn can
result in dissatisfied customers and have as a
consequence that the cash-to-cash cycle time
increases; cp. Schumann (2001, p. 99). The
assumption of such derived customer-orientated
behavioral patterns within the Supply Chains
context are not accommodated by the SCOR
model and are therefore not to be researched
any further in the submitted work. For a
coherence between these two fields of research,
Supply Chain Management and customer
behavior, see e.g., Bests fundamental work on
deterministic demand fluctuations in Supply
Chains; cp. Best (2003).
507. See the statements under the previous footnotes,
which may be used in analogue in the present
case.
508. As to the derivation of the fundamental coherence
of effects see chap. 3, para. 3.1.2.3.
509. Ibid.
510. Ibid.
511. The cash-to-cash cycle time represents by
experience a good measure for the evaluation of
the efficiency in the order transaction process.
However, no (direct) dependency allows itself to
be derived between the order transaction
performance and the asset turns; cp. Geimer
and Becker (2001b, p. 130).
512. See the statements under the previous footnote,
which may be applied in analogue in the present
case.
513. Ibid.
514. Ibid.
515. As to the derivation of the fundamental coherence
of effects see chap. 3, para. 3.1.2.3.
516. The cash-to-cash cycle time represents by
experience a good measure for the evaluation of
the efficiency in the order transation procedure.
However no (direct) dependency allows itself to
be derived between the order transaction
performance and the asset turns; cp. Geimer
and Becker (2001b, p. 130).
517. Cp. Schfer and Knoblich (1978, p. 248).
518. Cp. Klingemann and Mochmann (1975, p. 178).
519. Cp. Rogge (1981, p. 49).
520. Because in the case of a representative survey
the examination is in any case supposed to
provide characteristics about the population, the
selection of the sample must take place in such
a way as to enable an exact and safe
transposure of the results onto the entire mass.
That is the case if the sample is representative,
whereby representability is considered
satisfactory with regards to the characteristics
relevant to the examination. A partial mass is
representative if it conforms to the total mass as
far as the distribution of all characteristics of
interest is concerned, i.e., represents albeit a
small, but true-to-reality illustration of the
population; cp. Berekoven, Eckert, and
Ellenrieder (1987, p. 42) and Kromrey (2002, p.
257).
521. Cp., roughly, Selg and Bauer (1976, p. 87).
522. In both cases the partial mass forming the
surveys basis should represent a restricted,
however proportionally true illustration of the
population (so-called pars pro toto); cp. Monka
and Vo (2002, p. 299).
523. As far as methods of non-probability sampling are
concerned, those are often inapplicable for
statistically controlled scientific statements. In
the case of random sampling methods, the
extraction of samples is completely arbitrary.
Simple sampling and multi-stage sampling can be
named in this connection; cp. Schfer and
Knoblich (1978, p. 255) and Friedrichs (1990, p.
130).
524. Hammann and Erichson thereby subdivide further
as follows: 1. Types within random sampling are
simple random sampling, stratified sampling,
cluster sampling and multi-staged sampling. 2.
Non-probability sampling (or also procedures of
purposive sampling) are e.g., quota sampling,
snowball sampling and sampling of typical cases;
cp. Hammann and Erichson (1990, p. 108) and
Ludwig-Mayerhofer (2004).
525. Cp. Berekoven et al. (1987, p. 51).
526. For the principle of the representation of similar
type cases, cp., roughly, Kromrey (2002, pp.
257, 273).
527. See also to this end the questionnaire in the
appendix, sect. 1.
528. The unsystematic surveys, also called
opportunistic surveys, mainly allow themselves
to be completed in conjunction with other
business procedures. The systematic surveys
have an exactly defined examination objective
and must be designed and prepared according to
a plan. A division between a unique survey and
a repeated survey is given by the characteristics
of frequency and consistency of the survey. In
the case of single surveys, also known as ad-
hoc surveys, a very particular topic is examined.
They therefore have a kind of diagnostic
character, but also come under scrutiny to
clarify relationships before important decisions
are made; cp. Schfer and Knoblich (1978, p.
247) and Friedrichs (1990, p. 192).
529. Cp. Hammann and Erichson (1990, p. 78).
530. Cp. Bortz (1984, p. 180) and Berekoven et al.
(1987, p. 112).
531. For an example of an online questionnaire see
section 5 of the appendix.
532. See to this end also the questionnaire in section
1of the appendix.
533. This topic will be reiterated in connection with the
course of the examination in para. 3.4.1.1.
534. Cp. Schnell et al. (1992, p. 367).
535. The so-called scale question is an exemplary sub-
form of the closed question. Here the persons
interviewed are supposed to express their
opinion about the intensity of a factual situation,
which are provided in (verbally formulated)
staged categories or as a continuum. In this
way, an ordinal measurement of amounts or
frequencies is enabled. Alternative or scaled
questions are also described as selection
questions, since only one answer is possible. The
simplest form of alternative question is the Yes-
No Question. In the case of the so-called
catalogue questions, the selected person
receives a number of qualitatively varying
answer possibilities, which allow themselves to
be allocated to a continuum (multiple-choice).
As soon as they exclude each other, selective
questioning is the case. Occasionally, more than
one answer is permitted, one speaks in this case
of multiple selection questions. In all the above
mentioned cases, the suggested answers can
take the form of catch-words or whole
sentences; cp. Mller-Bling and Klandt (1996,
p. 42) and Friedrichs (1990, p. 236).
536. This refers to the handy format, the clear and yet
optimal use of space for the questions, and the
reservation of enough free space for the
protocolling of the answers (as long as the
principle of multiple-choice is not followed); cp.
Schfer and Knoblich (1978, p. 294).
537. The complete questionnaire can be taken from the
appendix (see sect.1), in addition to an example
of the online data entry screen (see sect. 5).
538. For information regarding the consultancy
BearingPoint, see chap. 2, para. 2.4.2.3.
539. As to the changes since SCOR version 4 see
chap. 2, para. 2.1.5.
540. See to this end the statements under para. 3.3.2.
541. Gu and Walther for example quote a study
conducted on Supply Chain Management in
Germany and Switzerland by the business
consultancy Deloitte Consulting in cooperation
with the Fachhochschule (University of Applied
Sciences) of Braunschweig/Wolfenbttel in
Germany in the period between 1999 and 2000.
Within the framework of the study, around 70
questionnaires were finally evaluated and
interpreted, whereby no further differentiation
according to region, industry, business size and
so on, were undertaken; cp. Gu and Walther
(2001, p. 159). The study was identical to the
work submitted with respect to the radius of the
random sampling, as well as the selection
method. For a similar study carried out in the
North American region, cp. Deloitte (2000, p.
2).
542. A description of the exact distribution is repeated
in chap. 4, sect. 4.1.
543. Ibid.
544. For the division of companies according to size
classes according to HGB (German
Commercial Code), cp. Schierenbeck (2003, p.
37). A description of the exact distribution is
repeated in chap. 4, sect. 4.1. The differences in
numbers result from the fact that in the case of
the above listing, both criteria for the allocation
to a size class (by revenue and number of
employees) had to be simultaneously fulfilled.
545. For the term Return on Assets (ROA), see the
explanations under the corresponding footnote in
chap. 3, para. 3.1.2.5.
546. A popular suggestion for the objective ROA for
industrial businesses lies on average around 10
percent; cp. Controlling Portal (2005). In
accordance with this for example a rough
definition can take place: Companies with a
negative ROA are losers, such with a positive
ROA up to 10 percent are average, and
companies with a ROA larger than 10 percent
are winners; cp. Aktien-Portal (2005). The
range should accommodate for industrial or
regional fluctuations; cp. Deutsche Bundesbank
(1997, p. 35).
547. The information results from research conducted
by the author in July 2006.
548. Cp. Hinkelmann (2003, p. 14) and Supply-Chain
Council (2005a, p. 21).
549. This is in accordance with the test concepts
represented by methodicians such as Rochel, by
which in the sense of a hierarchical structure
in the first instance statements as to the
general suitability of model images are to be
extricated (main effects); cp. Rochel (1983, p.
118). Adjustment was also strived for in the
work at hand. All the same, in order to be just to
the exploratory character of the work, the
possible explanatory value of the additional
variables i.e., sales volume and number of
employees was examined. Variables with a
very heterogeneous structure, e.g., industry-
affiliation, were not suitable for this observation,
because the respective case number would have
been too low. Variables with certain strongly
outweighing characteristics which due to this
fact - did not allow a sufficient differentiation as
in the case of Return on Assets (ROA), were
also only restrictedly suitable.
550. This does not make exempt from the necessity to
deepen the examinations of restriction and
particularities of the model image by means of
further discriminating parameters in new and, if
necessary, specific areas (see to this end also
the statements within the following in addition to
the notes in chap. 6, sect. 6.3).
551. For the various Supply Chain strategies, cp., for
example, Werner (2002, p. 64). For the term
mass customization see the explanation in chap.
1, para. 1.4.
552. Cp. Supply-Chain Council (2005b, p. 2).
553. See to this end the explanations in chap. 2, para.
2.1.3.
554. See to this end also the aforementioned notes on
the subject of test concepts in context with the
differentiation by strategy types and industry-
affiliation supported by Rochel.
555. The company size based upon the aforementioned
three-stage classification by employee numbers
and revenues according to the HGB (German
Commercial Code) lead in most cases to
identical allocation (see the detailed descriptive
table in chap. 4, sect. 4.1). In the case of the
Return on Assets it is to be restrictively noted
that this lay in the average area between 0
and 10 percent for the greater majority of
companies and was therefore only conditionally
applicable for the discrimination; see to this end
in the same way the descriptive table illustrated
in chap. 4, sect. 4.1. A differentiation according
to the respective business area or region was
not suitable as a discriminating variable, because
businesses in North America dominated with
roughly three quarters of the sample, and the
rest of the companies stemmed from a variety
of regions. The SCOR model positions itself
above this in a similar way to industry-affiliation,
i.e. it follows the intention of staying on one
level, upon which region specific factors are not
taken into consideration; cp. Supply-Chain
Council (2006b, p. 2).
556. For background information on BearingPoint, see
chap. 2, para. 2.4.2.3.
557. A method can be defined as a systematic
procedure or rules applied to complete a number
of activities in order to achieve certain structural
objectives. A questionnaire or survey can be
seen as a method in this sense. In opposition to
this, a process represents a more refined or
mature method which regulates the approach to
the achievement of particular structural
objectives down to the level of the individual
stages of work; cp. Seibt (2004, p. 19).
558. Cp. BearingPoint (2003b, p. 4).
559. Cp. BearingPoint (2003b, p. 21).
560. As to the problematic of the return quota, cp., for
example, Bortz (1984, p. 184) and Friedrichs
(1990, p. 241).
561. The questionnaire and the exact questions may be
taken from the appendix (sect. 1).
562. The associated Key Performance Indicators
(KPI) and their calculation may be taken from
the appendix (sect. 4).
563. For an example of representation of the results
see sect. 5 of the appendix.
564. For the varying graphical possibilities of
illustration, cp., for example, Whe (1984, p.
1245).
565. Cp. BearingPoint (2003b, p. 26).
566. Cp. Kromrey (2002, p. 405).
567. Cp., roughly, Friedrichs (1990, p. 54).
568. For this purpose refer to chap. 5 and chap. 6.
569. Cp., for example, Berekoven et al. (1987, p. 162).
570. For further information as to the product range in
general and in particular SPSS for Windows,
cp., roughly, SPSS (2003, p. 2; 2004b).
571. With respect to the application of programs for
data analysis, such as SPSS, cp., for example,
Allerbeck (1972). For the application of SPSS in
particular, cp., for example,Bhl and Zfel
(2002) and Backhaus et al. (2003, p. 15).
572. Cp. to this end Bortz (1984, p. 534), Friedrichs
(1990, p. 136), Kromrey (2002, p. 424), Voelker,
Orton, & Adams (2001, p. 23) and Ludwig-
Mayerhofer (2004). As to the procedures of
statistical data evaluation, cp. also Ehrenberg
(1986).
573. No further consideration is given here to the
median as, above all, a suitable measure of
central tendency for ordinal scales.
574. Measures of location are supposed to give
information as to where the focal point of a one-
dimensional data package lies. They are
therefore also known as the Measures of central
tendency; cp. Monka and Vo (2002, p. 98).
575. During a statistical test, a so-called null hypothesis
is set-up which generally states that the
postulated correlation or difference does not
exist. A test statistic is calculated which
confirms whether a connection or difference
found within the data is compatible with the null
hypothesis. If the test statistic exceeds a
particular, previously determined value, the null
hypothesis is rejected and the actual research
hypothesis, i.e., the alternative hypothesis, is
valid as tentatively not proven to the contrary;
cp. Voelker et al. (2001, p. 62).
576. In addition to the Type I Error, there is a Type II
Error which describes the erroneous retention of
a null hypothesis. It therefore reflects the risk of
retaining a null hypothesis, even though in
actuality the alternative hypothesis is applicable;
cp. Ludwig-Mayerhofer (2004). The type II
error is not given any consideration within the
further course of the work.
577. The letter P describes the confidence level
(Probability), with which the hypothesis is
supposed to be accepted as correct or
applicable. The probability of error is then
calculated as P(a) = 100% - P; cp. Gottwald
(2000, pp. 51, 61).
578. The covariance describes the correlation between
two metrical characteristics. It is identified by
the fact that for each value of both variables, the
deviation from the respective arithmetic mean is
calculated (by subtraction of the same). For
each case, the product of these two deviations is
formed, the products added together and then
divided by N-1 (where N represents the number
of cases). In conjunction with this, it is to be
noted that the calculation of the covariance is
only meaningful with metrical variables; cp.
Backhaus et al. (2003, p. 340).
579. As to the approach, cp., for example, Rochel
(1983, p. 143).
580. Cp., for example, Bortz (1985, p. 156) and
Friedrichs (1990, p. 389).
581. Cp., for example, Ludwig-Mayerhofer (2004).
582. Inferential Statistics, also known as investigative,
inductive or conclusive statistics, deal with the
question as to how the results of a sample, i.e. a
choice of examination units can be transposed
upon a population from which the sample stems;
cp. Monka and Vo (2002).
583. Descriptive Statistics deal with measurements to
characterize data. They have the task of
answering such questions as how can the
central tendency of a data package be
characterized in the same way as the
diffusion? or how can correlations
characterized between two or more variables be
packaged like data?; cp. Gottwald (2000, p. 4).
584. For the various possibilities of graphical illustration
of statistical results, cp., for example, Voelker et
al. (2001, p. 8) and Whe (1984, p. 1245).
585. Cp., roughly, Ehrenberg (1986, p. 48). For further
going explanations as to the procedures used for
the evaluation and statistical principles, cp.
Cramer (1999).
586. For reference to such a problematic, cp., for
example, Bortz (1985, p. 156).
587. Cp. Berekoven et al. (1987, p. 162).
588. For example, it would play a role during a group
of thesis tests whether all the theses lie within
the totally unsystematic R-range at an absolute
value of 0.00 or all within the model-conformant
range with a near miss of the significance
criterion. If the significance criterion was
exclusively applied the conclusion would, though,
be the same in both cases, namely that of
unsystematic diagnoses. Even in the latest
business administration essays whose
hypotheses investigations are mainly
correlatively directed a similar differentiation is
quite positively undertaken by unequivocal
hypotheses-conformant and hypotheses-
tendencial diagnoses; cp. to this end Hannappel
(2005, p. 129).
589. See to this end chap. 4, para. 4.2.3.3 and chap. 5,
para. 5.1.1.
590. For an example of the assignment of the stated
method see roughly Madeja and Schoder (2003,
p. 4). For further going explanations of
Structural Equation Models (SEM), cp. also
Byrne (1998) and Kline (1998).
591. With reference to the AMOS procedure, cp., for
example, Byrne (2000) and SPSS (2004a, p.
142).
592. Cp. Backhaus et al. (2003, p.11) and SPSS
(2004c).
593. LISREL stands for Linear Structural
Relationships. With reference to the LISREL
model, cp., for example, SSI (2000) and Hayduk
(1987).
594. Cp. SSI (2004).
595. Cp. Backhaus et al. (2003, p. 334). For the
subject matter of applicability of structure-
analytical procedures, cp. also Hoyle (1995) and
Schumacker and Lomax (1996).
596. See chap. 4, sect. 4.3.
597. The stability index, also known as the
Determination Coefficient, measures so to speak
the compatibility quality of the regression
function to the empirical data (goodness of fit).
The residual measures build the basis for this,
i.e., the deviations between the values observed
and the values estimated; cp. Gottwald (2000, p.
114).
598. The Adjusted-Goodness-of-Fit Index (AGFI)
additionally takes into consideration the number
of degrees of freedom in comparison to a so-
called neutral model. The degree of freedom
(df) is thereby the submitted number of data (N)
within a row of data, lowered by 1. The number
of degrees of freedom represents the number of
independent measurement values in a row of
data. It must be noted that in the case of a
structure-analytical method of approach, the
degrees of freedom are calculated according to
a more complex scheme (case number- and
variable-related) than the conventional statistics
referred to, for example, within the framework
of variance analysis; cp. Gottwald (2000, p. 25).
599. Cp. Backhaus et al. (2003, p. 374).
600. Cp. Friedrichs (1990, p. 53).
601. Cp. Gottwald (2000, p. 3).
602. Cp. to this end Kromrey (2002, p. 405).
603. The aspect of compatibility of theoretical
statements and empirical reality (in the present
case more exactly: business management and
corporate practice respectively) will be returned
to in chap. 5, para. 5.1.3 within the context of
proximity to truth and the correspondence
theory.
604. The mitigation of this risk in the examination being
implemented here has already been previously
discussed (see chap. 3, para. 3.3.5).
605. For a detailed list of various types of artifact
sources during the construction of testing
procedures and their application, reference is for
example made to Wottawa (1980, p. 208).
606. Cp. Kromrey (2002, p. 359). Cp. also Alemann
(1977, p. 209).
607. In this context see also the explanations in chap.
3, sect. 3.3.2.
608. See to this end chap.C, para. 3.3.3.
609. This conclusion also has implications for the
discussion of theses which are not able to be
confirmed. These types of non-confirmability
can arise due to (a) artifacts or respective lack
in statement strength of the data or (b) an
insufficient coverage of company reality by the
not so extensively examined SCOR model
illustrations (i.e., content changes or necessity
for expansion of the model illustrations). In the
work at hand, both possibilities were considered,
whereby the position of origin was that under
critical observation of the indicated restrictions
(see to this end also the explanations in chap. 3,
paras. 3.3.2 & 3.3.5) the validity of the data is
present and must therefore outweigh the
discussion about content.
610. For the term interaction within statistical
methodology and for the various investigative
procedures, cp., for example, Rochel (1983, p.
60).
611. In the sense of critical rationalism of research
logic, respective statements or hypotheses must
principally be able to fail by experience, i.e., be
falsifiable (falsification criterion); cp. Popper
(1989, p. 15). In accordance with this the term
confirmed can be equalled to tentatively not
falsified.
612. The interpretation of meaningfulness of a
correlation coefficient depends substantially
upon the content aspects of an empirical survey.
Voelker et al. describe the connection as
follows: Whether a correlation of a given
magnitude is substantively or practically
significant depends greatly on the phenomenon
being studied (Voelker et al., 2001, p. 101).
Therefore in the submitted case and in the face
of a level of R = 0.30, substantial correlations
could be assumed for graphical illustration
purposes which were significant on the
advanced P(a)-level. A critical reflection of
the correlation-analytical findings of the
investigation will in any case be undertaken at
the end of the chapter within the context of the
discussion on possible errors and interfering
influences.
613. Calculated based on BearingPoint (2003f).
614. Ibid.
615. Calculated based on BearingPoint (2003f). For
the classification according to HGB (German
Commercial Code), cp. Schierenbeck (2003, p.
37). The values quoted were calculated by
means of the exchange rate as at July 2006; cp.
Tiago Stock Consulting (2006).
616. Calculated based on BearingPoint (2003f). For
the classification according to HGB (German
Commercial Code), cp. Schierenbeck (2003, p.
37).
617. Calculated based on BearingPoint (2003f). For
the calculation of the Return on Assets (ROA),
see chap. 3, para. 3.3.5.
618. UoM abbreviation for the Unit of Measure.
619. x abbreviation for Arithmetic mean.
620. s abbreviation for Standard deviation.
621. Min abbreviation for Minimum.
622. Max abbreviation for Maximum.
623. V abbreviation for Variation range.
624. By rounding up or down.
625. Ibid.
626. Ibid.
627. Ibid.
628. Ibid.
629. Calculated based on BearingPoint (2003f).
630. By rounding up or down.
631. Calculated based on BearingPoint (2003f).
632. Due to concepts of displacing inventory
management and the associated costs, as for
example the Vendor Managed Inventory (VMI)
previously mentioned.
633. By rounding up or down.
634. Calculated based on BearingPoint (2003f).
635. By rounding up or down.
636. Calculated based on BearingPoint (2003f).
637. Correct extreme values due to various company
adjustments.
638. Ibid.
639. Calculated based on BearingPoint (2003f).
640. As to the Product-Moment Correlation (PM-
Correlation) and the associated Bravais Pearson
Correlation Coefficient (R), see the explanations
in chap. 3, para. 3.4.2.2.
641. N represents the number of total cases that have
been examined, i.e., the sample size.
642. R represents the Bravais Pearson Correlation
Coefficient which has been explained in detail in
chap. 3, para. 3.4.2.2.
643. P(a) stands for the probability of error and is
calculated as P(a) = 100% - P, with P for the
confidence level (Probability); for detailed
explanations see chap. 3, para. 3.4.2.2.
644. M abbreviates the SCOR model group that is
associated to the respective coherence. In this
conjunction, the following classifications are
differenciated analogues to the structure of
the developed theses: I-P = Intra-Performance
Attribute, I-C = Intra-Competence, I-CP =
Inter-Competency/Performance Attribute; for
detailed explanations, see chap. 3, para. 3.1.2).
645. For the differing cases of variable relationships
see the respective footnote under chap. 3, para.
3.1.2.4.
646. The abbreviation n in this as well as the following
graphics stands for number as a percentage of
the respective group (as opposed to the total
amount of examined cases represented by the
capital letter N).
647. With this grouping as also in the case of the
following illustrations a similar occupation was
strived for to the detriment of similar interval
widths. For detailed indications as to the
grouping and determination of the interval width
or the requirement for balance, cp. also Bortz
(1985, p. 35).
648. The variance clarification of the criterion variable
percentage of purchase orders received on time
and complete was visibly increased into a
multiple regression by the introduction of the
respective predicates company revenue or
number of FTE. More simply expressed, this
indicates a more meaningful correlation for the
larger companies whereby, however, criteria of
statistical significance were not achieved (see to
this end also the respective notes as to the
examination of the incremental function under
thesis 1).
649. The parameter on-time deliveries was lowered to
the ordinate here for reasons of clarity.
650. The variance clarification of the variable
percentage of purchase orders received on time
and complete was visibly increased into a
multiple regression by the introduction of the
respective predicates company revenue or
number of FTE. This indicates a more
meaningful bivariate (here negative) correlation
for the larger companies, whereby however
criteria of statistical significance were not
achieved (see to this end also further going
notes as to the examination of the incremental
function under thesis 1).
651. Here the variance clarification of the criterion
variable percentage of purchase orders received
on time and complete was also visibly increased
into a multiple regression by the introduction of
the respective predicates company revenue or
number of FTE. In this respect, a more
meaningful (negative) bivariate correlation is
again reflected for the larger companies (see to
this end also further going notes as to the
examination of the incremental function under
thesis 1).
652. The variance clarification of the criterion
percentage of available inventory material
presented itself in a model-conformant
direction visibly more important for companies
with smaller revenue than for larger companies.
A non-significant effect was therefore present
in the case of multiple regression (see to this end
also the respective notes as to the examination
of the incremental function under thesis 1).
653. The variance clarification of the criterion
percentage of purchase orders received on time
and complete was visibly increased into a
multiple regression by the introduction of the
respective predicates company revenue or
number of FTE. This indicates a more
unambiguous bivariate (in this case negative)
correlation for the larger companies (see to this
end also notes as to the examination of the
incremental function under thesis 1).
654. By the inclusion of the predicate Return on
Assets (ROA) into a multiple regression it was
possible to better highlight the above-mentioned
coherence. More simply formulated, this
indicates a more unequivocal correlation for the
companies with an increased ROA, whereby
however criterion of statistical significance were
not reached (see to this end also further going
notes as to the examination of the incremental
function under thesis 1, which may be applied in
analogue).
655. See sect. 4.2 of chap. 4.
656. In this case the parameter on-time deliveries was
lowered to the ordinate for reasons of clarity.
657. See to this end sect. 4-2 of chap. 4.
658. By rounding up or down.
659. Or respectively in the sense of the critical
rationalism of research logic: Which theses
(tentatively) do not have to be rejected? In the
following therefore, confirmed means the
equivalent to tentatively not rejected (see to this
end also the comments at the beginning of sect.
4.1).
660. As more closely explained in chap. 2, para. 2.3.2,
sales and marketing (demand generation),
research and technology development, product
development and partially after-sales customer
service fall beneath this; cp. Supply-Chain
Council (2005a, p. 3).
661. As to the detailed examination results see para.
4.1.1 of chap. 4.
662. As to the detailed examination results see para.
4.1.2.
663. As to the detailed examination results see para.
4.1.3.
664. As to the strategic square in the context of Supply
Chain Management, cp. Ellram and Cooper
(1990) and Weber, Dehler, and Wertz (2000, p.
264). See to this end also the respective
explanations in chap. 1, para. 1.3.1.
665. Cp. Fleischmann, Meyr, and Wagner (2002, p.
76). See to this end also the Supply Chain
Matrix with the two dimensions of Planning
horizon and Supply Chain process by Rohde et
al., whereby in the present context the Supply
Chain process is above all important; cp. Rohde
et al. (2000, p. 10).
666. Cp. Norek (1999, p. 381), Raman (1999, p. 174),
and Chakravarty (2001, p. 372).
667. Cp. Hugos (2003, p. 96). Copacino defines a so-
called Customer Service Pyramid, within which
the reliability of the Supply Chain purely
represents the basis upon which the Resilience
and Creativity or respective Innovation build
with the associated service elements; cp.
Copacino (1997, p. 74).
668. Cp. Christopher (1998, p. 12). The same direction
is indicated by a collective research project
implemented by the Institute for Supply Chain
Management of the University of Mnster in
Germany and the consultancy McKinsey in the
year 2003, in which Supply Chain Management
was examined by 40 of the 74 largest German
consumer goods manufacturers and 18 of the 40
largest German retail companies. During this, it
became apparent that low costs and good
service must no longer exclude each other as
such. The authors use the term Supply Chain
Champions for companies that perform better
than the competition; cp. Behrenbeck and
Thonemann (2003, p. 1). For detailed
explanations see also Thonemann et al. (2003).
669. Cp. Miller (2002, p. 665).
670. Cp. Christopher (1998, p. 195) and Raman (1999,
p. 182). Alt et al. presume that the concept of
the previously described concept of Vendor
Managed Inventory (VMI) influences all SCOR
main processes as a part of the Supply Chain
strategy; cp. Alt, Puschmann, and Reichmayr
(2001, p. 106).
671. Cp. Copacino (1997, p. 15), Poirier (2000, p. 57),
and Handfield and Nichols (2000, p. 7). Thaler
describes the varying inventory stock strategies
as necessity-justified inventory logistics; cp.
Thaler (2003, p. 212).
672. Cp. Kuglin (1998, p. 196).
673. Cp. Miller (2002, p. 665). Copacino postulates a
customer service survey of a more general
character, as he assumes that a continuous
customer service strategy has a success-critical
relevance; cp. Copacino (1997, p. 73).
674. Cp. Kuglin (1998, p. 256).
675. Cp. Banfield (1999, p. 19). For an overview of the
strategic procurement concepts, cp., for
example, Arnold and Eig (2000, p. 122).
676. Cp. Schfer (2002, p. 29).
677. Cp. Hoover et al. (2001, p. 27).
678. Cp. Bovet and Martha (2000, p. 217).
679. As to the detailed examination results see para.
4.1.1 of chap. 4.
680. As to the detailed examination results see para.
4.1.2.
681. As to the detailed examination results see para.
4.1.3.
682. See the connection between on-time deliveries,
lines on-time fill-rate, backorders and inventory
management costs under customer order
management.
683. Cp. Werner (2002, p. 65) and Wildemann (1992,
p. 391).
684. Cp. Meyr et al. (2002a, p. 57).
685. Cp. Hugos (2003, p. 168).
686. Cp. Schnsleben (2000, p. 116). Ayers uses the
term production flexibility in conjunction with
this; cp. Ayers (2002e, p. 110).
687. As to the detailed examination results, see para.
4.1.1.
688. Cp. Berger and Gottorna (2001, p. 73) and
Handfield and Nichols (2002, p. 63).
689. As to the detailed examination results, see para.
4.1.3 of chap. 4.
690. Cp. Drflein and Thome (2000, p. 47).
691. Cp. Schfer (2002, p. 39).
692. See to this end chap. 5, para. 5.1.2.
693. Without wanting to preempt further explanations,
the relationship measured upon the correlation
prognosis of applicable theses to the
unsystematic and contrary theses moreover
indicates that the model is compatible with the
empirical facts. Statistic special influences, as
for example the so-called Type I Error Inflation,
may not be called upon in the case at hand in
order to question this fundamental compatibility;
cp. to this end roughly Rochel (1983, p. 129).
694. Cp. Schnsleben (2000, p. 444) and Hugos (2003,
p. 91).
695. Cp. Schfer (2002, p. 39) and KPMG (1997, p.
2).
696. Cp. Thaler (2003, p. 48).
697. Cp. Ayers (2002c, p. 248).
698. Cp. Geimer and Becker (2001a, p. 28).
699. Cp. Werner (2002, pp. 54, 175).
700. Cp. Hugos (2003, p. 144). Cp. also in this context
Hausman (2000).
701. Cp. Schfer (2002, p. 39).
702. Cp. Supply-Chain Council (2003b, p. 8).
703. The percentage lay (rounded off) at 61 percent.
704. The percentage lay (rounded off) at 33 percent.
705. The percentage lay (rounded off) at 6 percent.
706. The remaining percentage proved itself to be non-
significant (see to this end also the explanations
under chap. 3, para. 3.4.2.2).
707. Cp. Kromrey (2002, p. 48).
708. In this sense the term of a central assumption to
be examined (as opposed to a theory) was
deliberately chosen.
709. See to this end the comments leading to this at the
beginning of chap. 3.
710. See chap. 5, para. 5.1.2.
711. See to this end chap. 3, sect. 3.2.
712. Details as to structural equation procedures in
general and AMOS, in addition to their
application specifically, may be taken from chap.
3, para. 3.4.2.3.
713. Usually, for parameter estimation in conjunction
with structure-analytical models, a sample size
of N = 100 and partially even N = 200 are
deemed to be sufficient; cp., roughly, Loehlin
(1987, p. 60). An insufficient sample size can
lead to the fact that based on the structure-
analytical estimation procedure, even a model
which presents itself by respective dimensional
or dimensional indicator relationships is not
accepted. Ringle, in conjunction with this, points
out a required minimum sample size of 200,
which is also highlighted in methodical literature;
cp. Ringle (2004, p. 16).
714. The so-called operationalization stands in the
foreground here, i.e., the meaningful coverage
of a total term by suitable indicators which if
one assumes a homogeneous term or
homogeneous construct must amongst
themselves logically also show close
relationships; cp. Wottawa (1980, p. 18).
715. Indicators are immediately measurable factual
situations which highlight the presence of the
meant, but not directly recorded phenomena; cp.
Kroeber-Riel and Weinberg (2003, p. 31).
716. It is to be conclusively noted that within the
framework of the AMOS program, the approval
of the allocation of indicators (single measures)
to respective postulated factors or structures or
latent dimensions is investigated in all cases.
This means that a model with inadequate
structural operationalization as a result of weak
or unsystematic intercorrelation of the indicators
in question is inevitably rejected; cp., roughly,
Hair, Tatham, and Anderson (1995, p. 680).
717. For the diverse types of variable relationships see
the comments under chap. 3, para. 3.1.2.4.
718. Cp. Backhaus et al. (2003, p. 335), Wottawa
(1980, p. 198), and Hodapp (1984, p. 47).
719. For closer comments on the Goodness-of-Fit
Index (GFI) and Adjusted Goodness-of-Fit
Index (AGFI) see chap. 3, para. 3.4.2.3.
720. It is recommended during an empirical survey to
ensure that as many indicator variables are
accumulated as are necessary in order to attain
a positive number of degrees of freedom. For
the solubility of a structural equation model it is
therefore unconditionally necessary (mandatory
precondition) that the number of degrees of
freedom is larger, or equal to, zero; cp., for
example, Backhaus et al. (2003, p. 360). For the
term degrees of freedom in conjunction with the
AGFI see also chap. 3, para. 3.4.2.3.
721. In the case of the GFI or AGFI respectively, the
extent of the index lies similar to a correlation
coefficient, namely between 0 and 1. Values
&60; 0.7 suggest a barely present coverage
between model assumption and empirical data.
As to the formation, relevance and controversy
over these measures, cp., for instance, Hair et
al. (1995, p. 686).
722. See to this end also chap. 3, para. 3.4.2.3.
723. Cp., for example, Backhaus et al. (2003, p. 336).
724. Cp. Hodapp (1984, p. 47).
725. Cp. SPSS (2004a, p. 142).
726. Single hypotheses 66 to 74 are assigned to this
Meta thesis (see chap. 3, para. 3.2.3.3). The
partial models can be illustrated, in analogue
with further Meta theses, upon the basis of the
theses model.
727. In this case, the graphical overview orientates
itself by visualization recommendations aimed at
immediate ability to be proven by Wottawa
(1980, p. 199). For a visual example of the
illustration of various structure-analytical
variables within a graphical representation, cp.,
for example, Madeja and Schoder (2003, p. 5).
728. See to this end sect. 3 in the appendix.
729. Cp., for example, Backhaus et al. (2003, p. 360).
730. The method of Unweighted-Least-Squares
represents one of the most assigned estimation
procedures in market research in these parts;
cp. to this end roughly Backhaus and Bschken
(1997, p. 166).
731. Cp., for example, Backhaus et al. (2003, p. 363).
732. Cp. Schewe (1996, p. 55). Cp. also to this end
Fritz (1984).
733. Cp. to this end roughly Backhaus and Bschken
(1997, p. 13).
734. Cp., for example, Backhaus et al. (2003, p. 408).
735. See to this end chap. 6, para. 6.3.2.
736. Cp., roughly, Kromrey (2002, p. 274) and Kops
(1977, p. 179).
737. Cp. Friedrichs (1990, p. 335).
738. The Supply-Chain Council describes the factual
situation as follows: Level 1 Metrics are
primary, high level measures that may cross
multiple SCOR processes. Level 1 Metrics do
not necessarily relate to a SCOR Level 1
process (Plan, Source, Make, Deliver, Return)
(Supply-Chain Council, 2006b, p. 8).
739. Cp. Heck (2004, p. 14).
740. Cp. BearingPoint (2003b, p. 22).
741. See to this end para. 4.4.2.
742. Cp. Klingemann and Mochmann (1975, p. 178)
and Kromrey (2002, p. 526).
743. See to this end sect. 1 in the appendix. Since it
was an online survey in this case, the interview
instructions are restricted to exact instructions
on the completion of the questionnaire.
744. See to this end sect. 3 (Personal Sources) in the
bibliography.
745. Cp. Bortz (1985, p. 269). A further risk of the
correlation-analytical procedure chosen here can
measurement-theoretically exist in the fact that
strongly represented bivariate-nonlinear
correlations may, as it were, be overlooked.
Implemented test calculations on the basis of
polynomials, i.e., procedures unambiguously
resting upon such non-linear processes,
produced no sort of indication of relevant
additional gain in knowledge (with reference to
polynomial investigation, cp., for example, the
concrete description by Rochel (1983, p. 162).
746. Cp., roughly, Backhaus et al. (2003, p. 410).
747. See to this end sect. 4.2 of chap. 4.
748. See to this end chap. 3, para. 3.1.1.2.
749. See Poluha (2004a).
750. Cp., roughly, Moser (1975, p. 123).
751. Cp. Friedrichs (1990, p. 54). In the present case,
the knowledge expansion refers to associations
respective to business or operations
management or, more precisely, Supply Chain
Management.
752. For the term Hermeneutics, cp. e.g., Ludwig-
Mayerhofer (2004).
753. Cp. Kromrey (2002, p. 405).
754. See to this end chap. 4, sect. 4.2.
755. See to this end chap. 3, para. 3.1.2.1.
756. In this context, it must be noted that the expected
parameter relationships for the performance
attribute assets were rather weakly represented.
757. The remaining percentage proved itself to be non-
significant (see to this end also the explanations
in chap. 3, para. 3.4.2.2).
758. See to this end chap. 3, para. 3.1.2.2.
759. The remaining percentage proved itself to be non-
significant.
760. Ibid.
761. See to this end chap. 3, Para. 3.1.2.3.
762. For the reasons for the model-contrary
constellation see chap. 4, para. 4.2.3.
763. For a possible approach at explanation see the
statements in the following para. 5.1.2. The
effect is presumably based upon the same
reason as for assets, more closely described in
the following, although it does not become so
strongly apparent with regards to the costs.
764. The remaining percentage proved itself as non-
significant.
765. Ibid.
766. The remaining percentage proved itself as non-
significant. Although 9 single theses were given,
the presence of subdivided single theses, due to
the differentiation between an inbound and
outbound component, meant that there were
actually 12 result cases (see chap. 4, para.
4.1.3.3). Of these in turn, one case proved itself
to be significantly model-contrary.
767. The statistically unsystematic thesis can even be
seen as a threshold value, i.e., it lay within the
area of prognosis, but could not be considered to
be a tangible corroboration of the model in the
face of the identified correlation level (see chap.
4, para. 4.1.3.4).
768. The remaining percentage proved itself as non-
significant.
769. See to this end the introduction to chap. 3.
770. See to this end the explanations in chap. 3, para.
3.1.2.5 as to alternative approaches and models
for the illustration and measurement of Supply
Chain performance.
771. See to this end also the explanations in chap. 1,
para. 1.1.1.
772. See for this chap. 2, para. 2.3.2.
773. Cp. Supply-Chain Council (2006b, p. 2).
774. For support of this statement, cp. also Christopher
(1998, p. 35) and Hieber, Nienhaus, Laakmann,
and Stracke (2002, p. 6). To the inclusion of
marketing and sales into the strategy concept,
cp., roughly, Kotler and Bliemel (1992, p. 453).
775. The Supply Chain strategy as a component of a
superior respective company or competitive
strategy can be defined as follows: Supply
chain strategies, which are part of a level of
strategy development called functional
strategies, specify how
purchasing/operations/logistics will (1) support
the desired competitive business level strategy
and (2) complement other functional strategies
(Handfield & Nichols, 2002, p. 247).
776. In the case of the order- or customer-controlled
SC process (pull process), customer orders
present do in fact initialize the planning and
execution of the partial processes within the
Supply Chain, beginning with procurement right
up to delivery. The description market economy
model or demand chain management may be
found in some places for this. Contrary to this, in
the case of the preview or necessity-controlled
SC process (push process), the predicted
demand development is the trigger for the SC
partial processes. The term network economy
model may sometimes be found for this; cp.
Schnsleben (2000, p. 30), Reddy and Reddy
(2001, p. 192), and Hoover et al. (2001, p. 13).
777. Cp. Geimer and Becker (2001a, p. 34). See to this
end also the principle of the so called risk spiral
according to Christopher and Lee, whereby a
lack of trust of the network participants in their
partners, and the inherent insecurity
accompanying it, can lead to a build-up in
stocks. Due to this, the inventory levels
inevitably increase, which in turn leads to a lack
of transparency and the spiral is run through
again; cp. Christopher and Lee (2001, p. 3). In
this context, cp. also Markillie (2006c, p. 18).
778. Cp. Thaler (2003, p. 15) and Aldrich (2002, p.
155).
779. Cp. Bovet and Martha (2000, p. 2) and Kuglin
(1998, p. 106). For the term Value Chain, cp.
also Porter (1999, p. 59). See to this end also the
explanations in chap. 1, sect. 1.3.
780. Cp. Werner (2002, p. 13).
781. Cp. Supply-Chain Council (2006b, p. 2).
782. See to this end chap. 4, para. 4.2.3.
783. Cp. Supply-Chain Council (2006b, p. 2).
784. See to this end chap. 4, para. 4.2.3.
785. Cp. Supply-Chain Council (2006b, p. 2).
786. See chap. 6, para. 6.3.1.
787. See to this end chap. 3, para. 3.1.2.
788. For the term Hermeneutic, see the footnote at the
beginning of sect. 5.1.
789. With regards to the proximity to truth, reference is
made to the truth criterion in the sense of the
concurrence of theoretical statements, and in
this case: business economics or corporate
reality (theory of correspondence). With this, a
continuous comparison of theoretical statement
and observed reality is assumed; cp. Esser,
Klenovits, and Zehnpfenning (1977, p. 167). The
SCOR model accounts for this, as it represents
an evolutionary model, so to speak, which is
adjusted to the (changed) reality at regular
intervals; cp. Geimer and Becker (2001b, p.
117) and Kanngieer (2002, p. 4). See to this
end also the respective explanations under chap.
2, paras. 2.1.2 & 2.1.5. The indicated intrusional
influences and errors highlighted with regards to
the scientific proof of the SCOR models
suitability or respective proximity to truth, which
was strived for within the framework of the
work submitted, must by no means be ignored
(see to this end also chap. 4, sect. 4.4).
790. See to this end the introduction to chap. 3.
791. This point of view is also supported e.g. by
Schoder; see Poluha (2005). It must be noted
that a special illustration of the model was
developed and investigated. Generalizing
inferences to the model must therefore be seen
under this premise.
792. The model concept stands for the theoretical
statement, the empirical reality for the
respective economical or company reality.
Therefore and in turn, reference is made to the
theory of correspondence described in one of
the previous footnotes in para. 5.1.3; cp. to this
end also Friedrichs (1990, p. 27).
793. It has been indicated several times that the SCOR
model represents, in the original sense, a
descriptive model; cp. Supply-Chain Council
(2005a, p. 3; 2006b, p. 2). See to this end also
chap. 2, sect. 2.2, as well as para. 2.3.3.
Continuative thoughts lead in the direction of its
possible further development into a forming
model.
794. See to this end chap. 1, para. 1.1.1.
795. See chap. 6, sect. 6.3.
796. Adaptability can be described in the present
concrete case as: capability to adapt or be
flexible amid changing conditions (Heinrich &
Betts, 2003, p. 205). Christopher uses the term
Agile Supply Chain, whereby the main
difference lies in that in his case (and therefore
in the case of Agile Supply Chains), the aspect
of information technology or penetration of the
Supply Chain by E-Business is only
rudimentarily expressed; cp. Christopher (2001,
p. 1). For the term Adaptability, cp. also Seibt
(1997a, pp. 23, 32).
797. Cp. HP (2003, p. 2).
798. Cp. SAP (2004, p. 5).
799. (Industry Directions, 2003, p. 1).
800. Cp. CapGemini (2004).
801. Cp. Stephens et al. (2002, p. 361). As to the gain
in competitive advantages by means of
information technology, cp. also Porter and
Millar (1988, p. 62). For the importance of
information technology in the formation of
corporate networks, cp. also Klein (1996).
802. See to this end the close of chap. 1, para. 1.3.1.
The named criteria represent necessary
conditions, i.e., the listed criteria are urgently
required in order to constitute an Adaptive
Supply Chain (ASC). As to the necessity for
conditions, cp. also Zetterberg (1967, p. 82).
803. Modelled upon Stephens et al. (2002, p. 361) and
Seibt (2000, p. 11).
804. Cp. Heinrich and Betts (2003, p. 79).
805. A market place is described as a platform or
portal if it enables users to execute electronic
business transactions. Portals are used within
the framework of SCM in various objective
directions or application scenarios, as for
example order execution and for the
procurement process; cp. Lawrenz and
Nenninger (2001, p. 329). Relevant company
scenarios supported by portals represent the E-
Business areas explained earlier elsewhere, as
for example B2B, B2C and G2B (see to this end
chap. 1, sect. 1.6).
806. The concept of Collaborative Order Planning that
describes the exchange of order and planning
data between various SC participants, for
instance, fall beneath this; cp. Thaler (2003, p.
133).
807. See to this end for example the previously
described concept of Collaborative Planning,
Forecasting and Replenishment (CPFR).
808. See to this end roughly the previously described
concept of Vendor Managed Inventory (VMI).
809. With regards to the optimal fulfillment of orders, a
differentiation must be made between
quantitative and qualitative components. Whilst
the quantative perspective focuses upon the
pure amount or percentage of on-time order
deliveries, the qualitative perspective includes
the classification of the customers. In this way,
strategic customer management could mean that
preference is given to the delivery to a key
account customer over the delivery to several
B-rated customers; cp. Industry Directions
(2001b, p. 7).
810. Cp. to this end Radjou (2001, p. 1).
811. (Heinrich & Betts, 2003, p. 152).
812. Cp. Lawrenz and Nenninger (2001, p. 335).
813. Cp. Schfer (2002, p. 452).
814. See to this end also chap. 2, para. 2.4.1.3.
815. Cp. Gensym (2001, p. 2).
816. (Radjou, Orlov, & Porth, 2003, p. 3).
817. Cp. Segal (2003).
818. See chap. 2, sections. 2.2 and 2.3.
819. The term Business Process Reengineering (BPR)
can be defined as follows with a view to SCM:
The terms transformation and business process
reengineering are used rather loosely to describe
three main types of business change efforts: 1.
Business design, 2. Big business process
reengineering, 3. Little business process
engineering. When translated into supply chain
terms, these three change efforts have various
meaning: Business design = Restructuring
businesses, Big business process reengineering
= Transforming the supply chain order-to-cash
cycle, Little business process reengineering =
Transforming logistics functions (for example,
transportation or warehousing) (Kuglin, 1998,
p. 99).
820. As stated in chap. 2, para. 2.1.3, enable
represents one of the three types of a SCOR
model process. It is noticeable that this type of
process was formerly named infrastructure; cp.
for example, Bolstorff and Rosenbaum (2003, p.
154).
821. Cp., roughly, Hammer and Champy (1993, pp. 44,
83), Davenport (1993, p. 16), and Venkatraman
(1991, p. 127). Information technology alone,
however, is not sufficient in order to change or
improve company processes. Next to this,
organizational and human factors also play a
role; cp. Schfer (2002, p. 2). These will be
dealt with in chap. 6, sect. 6.1.
822. (Hofmann, 2004, p. 86).
823. Cp. Supply-Chain Council (2005a, p. 12; 2006b, p.
2). See to this end also chap. 2, sect. 2.1.3.
824. Cp. Heinzel (2001, p. 53).
825. For the term tools in the previous sense and as to
the definition of other terms (procedures, etc.),
cp. roughly, Seibt (2004, p. 19).
826. Cp., roughly, Holcomb, Manrodt, and Ross (2003,
p. 2) and Boyer, Frohlich, and Hult (2004, p.
171).
827. Cp. Goetschalckx (2002, p. 105).
828. Cp. Metcalfe (2003, p. 32) and Radjou et al.
(2003, p. 14).
829. Cp. Industry Directions (2001b, p. 7). For the
diffentiation between strategic and operational
planning, cp. e.g. Schierenbeck (2003, p. 128).
830. Seibt assumes that companies must continuously
adjust their E-Business systems to market
developments and changed requirements
throughout the whole system life cycle due to
dynamic market development and the speed of
development in the field of technology; cp. Seibt
(1997b, p. 393).
831. Company representation: IBS, International
Business Systems, is a worldwide leading
software-supplier for () integrated IT-
solutions for distribution and Supply Chain-
orientated companies. () Our internationally
active customers comprise for example, ABB,
Cartier, Ciba Vision, Galenica, General Electric,
Honda, Maxell, Miele, Pioneer and Volvo. In
total, more than 5000 customers in over 40
countries have already chosen IBSs software
solutions. Since over 25 years ago our global
network of branches and business partners has
provided future-orientated companies with
software, hardware and services. 2000 IBS
employees work in 90 branches in 26 countries.
In a further 10 countries IBS works successfully
with business partners. IBS is noted at the
Stockholm Stock-Exchange; cp. IBS (2004a).
832. Self-representation of the company: Business
Objects helps the worlds leading organizations
track, understand, and manage their business in
order to improve enterprise performance. With
more than 26,000 customers in 80 countries
worldwide, Business Objects is the clear market
leader in the business intelligence industry.
Founded in: 1990. 2003 Revenue: $560.8 million.
Employees: 3,900. Headquarters: San Jose,
California and Paris, France (Business Objects,
2004).
833. Cp. IBS (2004b) and Business Objects (2002).
The available work does not have the intention
of verifying (or falsifying) the correctness of this
statement. Moreover, purely the respective
category of applications is to be highlighted.
834. An overview of the varying applications for
Supply Chain Management (SCM) IT support
can for example be found with Richmond,
Burns, Mabe, Nuthall, and Toole (1999, p. 509).
For an example as to how the various
applications can be supported on the hardware
side, cp., roughly, Sun and CGE&Y (2003, p. 2).
835. Self-portrayal: Gartner, Inc. is the leading
provider of research and analysis on the global
IT industry. Our goal is to support enterprises as
they drive innovation and growth through the use
of technology. We help clients make informed
technology and business decisions by providing
in-depth analysis and actionable advice on
virtually all aspects of technology. This year
(2004; note of the author) marks the 25th
anniversary of Gartner and the founding of our
industry. We take pride in our pioneering work
to assist our clients and our industry in benefiting
from the use of technology. Gartner clients trust
in our rigorous standards that safeguard the
independence and objectivity of our research
and advice. With $858 million in revenue in
2003, and more than 10,000 clients and 75
locations worldwide, we are the clear market
leader (Gartner, 2004).
836. Cp. Gartner (2002, p. 1). In Gartners
terminology, the term SCDM defined and used
within the framework of the available work is a
far-reaching combination of the automated
execution of business events (Business Rules
Engine, BRE) and the management of company
processes (Business Process Management,
BPM); cp. Sinur (2003, p. 2).
837. Cp. Hinkelmann (2003, p. 27). Under
applications to be taken seriously, the author
understands those that have already been widely
assigned within larger and big companies as to
the classification of company sizes, cp.
Schierenbeck (2003, pp. 34, 540). Next to this,
other comparable applications exist, as for
example ProSCOR by Proforma; cp. Proforma
(2004) or PowerChain by Optiant; cp. Optiant
(2004), which up until now have only been
engaged in the application of SCOR within a
relatively narrow scope and by smaller SW
vendors.
838. For an overview and an estimate as to the
presently available SCDM manufacturers and
applications, cp., roughly, Gartner (2002, p. 1)
and Hall and Harmon (2005, p. 13).
839. Self-description of the Organisation: Founded in
1986, Gensym Corporation (Burlington,
Massachusetts) is a provider of software
products and services that enable organizations
to automate aspects of their operations that have
historically required the direct attention of
human experts. Gensyms product and service
offerings are all based on or relate to Gensyms
flagship product G2, which can emulate the
reasoning of human experts as they assess,
diagnose, and respond to unusual operating
situations or as they seek to optimize operations
(Gensym, 2004a).
840. Cp. Gensym (2001, p. 1).
841. Cp. Gensym (2004b).
842. Cp. Industry Directions (2001b, p. 9). See to this
end also chap. 3, para. 3.1.2.
843. Company description: IDS Scheer was founded in
1984 by Prof. Dr. Dr. h.c. mult. August-
Wilhelm Scheer as a small consultancy company
with employees of the University of Saarland in
Germany. Today, the international company is
represented by partners in 50 countries and a
Global Services Partner of SAP. At IDS Scheer
() over 2.000 employees are engaged as
competent contact persons in all important
questions about process organization in the
fields of Customer Relationship Management,
Supply Chain Management and Enterprise
Management, as well as the fields of Application
Management, Outsourcing and Technology
Consulting. IDS Scheer is represented in
Germany in Saarbrcken Berlin, Dsseldorf,
Frankfurt, Hamburg, Munich, Freiburg and
Nuremberg and has branches in 20 countries,
including Great Britain and France, the States of
Middle and Eastern Europe, Brasil, Canada and
the USA, in addition to Japan, China and
Singapore; cp. IDS (2004a).
844. Cp. IDS (2004b).
845. Ibid.
846. Cp. IDS (2003, p. 1).
847. Cp. Gunther (2003, p. 4).
848. Cp. IDS (2004c).
849. (Gunther, 2003, p. 8). Detraction in quality of the
illustration result from extraction from the
original document, which can, if necessary, be
accessed from the original for better legibility.
The consistency of the application with the
SCOR model is primarily to be visualized by
means of the illustration.
850. Cp. Sydow (2003, p. 18).
851. Company information: BOC Information
Technologies Consulting GmbH, was founded in
1995 in Vienna, as a spin-off of the BPMS
(Business Process Management Systems) group
as part of the Knowledge Engineering
Department of the University of Vienna. Thanks
to the speedy expansion of the German market,
the first independent company was founded in
Berlin in 1996. Originating from the headquarter
in Vienna, further companies emerged in Madrid
(1997), Dublin (1998), Athens (1999) and
Warsaw (2002). BOC Information Technologies
Consulting GmbH is an internationally operating
advisory and software house, which has
specialized itself in strategy, business process
and IT management. At present, BOC employs
over 100 people; cp. BOC (2004).
852. In the sense of the analysis of operational cross-
sectional functions (for the various operational
organization forms, cp., for example,
Schierenbeck (2003, p. 115).
853. Cp. BOC (2002a, p. 1).
854. Cp. BOC (2002b, p. 1).
855. Cp. BOC (2002c, p. 1)
856. Cp. Sinur (2003, p. 2) and Heinrich and Betts
(2003, p. 14).
857. For the term Supply Chain Competence in the
present context see chap. 1, sect. 1.7.
858. Cp. Schfer and Seibt (1998, p. 365). In the
submitted case, the focus lies upon the Supply
Chain and its management. In analogue to this,
the factual situation refers to the competence
with respect to the Supply Chain, which was
referred to as Supply Chain competence in the
work at hand.
859. (Lippitt, 1982, p. 1).
860. See chap. 2, para. 2.3.2.
861. See chap. 5, para. 5.1.2.
862. The Supply-Chain Council offers the following
explanation of the model description in
conjunction with this: The Model is silent in the
areas of human resources, training, and quality
assurance among others. Currently, it is the
position of the Council that these horizontal
activities are implicit in the Model (Supply-
Chain Council, 2006b, p. 3).
863. See sect. 1 of the appendix.
864. The term can be defined as follows: Human
resources cover all process related human
factors that are relevant to the improvement of
the capabilities and motivation of the employees
involved (Seibt, 1997a, p. 13). Cp. to this end
also Lawrence and Lee (1984, p. 54).
865. Development planning also covers on the one
hand assignment planning that is supported by
Training on-the-job, and on the other hand
further educational planning that is assured by
means of Training off-the-job; cp. Schierenbeck
(2003, p. 352).
866. An organization can be fundamentally described
as follows: Organizations are composed of
individuals and groups, created in order to
achieve certain goals and objectives, operated
by means of differentiated functions that are
intended to be rationally coordinated and
directed, in existence through time on a
continuous basis (Lawler & Rhode, 1976, p.
32).
867. Leavitt uses the term four-variable conception of
organizations; cp. Leavitt (1965, p. 1144). Seibt
also describes the system variables as
Dimensions for Information System Structuring;
cp. Seibt (1991, p. 252). For a thorough
discussion of the subject matter, q.v. Seibt
(1997a).
868. Cp. Schfer (2002, p. 99).
869. Leavitt describes the special meaning of the
People approach as follows: By changing
human behavior, it is argued, one can cause the
creative invention of new tools, or one can
cause modifications in structure () By either
or both of these means, changing human
behavior will cause changes in task solutions and
task performance and also cause changes
toward human growth and fulfillment
(Leavitt, 1965, p. 1151).
870. Cp. Galbraith (1977, p. 26).
871. Cp. Guest (1962).
872. Cp. OShaughnessy (1976).
873. The approach already becomes apparent in the
definition of an organization which the authors
submit as follows: An organization is the
coordination of different activities of individual
contributors to carry out planned transactions
with the environment (Lawrence & Lorsch,
1969, p. 3).
874. Cp. Leavitt (1965, p. 1153).
875. Cp. Lippitt (1982).
876. Cp. Likert (1961).
877. Litterer assumes that two substantial factors of
influence exist for organizations: members and
technology, cp. Litterer (1973, p. 104).
878. For the subject matter of organizational design,
cp. also Grochla (1982, 1983).
879. For the meaning of the system variable people,
especially within the context of organizational
changes with regards to the Supply Chain, cp.
also Cohen and Russel (2005, p. 229).
880. Cp., roughly, Becker and Geimer (1999, p. 25).
881. This is mainly in accordance with the Supply
Chain competences fundamental to the SCOR
model: Customer-facing performance capability
on the one side, and company-related efficiency
on the other side.
882. Alternatively expressed, the performance
indicators serve to measure, assess and monitor
the two SC competences that constitute the
SCOR model.
883. Human Resources Management (HRM) is seen,
as already represented in Porters Value Chain
approach in chap. 1, para. 1.3.1, as an essential
component of Supply Chain Management.
Porter assumes that HRM-related activities take
place in various parts of the company, and that
management of the human resources supports
not only the individual primary and supportive
activities, but also the total Supply Chain; cp.
Porter (1999, p. 68).
884. In this context it is relevant to see the role of
technology as an Enabler, as stated in chap. 5,
sect. 5.3. Collins describes this as follows:
Technology can accelerate a transformation,
but technology cannot cause a transformation
(Collins, 2001, p. 11).
885. Cp. Geimer and Becker (2001a, p. 22).
886. See to this end the statements in chap. 1, para.
1.3.1.
887. Cp. Schfer (2002, pp. 358, 370). On the basis of
empirical studies within the context of company
process optimization, Kajter quotes the
following result: Reengineering concepts
confirmed the findings of earlier research
identifying human factors (e.g., resistance
against organizational change) as the major
reason for the failure of corporate restructuring
(Kajter, 2002, p. 15). Handfield and Nichols
come to a similar conclusion: Organizations are
continually faced with the challenge of managing
the people part of the equation. () A number
of supply chain initiatives fail however due to
poor communication of expectations and
resulting behaviors that occur. () The
management of interpersonal relationships
between the different people in the organization
is often the most difficult part (Handfield &
Nichols, 2000, p. 67).
888. (Kuglin & Rosenbaum, 2001, p. 170).
889. Hamel describes the renewal as follows:
Renewal is the capacity to reinvent not only
processes and systems, but purpose and mission
as well (Hamel, 2002, p. ix).
890. Based upon Leavitt (1965, p. 1145).
891. Schumann for example describes Change
Management as a process of permanent
change; cp. Schumann (2001, p. 102). For the
importance of Change Management in
conjunction with Supply Chain Management, cp.
also Poluha (2001, p. 317).
892. Cp., roughly, Hieber et al. (2002, p. 6).
893. For example, a project with the name ProdChain
was carried out by the Forschungsinstitut fr
Rationalisierung (Research Institute for
Rationalization) at the RWTH Aachen (fir) in
Germany during the period from March 2002
until August 2004 under Promotion No. IST-
2000-61205. Its objective was the development
of a procedure for analysis and improvement of
logistic performances within production
networks, and it was based upon the Supply-
Chain Councils SCOR model. The project did
not, however, investigate the SCOR model as
such. It rather assumed its suitability and
applied it to develop logistic metrics as indicators
for the continuous improvement in logistic
performance in production networks, by means
of which targeted structural suggestions could
be made according to the analyzed logistic
performance; cp. Forschungsinstitut fr
Rationalisierung an der RWTH Aachen (fir)
(2004).
894. Cp. Bolstorff and Rosenbaum (2003, p. 1).
895. For the term exploration, cp., roughly, Kromrey
(2002, p. 67). See to this end also the statements
under chap. 1, para. 1.1.2.
896. The first version of the SCOR model was
published in November 1996; cp. for example,
Hagemann (2004, p. 4).
897. Cp. Heck (2004, p. 15).
898. Cp. Gpfert and Neher (2002, p. 37).
899. Cp., for example, Heinzel (2001, p. 50). This
opinion is also shared by Welke, who assumes
that the development in the European region is
being increasingly hastened by multinational
companies which have possibly accumulated
experience of the SCOR model in their
American branches, as for example Daimler-
Chrysler and Siemens, or have their
headquarters in America and are also active in
Europe, as for example the companies HP and
Intel already mentioned in conjunction with
SCORs application; see Poluha (2004b).
900. See to this end chap. 4, sect. 4.4.
901. Cp. Supply-Chain Council (2003b, p. 1) and
Hieber et al. (2002, p. 6).
902. In this context cp. also chap. 5, para. 5.1.2.
903. Cp. Kromrey (2002, p. 3).
904. As to the relevance of comparable data upon
regional level, cp., for example, SIMTech (2002,
2003) and Gintic (2000, 2001).
905. See to this end the statements made in chap. 3,
para. 3.3.5.
906. A possible approach at explanation for this would
be that these companies invest increasing
resources into the SCOR model or have
respectively adjusted themselves more strongly
to corporate-policy or logical decisions.
907. See chap. 4, para. 4.2.2.
908. Cp. Schfer (2002, p.2). The concept of a new,
expanded company, highlighted by strong
relationships to external partners, and a shift
from physical to virtual exchange in which
information is primarily transfered along the
value chain, was already introduced by Tapscott
in 1996; cp. Tapscott (1996, p. 97).
909. For example, Radjou et al. (2003, p. 31) name
practical application cases for Adaptive Supply
Chains. However, the statements are of a purely
qualitative nature and are not based upon
scientific examinations.
910. So that modern concepts like SCDM can be
established within company practice, they must
prove their strategic importance for the
company success. In this case, the same
requirements and present-day challenges apply
that apply to information technology in general:
As information technologys power and
ubiquity have grown, its strategic importance has
diminished. The way you approach IT
investment and management will need to change
dramatically (Carr, 2003, p. 5).
911. For an empirical study of the influence of
Customer Relationship Management (CRM) in
the context of E-Business, cp. Madeja and
Schoder (2003, p. 9). For an overview of
selected E-Business concepts, cp., roughly,
Schfer (2002, p. 11).
912. The suggestions listed in the following for
expansion of the SCOR models structure in the
human factor area do not immediately stem
from the results gained within the framework of
the work submitted, because inevitably no data
was collected for this purpose. They are rather
based mainly upon present developments in the
field of Supply Chain Management, as they are
shown to do in chap. 5 (see to this end chap. 5,
sect. 5.2 & 5.3) Furthermore, they are to be
differentiated from such suggestions which aim
at a further supplementing of the existing
model structure (see to this end chap. 5, para.
5.1.2).
913. See sect. 6.1; cp. also to this end Davenport
(2005, p. 102).
914. Cp., roughly, Dhavale (1996, p. 50). Sharman
(1995, p. 34) introduces the term employee or
team performance in conjunction with this. As to
the Supply Chain scorecard, see also the
statements under chap. 1, para. 1.5.4.
915. Cp., roughly, Kaplan and Norton (1997, p. 121).
916. See to this end the explanations under chap. 3,
para. 3.1.2.5.
917. Cp. Welz (2005, p. 17).
918. Cp. Ziegler (2005, p. 20).
919. As highlighted in sect. 6.1, the system variable
people represents a substantial factor during the
implementation of organizational changes.
920. See to this end chap. 3, para. 3.1.2.5.
921. A distinguishing characteristic of the BSC is
represented by the monetary (finance-related),
as well as non-monetary performance
indicators; cp., for example, Kaplan and Norton
(1992, p. 71) and Horvth and Kaufmann (1998,
p. 41).
922. Cp. to this end roughly Wollnik (1977).
923. See to this end chap. 4, sect. 4.3.
924. Cp. to this end roughly Backhaus et al. (2003, p.
408).
925. See to this end chap. 4, para. 4.3.2.
926. The graphical overviews also orientate
themselves upon the recommendations for
visualization by Wottowa, which target the
immediate ability to be proven; cp. Wottawa
(1980, p. 199).
927. Diags. 6.2a & 6.2b represent an entirety which,
for graphic representation reasons, could not be
reproduced in an illustration.
928. Ibid.
929. See to this end sect. 3 of the appendix.
930. Cp. Supply-Chain Council (2005c, p. 1); Supply-
Chain Council, 2006a, p. 1). For a detailed
overview of the concerned performance
indicators and their calculation cp. also Supply-
Chain Council (2005b, p. 296; 2006b, pp. 368,
434).
931. This means that two (or more) absolute figures
are placed into relation with each other (see to
this chap. 3, para. 3.1.1.2).
932. Cp. Geimer (2000, p. 56).
933. The advantages of such a standardization are
seen not only within a company (between the
functional departments), along the SCOR-
specific Value Chain (VC) and in cooperation
between the partners within VC, but also
between companies in varying industries
(manufacturers, Logistics Service Provider, and
so on); cp. Heinzel (2001, p. 49). See to this end
also the explanations in chap. 1, sect. 1.6 and
chap. 2, sect. 2.2.
934. Cp. Schmelzer and Sesselmann (2004, p. 162).
The authors quote Johannes Feldmayer, member
of the central Board of Directors of Siemens
AG.
935. Davenport, in conjunction with this, introduces the
term Commoditization of processes; cp.
Davenport (2005, p. 100). In this way, or
example, the previously-mentioned Dell
Company has selected velocity in association
with a high multitude of products as a
differential characteristic. The company has
optimized and specially suited the relevant
processes to such an extent that they run
noticeably faster than the competition and have
therefore created, and continuously built upon, a
competitive advantage; cp. Geimer and Becker
(2001a, p. 28) and Markillie (2006b, p. 4). As a
final consequence, such a standardization
compatible to a competition benchmarking
would lead to stagnation, as at the end all
competitors would have reached the same
performance level, and a differentiation would
no longer take place; cp. Schfer and Seibt
(1998, p. 376). For the term competitive
benchmarking, cp. also Watson (1992, p. 5).
936. Cp. Heck (2004, p. 16).
937. Cp. Gpfert (2002, p. 38).
938. The DAX100 includes 100 large German stock
corporations or public companies respectively
comprising 30 DAX and 70 MDAX companies;
cp., for example, Deutsche Brse (2004).
939. See to this end the statements in chap. 1, para.
1.3.1 and sect. 1.6.
940. Cp. Schfer (2002, pp. 346, 381).
941. Cp. for example, Latham (1999, p. 91).
942. Cp. Seibt (1999, p. 56).
943. Cp. Normann and Ramirez (2000, p. 187). Abell
combines the factual situation in a more general
form under the term Dual Nature of
Management and provides the following
description: Running the business and changing
it are not sequential but parallel pursuits (Abell,
1993, p. 3).
944. The fundamental dynamic process of continuously
searching for new value creation and business
opportunities, as well as realizing those within
the framework of organizational change, was
described by Schumpeter as the process of
creative destruction; cp. Schumpeter (1976, p.
81). Analogue to this, Lee states three
fundamental conditions for an optimal Supply
Chain according to his terminology: flexibility,
adaptability and a balancing-out of interests; cp.
Lee (2005, p. 72).
945. See to this end roughly chap. 2, sect. 2.2 & para.
2.3.3 in addition to the introduction to chap. 5,
sect. 5.3.
946. Davenport describes the connection as follows:
The SCOR model is only a catalyst for change
and a framework for analysis. As with any
approach to process improvement, firms must
still make difficult changes in how they do their
work and to associated systems and behaviors
(Davenport, 2005, p. 102).
947. See to this end the practical examples under chap.
2, sect. 2.4.
948. By these means and amongst other things, the
increasing demands upon the Supply Chain are
to be taken into account, which in turn result
from the changed competitive conditions; cp.
Markillie (2006a, p. 3). Based upon Cohen and
Russel, the present connection allows itself to be
described as follows: Like its business, (the
optimal) supply chain is flexible, agile and
evolving constantly. What doesnt change,
though, is the companys view of its supply
chain as a key source of competitive advantage
one well worth the ongoing investment
(Cohen & Russel, 2005, p. 257).
949. Taken from BearingPoint (2003d).
950. Ibid.
951. Based on BearingPoint (2003d).
952. Taken from BearingPoint (2003e). For
explanations concerning the graphical
representation in the following diagrams, refer to
para. 5.5 of the appendix. There is no direct
correlation between the data used in the
examples and the data used in the empirical
study outlined in chapters 3 & 4. The data used
in the following examples are only intended for
exemplary and illustrative purposes.
953. Taken from BearingPoint (2003b, p. 23).
954. For detailed results refer to chapter 4, sect. 4.1;
for a summary of the results refer to chapter 5,
para. 5.1.1. The existence of sub-cases for a
single theses (e.g., 1a & 1b) is a result of the
differentiation in an inbound and an outbound
component.
955. For the abbreviations used, see the abbreviations
list at the beginning of the book.
956. For each of the digitalized sources, the day of last
access is given under the abbreviation DolA,
i.e., the date when the internet site mentioned
was last accessed.
957. Unpublished, available from the author.
Appendix One

Quantitative Survey (KPI
Questionnaire)
949












Appendix Two

Overview of the Performance
Measures of the
questionnaire
950



Appendix Three

Connection between Supply
Chain Competences and
Performance Indicators
951
951
3.1 Customer-facing
competence (customer
service and flexibility)

3.2 Internal-facing
competence (cost and assets)

Appendix four

Details and Evaluation
Examples of the
Performance Measures
952
4.1 Source







4.2 Make (Produce)





4.3 Deliver: Store






4.4 Deliver: Transport






4.5 Deliver: Sell





Appendix five

Representation of the
Resultsof the Questionnaire
for the Acquisition of
Performance Measures
within the KPI Benchmarking
Tool
953
5.1 Example for online
survey (KPI Questionnaire)

5.2 Results of SCOR on the
first level

5.3 Results within a SCOR
process

5.4 Details of an exemplary
performance measure and
suggested measures for
improvement

5.5 Clarification of details
of an exemplary
performance measure
representation

Appendix six

Detailed Analysis Results of
the Single Hypotheses
954
6.1 Results of SCOR model
group Intra-Performance
Attribute (I-P)

6.2 Results of SCOR model
group Intra-Competency (I-
C)

6.3 Results of SCOR model
group Inter-
Competence/Performance
Attribute (I-CP)


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Table of Contents

Application of the SCOR Model in
Supply Chain Management
Copyright
Dedication
Foreword
Preface
Acknowledgments
Abbreviations
1. Objectives, methodology, approach
and definition of terms
2. The Supply Chain Operations
Reference Model (SCOR model) of the
Supply-Chain Council
3. Empirical study based upon a
quantitative questionnaire
4. Comparison of work hypotheses and
acknowledged results of the empirical
study
5. Summary of conclusions and
innovative assessments
6. Limitations of the presently available
SCOR model
References
Appendices
Bibliography