[MUSIC] In this video, we examine the operations of a global supply chain. As previously noted, supply chain strategy can be conceptualized as a pyramid with four layers. Strategy, which is the topic of the previous video, tactics, operations, and execution. For our purposes, it will be convenient to combine tactics, operations, and execution into a single group, which we generically label as operations. To understand global supply chain operations as just defined, we'll employ the SCOR model of supply chain reference and its five principal components, plan, source, make, deliver and return. SCOR stands for Supply Chain Operations Reference, which is an international cross-industry model of supply chain best practices required to satisfy customer requirements. The SCOR model organizes supply chains into five principal components. Plan, which is about deciding what to make, when to make it, and where to make it. Source is about procuring items needed for production. Make is about producing products and/or services. Deliver is about selling and delivering products to customers, and return is about processing defective, returned, or recycled products. The top figure illustrates the supply chain components for a single firm, while this next figure illustrates the multiple SCOR models for a sequence of firms along a supply chain. In other words, every company in a supply chain or network will have its own SCOR elements to integrate into the overall supply chain. The SCOR plan component determines what to make, when to make it, and where to make it. It includes aggregate planning, which develops tactics to deliver the right products or services to the right place at the right time, and for the right customer. Global supply chain planning tasks include demand forecasting, how much do we need to produce? Facilities location, where should we produce it? Capacity planning, ensuring that we have resources to produce what we want to. Transportation planning, determining the best ways to move materials and product. Labor planning, to provide an adequately trained workforce for production. And tax planning, to plan production in such ways as to minimize tariffs and taxes. The source component of SCOR determines where and how to procure items needed for production. By deciding the critical question of what the firm should produce itself and what it should outsource, by determining the correct balance between efficiency and responsiveness. Sourcing activities can include vendor selection, choosing the right suppliers. Procurement scheduling, determining arrival times for shipments. Vendor management, partnering with suppliers for efficiency and effectiveness. Quality assurance, verifying that products are met and maintained. And delivery reliability, assuring that shipments are received on time and on schedule. The make component of SCOR addresses the manufacturer of a product or delivery of a service. Activities of make include inbound materials receiving, inventory management, just enough, but not too much. Production scheduling, workforce scheduling, quality assurance, packaging and shipping, plus maintenance and repair of production equipment. The deliver component of the SCOR model addresses the sales and delivery of products and services to customers. Deliver decisions can include methods of shipping, such as by truck, rail, air or ship, and by making cost versus speed trade-offs. Quantities to ship, such as full truckload, less than truckload, and delivery frequency. Deciding on warehouse locations, determining how many locations to use, and by making time/cost/service trade-offs. And by determining customs requirements, tariffs to be paid, shipping documents to create, and the potential use of logistics intermediaries. The final component of the SCOR model is return, which is processing defective, returned, and recycled products. There are many possible reasons for returns, such as defective vendor products, production mistakes, excess production and overstock. Warranty returns, shipping container returns, returns for recycling and reuse, and disposal of products at their end-of-life, as required in some countries. In this video, we have used the global supply chain pyramid and the SCOR model to better understand the role and activities of global supply chain operations. In particular, the SCOR model breaks supply chain operations into five principal components. Plan, decide what to do, source, where to get resources. Make, how to produce, deliver, where and how to deliver our products and services. And return, how to handle product returns and rejects. Finally, we must emphasize that operations do not stand alone, but must align with and support our chosen global supply chain strategy. [MUSIC]
