ASSESSMENT

Subject – Operation Management (OM)

NAME- Rahul Agarwal (PGD20028)

SCOR model: -
The supply chain operations reference (SCOR) model is designed to evaluate your supply chain for
effectiveness and efficiency of sales and operational planning (S&OP). SCM is complex, and S&OP
implementation can be difficult, but the SCOR model is intended to help standardize the process and
create a measurable way to track results. It works across industries using common definitions that
apply to any supply chain process. Using the SCOR model, businesses can judge how advanced or
mature a supply chain process is and how well it aligns with business goals.
The SCOR model is based on six management processes:
Plan: Planning processes include determining resources, requirements, and the chain of
communication for a process to ensure it aligns with business goals. This includes developing best
practices for supply chain efficiency while considering compliance, transportation, assets, inventory,
and other required elements of SCM.

Source: Source processes involve obtaining goods and services to meet planned or actual market
demand. This includes purchasing, receipt, assay, and the supply of incoming material and supplier
agreements.

Make: This includes processes that take finished products and make them market-ready to meet
planned or actual demand. It defines when orders need to be made to order, made to stock, or
engineered to order and includes production management and bill of materials, as well as all
necessary equipment and facilities.

Delivery: Any processes involved in delivering finished products and services to meet either planned
or actual demand fall under this heading, including order, transportation, and distribution
management.

Return: Return processes are involved with returning or receiving returned products, either from
customers or suppliers. This includes post-delivery customer support processes.

Enable: This includes processes associated with SCM such as business rules, facilities performance,
data resources, contracts, compliance, and risk management.

SCOR with Walmart example: -

Plan: Wal-Mart utilizes a sophisticated algorithm to calculate their forecasts that allow the company
to forecast the exact quantities of each item to be delivered while taking into account each store’s
current inventory. This is also possible because of Wal-Mart’s computerized inventory structure that
uses the Point of Sales (POS) system. This not only tracks all the company’s inventory and stock at
retail stores and distribution centres, but it also monitors when products are sold and is able to
predict the future quantities needed.

It is this production scheduling and the ability to monitor inventory so closely that allowed Walmart
to accurately predict where, when and how much of a product will be needed and in turn develop a
distribution network that works hand in hand with these needs. This reduces their costs by reducing
leftover inventory and optimizing the transportation of their products by delivering only exactly
what is needed. Super retailer Wal-Mart has spent considerable resources to ascertain how best to
minimize transportation costs. Efforts such as owning their own fleet, standardizing processes, and
capitalizing on information technology have resulted in transportation costs that are 3% of total
costs versus the industry average of 5%. By analysing how to cut costs in all aspects of their
transportation, Wal-Mart was able to pass these savings onto consumers and support their ‘always
low prices strategy.
Source: In this case as well-mart is a retailer it doesn’t have to go for sourcing that is the
procurement of raw material is not required. The suppliers, in this case, will be the companies who
are selling their product through Walmart retailers that are: Grand Ocean star (Supplier of seafood it
takes 5 to 10 days after order)
Procter & Gamble Co (it takes a lead time range of 8.5 to 14.0 days to deliver the food product)
Nestle, Gillette, Hewlett-Packard, Johnson & Johnson, Kimberly-Clark, Kraft Foods Nestlé Purina Pet
Care, Unilever.
Make: Wal-Mart exemplifies how the construction of a product affects transportation costs. Wal-
Mart recently asked its 60,000 suppliers worldwide that by 2008 they decrease the amount of
overall packaging they use by 5%. Wal-Mart believes this packaging proposal will save the company
$3.4 billion. When Wal-Mart previously did this in 2005 with the packaging of its private clothing
label, Kids Collection, the company saved $3.5 million in one year.
By reducing the amount of packaging, Wal-Mart is not only cutting costs, but they are reducing the
weight and volume of their products. This increases the ability of their trucks to carry more per
truckload, possibly even making fewer runs in a given day. Wal-Mart’s packaging decisions illustrate
the direct impacts supply chain decisions and transportation can have on each other. Wal-Mart had
just over 40 distribution centres located around the United States. Stocked in these centres were
over 80,000 items. 50% to 65% of Wal-Mart’s competitors directly supplied the inventory to their
retailers from their warehouses, in comparison to Wal-Mart’s 85%. Walmart replenished their stores
on average within two days compared to the five days their competitors took. The shipping costs
were approximately 2% less of the total cost than competitors (Chandran, 2003). The location of a
facility can cut transportation costs dramatically as shown by the Wal-Mart example.
Deliver: Wal-Mart has a private fleet of their own truck drivers and by somewhat integrating
backward in their supply chain, they have needed to become efficient in documenting and tracking
their products. To do this, Wal-Mart employees use handheld computers, a form of EDI systems,
which contain information about the product’s storage, packaging, and shipping and eliminate the
need for actual paperwork saving them time. Because there is no third party, Walmart must self-
manage the ordering of their products with great accuracy.
What makes Wal-Mart’s distribution process so efficient is that they use a logistics technique known
as “cross-docking”. It breaks down the distribution of the products into five simple stages. The
unique aspect of Wal-Mart’s system is that their drivers deliver the trucks to their distribution
centres at specific times and set intervals. Their entire distribution system is a consistent flow of
goods adjusted to the individual needs of each retail store. Wal-Mart’s delivery system works so well
because it is developed in accordance with the demands of each store and the communication
between each point allows the process to be effective.
Wal-Mart believes that the widespread implementation of RFID technology marks a sea change in
the supply chain, much as the introduction of bar codes was as seen as revolutionary two decades
ago. But while bar codes can tell a retailer that it has two boxes of product XYZ, Walmart’s EPCs can
help distinguish one box of product XYZ from the next. This allows retailers greater visibility in
monitoring product inventory from the supplier to distribution centre to store.
Return: Walmart’s No Receipt policy applies to items returned in a store only. You have the option
of a cash refund (for purchases under $25), a Gift Card for the amount of the purchase (for
purchases over $25), a credit to your credit card, or an even exchange for the product. We can make
up to three No Receipt returns within a 45-day period.
All merchandise sold and shipped by [Link] may be returned to a store within 90 days of
receiving it. If there is an error on our part related to your order, we will issue a credit for your order
and any applicable shipping and gift-wrapping charges. An item must be returned in the original
manufacturer’s packaging, so we recommend you keep your packaging for at least the first 90 days
after purchase.
Plants, Food, and certain Health and Beauty items: To return perishable items, the following

information is to be required and send to the customer care link of Walmart i.e.

Order number for the item

Date of arrival

Condition of item at the time of arrival

A detailed explanation of the issue