The SCOR Framework as a Basis for the Model of the Company’s Logistics Cost and Service Level Optimization

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MAGAZINE  №4 (99) August 2020

AUTHORS RYBAKOV D.S.

CATEGORY Logistics service management Optimization and mathematical modelling Supply chain planning

 

ABSTRACT

The current state of management practice is characterized by the presence of a demand to improve the efficiency and effectiveness of logistics processes, on the one hand, and an insufficient level of application of one of the main tools for achieving this goal – optimization modeling, on the other. One of the main reasons of this phenomenon is the lack of a universal basis of the proposed optimization models that does not allow them to be applied widely enough in companies with different business process structures. The aim of the research was to develop a universal, based on the SCOR framework, integrated model for optimizing the logistics service of an enterprise. During the research process, the overview of the developed models for logistics service optimization, the analysis of the limitations of the logistics system optimization models, the adaptation of the map of SCOR process metrics have been carried out; the influence diagram of the optimization model components has been developed; the models of cost optimization and logistics service optimization have been combined into a single integrated optimization model; an algorithm for the optimal solution search has been elaborated; the implementation of the model and algorithm as a program for the solution search has been introduced. As a result, the integrated optimization model based on the components of the SCOR model has been developed, combining the cost and service level optimization models, using the outputs of one model as inputs for another when searching for an optimal solution. Building the optimization model on the basis of the SCOR model components provides universal character of its application, taking into account the set of costs, arising in a logistics system, including indirect ones, and the set of metrics of logistics service reflects the links between functional departments, the ability to maintain a level of total costs at the efficiency frontier, achieving the goal of the profit maximization at the same time, provides a link between the tactical and operational levels of decision-making, which together leads to an increase in the reasonableness and quality of management decisions, and creates prerequisites for the overall optimal functioning of an enterprise logistics system.

 

 Electronic version

 Keywords:  SCOR optimization Optimization Models optimization modeling logistics service logistics costs logistics processes business process metrics performance indicators KPI

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