Supply Chain Engineering (SCE) describes a method for the conceptual construction and

realization of logistics and product oriented supply chains within a company and beyond its
borders. According to SCE the focus should not be limited to optimizing the parts of supply chain
for effective and efficient functioning, but the complete value chain needs to be considered in a
holistic fashion to yield the desired efficiency and effectiveness. The most essential ingredient of
SCE is its integral view embodying
Local Customization
Engineering
Information Technology
The engineering character is not only visible in the SCEs content but also in its name.
As SCE is still a very young method only few standard works have been published so far;
however, Kukkuk C, (Snr) in his opening address to the South African mining industry in 2015,
sites "SEC should be regarded as an upstream practice and should not be a silo business unit, it
may well be integrated with other key disciplines that form part of the 'value chain' some
principles we apply are interactive sessions for front end planning, industry lessons learned, lean
optimization strategies and updated ERP/MRP solutions"
The following definition therefore mainly refers to the standard work, Supply Chain Engineering
methods of integrated logistics planning, published in July 2010 by Dr. Joachim Miebach and
Dominik Bhring. Herein SCE is defined as an independent and overall method to design supply
chains.

Fundamentals and definition[edit]

The method of SCE moves along a classical definition of a value-adding supply chain within,
from and between companies and markets. Thereby SCE creates network structures, processes
and establishments along the supply chain in a certain way. Hence strategy, engineering and IT
are not regarded separately but equally and integrated in all planning steps. Solutions for supply
chain design that follow the SCE approach are therefore considered to be holistically and always
influenced by engineering. All measures that follow the SCE process focus the most ideal supply
chain construction whilst regarding cost optimization, a correct use of engineering and IT as well
as training and integration of employees in production centres and logistical facilities. For the
German-speaking area this approach was mostly defined by Dr. Miebach. Supply Chain
Engineering methods of integrated logistics planning was published in July 2010 and is so far
the only work that describes SCE as a holistic and well-defined method. Following the publishers
experiences, neither the top-down approach (mostly used by strategy consultants) nor
the bottom-up approach (used by most engineering offices as unique point of view) achieve
satisfying results when trying to create most optimized supply chains. The French authors
Alexandre Dolgui and Jean Marie Proth have also dealt with the wording SCE in their book
Supply Chain Engineering Useful Methods and Techniques(Springer-Verlag London Limited,
2010). Anyhow the authors do not use SCE as an independent method but subsume different
single planning and realization elements of supply chains. So their focus is laid more on
production processes and less on a holistic view of supply chains. Another driver of the wording
is the area Supply Chain Engineering of the Fraunhofer Institute where SCE is understood as a
name giver. The methodology of this area still uses a quite narrow conception of Supply Chain
Management.

Supply Chain Engineering Vs Supply-Chain-

Management (SCM)[edit]
The SCE approach as defined by Dr. Miebach regards itself as an upstream authority and basic
principle for efficient and effective SCM. SCM - as it is defined by the Council of Supply Chain
Management Professionals (CSCMP) - is a strategic-operative controlling tool for already
installed supply chains. On the contrary the SCE approach addresses the basic and first creation
or optimization of supply chains and integrates SCM as a subsystem to control supply chains.
Joint goals - such as coordination and integration along a supply chain regarding cross-
functional business processes and a value-adding point of view - are therefore also inherent
parts of a SCE goal.

SCE Top-Down and Bottom-Up[edit]

The general assumption of Miebachs SCE concept is based on the awareness that neither the
top-down nor the bottom-up approach are singular methods that deliver satisfying results when
constructing supply chains. As the top-down approach is quite strategically and thus firstly
regards networks, strategies, delivery-rhythms and other economical tools. Subsequently a best-
practice method emerges which defines top-down all basic organization structures and
processes as well as all facilities and technical specifications. Hence this approach is most likely
for strategic consulting companies. The bottom-up approach which is technic-oriented regards
cost and quality problems along a supply chain almost exclusively from a technical point of view
and is therefore often applied by engineering companies and plant engineers. Hence
propositions like installation, warehouse techniques and administrative organization arise.
Reconciliation with a strategically complete overview mostly never happens. Following the SCE
approach, an optimal supply chain only contributes to the companys success if its structure was
holistically designed as well in a technical and also economic understanding. The supply chains
definition has sovereigntyover economical constructs like a companys tied up liquidity
(inventory), customer satisfaction (delivery reliability), EDV-systems and equipment invests as
well as over technical and process dependent constructs like costs for staff and transport or
delivery quality. As all elements of a supply chain influence each other they cannot be separated.

Methodical SCE approaches[edit]

The SCE methodology can be separated into 5 different section of a planning cycle

Key-Performance-Indicators (KPI) as target figures

Network strategy Process planning Engineering and business Optimization of the total
system
Principally an evaluation of the supply chains current statuesque is necessary as well as
developing different scenarios using quantified calculation models. A conception - according to
this method- is based on the actual situation and the respective data (location oriented) and not
on rough benchmark scales. The SCE approach therefore assumes that no calculation model
exists which is able to automatically generate an ideal solution based on all thinkable network
strategies, processes and techniques as the effort would be too great. Along the planning cycle
unfavorable solutions are excluded stepwise but others will are specified more closely. So the
target-aimed optimization is questioned constantly. Important SCE tools are knowledge
management databases, simulations and emulations, EDV-tools for detailed calculation,
implementation experiences in program and project management as well as motivation and
experiences of domain experts.

I. Key-Performance-Indicators as target goals[edit]

If design of logistics networks follows the SCE approach, there is a general rule: if it cannot be
measured it cannot be constructed. Therefore, all supply chain requirements must be quantified
in terms of key performance indicators as economical target goals. Looking back on the
integration of top-down and bottom-up approaches then purchasing, production and distribution
strategy are joining the system from above whilst performance and cost data are specified
from beneath. For example, they refer to reachable through put times or return quantities. The
limiting definition of separate cost types is not conducted at this point as necessary changes can
arise if warehouse and transport costs should shift.
II. Network strategy[edit]
This part of the SCE planning cycle deals with locations, production networks, co-operations and
suppliers and also with the degree of centralization and specialization and other influences on a
networks structure. Here, new approaches from several site-formed options and quantifies the
alternative strategies, and matched against the set target KPI. This is done for example by
simulating the flow of goods.

III. Process planning[edit]

First of all this step regards processes which take place on company level. These processes are
mapped within the Enterprise-Resource-Planning-System (ERP). This mainly concerns demand
and resource planning, batch size development, dispatching planning, replenishment strategy
along storage levels within the push or pull approach, inventoryplanning and general software
architecture. On this stage a quantification of all processes is also necessary to reach a most
ideal solution. For process planning simulation usage is also an adequate tool to reach decisions.

IV. Techniques and operational procedures[edit]

Next step is to observe processes and systems on an operative level. This includes conveying
and warehouse systems, pick packing and packaging systems, loading aids, warehouse
management systems, tour planning, staff planning and safety issues. As manufacturers mostly
only offer data for own solutions the SCE methodology requires additional quantifications of
possible alternatives. Usually as many comparable projects as possible are used. If they are
rehashed in terms of data bases the better. Collected experience data should be made available,
as well as performance data like play times, picking performance, error rates or transport
performance.

V. Optimizing the total system[edit]

Last step of the SCE planning cycle is to optimize the whole system. The system that was
acquired through the previous three steps is now compared to the KIP system of step. Thereby it
is analyzed whether the planned system meets the requirements, exceeds them or not and if
changing the alternative is necessary. This adjustment is done before implementing the planned
supply chain system. Moreover, the robustness of the chosen alternative is questioned and its
efficiency is inspected along changing factors of products or in the market. This methodology is
also possible to result in the awareness that the targets were too ambitious.

Sources[edit]
Dolgui, Prof. Alexander/Protz, Jean-Marie (2010): Supply Chain Engineering Useful
Methods and Techniques, Springer-Verlag, London
Miebach, Dr. Joachim/Bhring, Dominik (Hrsg., 2010): Supply Chain Engineering Die
Methodik integrierter Planung in der Logistik, Gabler-Verlag, Wiesbaden
Poluha, R. G. (2009): Quintessenz des Supply Chain Managements. Was Sie wirklich ber
Ihre Prozesse in Beschaffung, Fertigung, Lagerung und Logistik wissen mssen, Berlin und
Heidelberg
Kukkuk, C. SNR (2015) : Supply Chain Engineering, an integrated approach, Johannesburg,
South Africa