Download - SCOR 10 Overview

2011 Supply Chain Council. ALL RIGHTS RESERVED. | 2010 Executive | 1 | 25 July 2010

SCOR 10.0 Overview

Supply Chain Council

Executive Presentation


WHAT IS SCOR EXACTLY


Instructor Introduction

3

Dan Swartwood Vice President of Process and Technology

for Satellite Logistics Group

25 Years manufacturing management experience with 3M

Company and Imation Enterprises

7 years experience in management consulting in Aerospace,

Pharmaceutical, Industrial, Chemical, and Paper industries

focusing on Supply Chain Analysis, Lean, and Six Sigma

3 years forward and reverse logistics

Chairman Supply-Chain Council Technical Development

Steering Committee 2005-2007

SCC Board of Directors 2005-2007

Author of Fix Your Supply Chain (published May 2009)

Speaker on Supply Chain, Transformation, Continuous

Improvement

SCOR Master Instructor, Six Sigma, Lean, APICS CPIM


SCOR: A Process Framework

Process frameworks deliver the well-known concepts of

business process reengineering, benchmarking, and

best practices into a cross-functional framework

Standard processes: Plan, Source, Make, Deliver, Return,

Enable

Standard metrics: Perfect Order Fulfillment, Cash-to-Cash

Cycle Time, Cost of Goods Sold, Order Fulfillment Cycle Time,

etcetera

Standard practices: EDI, CPFR, Cross-Training, Sales &

Operations Planning, etcetera

Standard skills: Aptitudes, Experiences, Credentials, Tasks

Pre-defined relationships between processes, metrics

and practices and inputs and outputs


What is a Supply Chain?

Cu

sto

me

r pro

ce

sse

sSu

pp

lie

r p

roce

sse

s

Product/Portfolio Management

Supply ChainSCOR

Product DesignDCOR

Sales & SupportCCOR

Cu

sto

me

r pro

ce

sse

sSu

pp

lie

r p

roce

sse

s

Product/Portfolio Management

Supply ChainSCOR

Product DesignDCOR

Sales & SupportCCOR


SCOR Processes

Five distinct management processes link together (the

chain in supply-chain) seamlessly from supplier to

customer

Boeing - SCOR Executive Overview

Supplier

Plan

CustomerCustomersCustomer

SuppliersSupplier

MakeDeliverSource Make DeliverMakeSourceDeliver SourceDeliver

Internal or External Internal or External

Your Company

Source

Return Return ReturnReturn Return Return

Return Return

SCOR Model


SCOR Hierarchy

Level 1 Level 2 Level 3 Level 4 Level 5

Scope Configuration Activity Workflow Transactions

Differentiates

Business

Differentiates

Complexity

Names Tasks Sequences Steps Links

Transactions

Defines Scope Differentiates

Capabilities

Links, Metrics,

Tasks and

Practices

Job Details Details of

Automation

Framework

Language

Framework

Language

Framework

Language

Industry or

Company

Specific

Language

Technology

Specific

Language

S1

Source

Stocked Product

Supply-Chain

Source

S1.2

Receive Product

Standard SCOR definitions Company/Industry definitions

EDI

XML


Execution Processes

Processes: Source, Make and Deliver

Objective: value-add, revenue generating

Cu

sto

mer p

rocessesS

up

pli

er

pro

cesses

Supply ChainC

usto

mer p

rocessesS

up

pli

er

pro

cesses

Supply Chain

DeliverMakeSource

ReturnReturn

Plan


Stocked Product (sS1) Make-to-Order (sS2) Engineer-to-Order (sS3)

sS1.1 Schedule Product

Deliveries


Deliveries

sS3.1 Identify Sources of

Supply

sS3.2 Select Final Supplier(s)

and Negotiate


Deliveries

sS1.2 Receive Product sS2.2 Receive Product sS3.4 Receive Product

sS1.3 Verify Product sS2.3 Verify Product sS3.5 Verify Product

sS1.4 Transfer Product sS2.4 Transfer Product sS3.6 Transfer Product

sS1.5 Authorize Supplier

Payment


Payment


Payment

Source Level-3 Processes


S2.2Receive

Product

S2.4Transfer

Product

S2.5Authorize

Supplier

Payment

S2.1Schedule

Product

Deliveries

S2.2Receive

Product

S2.3Verify

Product

S2.4Transfer

Product

S2.5Authorize

Supplier

Payment

S2.1Schedule

Product

Deliveries

S2.2Receive

Product

S2.3Verify

Product

S2.4Transfer

Product

S2.5Authorize

Supplier

Payment

S2.1Schedule

Product

Deliveries

Question: Process Flows

Which of the following flows is/are correct?


Supply Chain Processes

Work and Information Flows

D1.3Reserve Inv.

Calculate Date

mp3 H

Qm

p3 F

act

ory

Reta

il, inc.

D2.2Receive, Enter, Validate Order

D2.3Reserve Inv.

Calculate Date

S1.1Schedule Prod.

Deliveries

Customer P.O. Delivery Commit

S2.1Schedule Prod.

Deliveries

D1.2Receive, Enter, Validate Order

Inter-Company P.O.

C.O. = Customer Order, Inv. = Inventory, P.O. = Purchase Order, Prod. = Product

C.O. C.O.


Maps to Organizations

Level 1 Level 2 Level 3 Level 4 Level 5

Scope Configuration Activity Workflow Transactions

CxO

EvP, SVP

SVP

VP

VP, Director

Line Manager

Manager

Team Lead

Team Lead

Individuals

Strategic

Decision-Making

Line of Business

Management

Activities

Management

Job Management Transaction

Management

Enterprise

Supply-Chain

Requirements

Operations

Strategy

Fine-Tuning

Operations

Adjusting

Process

Performance

Tuning

Technology

Performance

S1

Source

Stocked Product

Supply-Chain

Source

S1.2

Receive Product

Standard SCOR program Company/Industry implementation

EDI

XML


Attribute Strategic metric

Reliability RL.1.1 Perfect Order Fulfillment

Responsiveness RS.1.1 Order Fulfillment Cycle Time

Agility AG.1.1 Upside Supply Chain Flexibility

AG.1.2 Supply Chain Upside Adaptability

AG.1.3 Supply Chain Downside Adaptability

AG.1.4 Overall Value at Risk (VaR)

Cost CO.1.1 Supply Chain Management Cost

CO.1.2 Cost of Goods Sold

Assets AM.1.1 Cash-to-Cash Cycle Time

AM.1.2 Return on Supply Chain Fixed Assets

AM.1.3 Return on Working Capital

Measuring strategy: KPIs are strategic (level-1) metrics

Custo

mer

Inte

rnal

SCOR Level-1 Metrics (KPIs)


Metric: Perfect Order Fulfillment

Definition: The percentage of orders delivered on-time, in full.

Components of perfect include all items and quantities on-time,

using the customers definition of on-time, complete

documentation and in the right condition

Calculation: [Total Perfect Orders] / [Total Number of Orders]

Diagnostic

Metrics:

(examples)

% Orders placed without error

% Orders scheduled to customer request date

% Orders received damage free

% Orders with correct shipping documents

Notes: An order is perfect only if all L2/L3 metrics are perfect; An

order must be: AND on-time AND in-full AND right condition

Strategic Reliability Metric


Best Practices

Best practice: "A current, structured, proven and repeatable method for making a positive impact on desired operational results."

CurrentMust not be emerging and can not be antiquated

StructuredHas clearly stated Goal, Scope, Process, and Procedure

ProvenSuccess has been demonstrated in a working environment and can be linked to key metrics

RepeatableThe practice has been proven in multiple environments.


Supply Chain Assets Human Capital

Supply Chain Skills

Skill: Capacity to deliver pre-determined results with minimal

input of time and energy

Experience: The knowledge or skill acquired by observation or

active participation

Aptitude: A natural, acquired, learned or developed ability to

perform a certain kind of work at a certain level.

Training: A particular skill or type of behavior learned through

instruction over a period of time

Competency: The state or quality of being qualified, having the

ability, to perform a specific role.

Skills Assessment


THE BUSINESS MONEY IS IN SUPPLY CHAIN!

WHEN IT COMES TO SUPPLY CHAINS, HAVING TWO IS BETTER THAN

ONE, AND THREE OR MORE MAY BE BEST OF ALL!

ISLANDS OF PROFIT IN A SEA OF RED INK BYRNES, J..L..S. SR. LECTURER MIT


Our Journey

Strategy

Determine Market requirements Align Strategic Goals

Performance

Determine Supply Chain Requirements Align Supply Chain Performance

Process

Determine Process Requirements Align Process Definition

Resource

Determine Resource Capabilities Align Resource Allocation


Align Strategy

Steps, tools and templates

Business plan

Supply chain definition

Supply chain prioritization

SWOT by supply chain

Chip analysis by supply chain (SAP)

SCORcard definition (select metrics for SCORcard)

Material flows map (geo map)

Capture actual performance (populate SCORcard)

Benchmark

Interpret benchmark, determine corrective actions

Prioritize corrective actions

Strategy

Determine Market requirements Align Strategic Goals


The Matrix

We now place the customer list as column headings repeating until finished

And then the products list as row headings repeating until finished

For each product that flows to a customer, we put an X in the cell

Its that simple.

20SCOR Benchmarking -

Group 1 Group 2

Customer A Customer B Customer C Customer D

Group 1 Group 2

Customer A Customer B Customer C Customer D

Business 1Product 1

Product 2

Business 2Product 3

Product 4

X

X

X

X

X

X

X


Example: Air Conditioning Company

Columns are Retail/Commercial, and sub-segmented

Rows are the Major Product Lines

Your Company

Supply Chain Definition

Matrix

Customer/Market/Channels

Retail Commercial

Big BoxInternet Direct

Mom & Pop

StoresBuilding

Major Account

Distrib

Lin

es

of

Bu

sin

ess

-P

rod

uct

Fam

ilie

s

Air

Co

nd

itio

ne

rs

Big Airco x x xSmall Airco x x x

Custom Industrial x xStandard Industrial x x


Supply Chain Prioritization

Each supply chain is given a rank in each category

The total of the values gives the final overall ranking

Weightings and other criteria may apply

In this example Big Air is the most important supply chain to pursue, rank 11

You My choose to weigh the rankings by business plan focal points

RevenueGross

Margin %# of SKUs

Unit

Volume

Strategic

ValueRank

Big Air 3 2 2 2 2 11

Small Air 2 1 3 3 1 10

Commercial 1 3 1 1 3 9

1=low, 3=high


Chip Analysis

We use a tool called the Chip Analysis Matrix to Identify

priority strategic features or attributes of Supply Chains.

Each supply chain strategy is indicated by a collection of

ranked features:

Reliability On time? Complete? Undamaged?

Responsiveness From Customer Request to final acceptance

Flexibility How long to scale up? How expensive to scale down?

Cost Cost of Processes? Cost of Goods Sold?

Assets Working Capital? Return on Investments?


Comparative Ranking

We advocate using a simple ranking system for industry comparison

Each rank corresponds to a specific percentile in industry performance

We do not use averages or other statistical tests

Our key ranks:

Performance Percentile Choices Interpretation

Superior 90th 1 Top 10 performer

Advantage 75th 2 Top Quadrant performer

Parity 50th 2 Half better/Half worse


Supply Chain Chip Analysis

Supply Chain

Strategy MatrixBig Airco

Small

AircoComml

Ex

tern

al

Reliability S

Response A

Flexibility A

Inte

rna

l Cost P

Assets P

Each unique combination of

ratings defines Your Supply

Chain Strategy for the channel

Ratings are a desired state,

NOT where you want to

improve the most

One S, Two A, Two P is the

rule, but you may also have

One S, One A, Three P

S

A

A

P

P


Supply Chain SCORcard

Definition

We use a tool called the SCORcard to define the metrics of most interest to an organization, to arrange them by area of impact, by strategic linkage, and to provide a container for later benchmarking comparisons. Each SCORcard is built from a subset of hundreds of SCOR metrics.

For Supply Chain benchmarking we generally use only Level 1 or Level 2 Metrics

The SCOR Manual provides all necessary definitions

Hazards

Without clearly defined supply chains, SCORcards may contain aggregate data of conflicting supply chain types e.g. BTO and BTS together. Without strategy, metrics chosen are not clearly linked to strategic priorities


Attribute Strategic metric

Reliability RL.1.1 Perfect Order Fulfillment

Responsiveness RS.1.1 Order Fulfillment Cycle Time

Agility AG.1.1 Upside Supply Chain Flexibility

AG.1.2 Supply Chain Upside Adaptability

AG.1.3 Supply Chain Downside Adaptability

AG.1.4 Overall Value at Risk (VaR)

Cost CO.1.1 Supply Chain Management Cost

CO.1.2 Cost of Goods Sold

Assets AM.1.1 Cash-to-Cash Cycle Time

AM.1.2 Return on Supply Chain Fixed Assets

AM.1.3 Return on Working Capital

Measuring strategy: KPIs are strategic (level-1) metrics

Custo

mer

Inte

rnal

SCOR Level-1 Metrics (KPIs)


Competitive Benchmarking

Relies on external, usually anonymized data source

Demographics must match size, planning model, region,

and product scope of benchmarked supply chain

Generally requires submitting data to merge into master

benchmark data set

Attribute Metric (level 1) You Parity Adv Sup Gap Step

Reliability S Perfect Order Fulfillment 97% 85% 90% 98% 1% 1

Response A Order Fulfillment Cycle Time 14 days 23 days 15 days 5 days -1 Days 0

Flexibility P Ups. Supply Chain Flexibility 62 days 63 days 62 days 60 days 0 0

Cost P Supply Chain Mgmt Cost 12.2% 10.8% 10.4% 10.2% 1.4% 1

Assets A Cash-to-Cash Cycle Time 35 days 15 days 13 days 10 days 22 Days 2


Align Performance


Metrics decomposition, including linkage to process

Material Flow Diagram as is

Thread diagram as is

Prioritize L-2 process based on contribution to gap (pareto)

RACI diagram by metric and by process

Best practices assessment Level-2 process level

Brainstorm level-2

Affinity Diagram level-2

Create list of process changes with anticipated gap impact

Prioritize process changes

Materials Flow Diagram to be

Thread Diagram to be

Performance

Determine Supply Chain RequirementsAlign Supply Chain Performance


Drive Supplier

D1, P1, P4Battery Supplier

D1, P1, P4

Retail, Inc

S1, P2

MP3 Factory

P3, S1, M1, D1

HQ

P1, P2, D2, S2

The Geographic Map


Best Practices Analysis Worksheet

Function Process Practice Value Level

Western

Plant

S1 Joint Service Agreements (USA) true 1

Collaborative Planning Systems true 1

Select Suppliers with EMS false

Utilize green purchasing practices false

M1 Accurate and Approved Work Instructions/Process Plans true 1

Accurate and Low Cost Batch/Configuration Records for Warranty and Regulatory Tracking true 1

Cellular Manufacturing true 3

Demand-Pull Manufacturing, Including Active Reduction of Manufacturing Systems Time and WIP

Through the Use of Demand-Pull Mechanisms and Visual Controlstrue 3

Lean Manufacturing true 3

Link Individual Performance to Organizational and Divisional Goals true 2

Organize to Enhance Flexibility: Few Job Classifications, Self-Directed Work Force, Flat Management

Structure, Cross-Functional Work Teamstrue 3

Paperless Order Tracking and Customer Visibility of Orders true 2

Paperless Production Order and Inventory Tracking true 2

Performance Results that Are Compared to Benchmarks (i.e. Capacity, Scheduling) and Readily

Available to Employeestrue 3

Posted Performance Results true 1

Postponement true 1

Production Level Loading true 2

Provide Continuous Formal Training to Employees true 2

Vendor Managed Inventory false

Migrate from Build to Stock to Configure to Order; Build Subassemblies to Forecast at the Highest

Generic Level in the Bill of Material/Recipe/Formulafalse


Align Process

Steps, tools and templates Capture Process Flows as is (TYTAO, process worksheets,

process workflow)

Best Practices Assessment level -3 PCE map

Value Stream Map

Brainstorm level-3 Affinity Diagram level-3 Documents Process Flows to be (TYTAO, process worksheets,

process workflow)

Simulation

Impact documentation business rules Impact documentation organization Impact documentation systems, business requirements document Impact documentation Skills Risk/Reward

Prioritized resource requirements

Process

Determine Process Requirements Align Process Definition


D1.3Reserve Inv.

Calculate Date

Result: The Workflow Diagramm

p3

HQ

(Cu

pe

rtin

o)

mp

3 F

acto

ry

(Shenzhen)

Re

tail,

in

c.

(Am

ste

rdam

)

D2.2Receive, Enter,

Validate Order

D2.3Reserve Inv.

Calculate Date

S1.1Schedule Prod.

Deliveries

Customer P.O. Delivery Commit

S2.1Schedule Prod.

Deliveries

D1.2Receive, Enter,

Validate Order

Inter-Company P.O.

C.O. = Customer Order, Inv. = Inventory, P.O. = Purchase Order, Prod. = Product

C.O. C.O.


Example Value Stream Map

sS1.1

Schedule

Orders

C/T = 5mn

Up = 79.17%

0.5 FTE

sS1.2

Receive

Material

C/T = 5mn

Up = 92.5%

0.5 FTE

sS1.3

Verify Material

C/T = 1mn

Up = 97.5%

0.5 FTE

sS1.4

Transfer

Material

C/T = 15mn

Up = 93.75%

0. 5 FTE

sS1.5

Authorize

Payment

C/T = 1mn

Up = 97.5%

0.25 FTE

sS1.3

Establish

Sourcing Plans

Supplier Make

5 mn 5 mn 1 mn 15 mn 1 mn

2 d 1 mn 5 mn 15 mn


Example PCE Analysis

0

5

10

15

20

25

30

35

Sched Delivery Receive Product Verify Product Transfer Product Payment

sS1.1 sS1.2 sS1.3 sS1.4 sS1.5

Idle Time

Transact Time

Transact

Time

Idle

Time

Transact per

HourFTE Rework/Day PCE Yield Waste

sS1.1 Sched Delivery 5 5 3 0.5 5 50.00% 79.17% 20.83%

sS1.2 Receive Product 5 1 5 0.5 3 83.33% 92.50% 7.50%

sS1.3 Verify Product 1 5 5 0.5 1 16.67% 97.50% 2.50%

sS1.4 Transfer Product 15 15 2 1 1 50.00% 93.75% 6.25%

sS1.5 Payment 1 2 5 0.25 1 33.33% 97.50% 2.50%


Example Process Yield Analysis

Transact

Time

Idle

Time

Transact per

HourFTE

Rework/Da

yPCE Yield Waste

sS1.1 Sched Delivery 5 5 3 0.5 5 50.00% 79.17% 20.83%

sS1.2 Receive Product 5 1 5 0.5 3 83.33% 92.50% 7.50%

sS1.3 Verify Product 1 5 5 0.5 1 16.67% 97.50% 2.50%

sS1.4 Transfer Product 15 15 2 1 1 50.00% 93.75% 6.25%

sS1.5 Payment 1 2 5 0.25 1 33.33% 97.50% 2.50%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Sched Delivery Receive Product Verify Product Transfer Product Payment

sS1.1 sS1.2 sS1.3 sS1.4 sS1.5

Waste

Yield


Align Resources


Skills inventory

Skills Map (training & hiring needs)

Process standard operating procedure rewrite list (instruction

needs)

Technology needs list -> no standards

Assess organization charts

Program plan (change management plan)

Assets

Determine Resource Capabilities Align Resource Allocation


Skills Analysis Worksheet

Area L2 L3 Skill ValidCurr

Level

Curr

FTE

Target

Level

Target

FTE

Train

Gap

FTE|

Gap

Western

Plant

S1 S1.1 HS.0001 3-way Receiving Match TRUE 3 2 2 3 1 1

HS.0009 Bar Code Handling/RFID (if available) TRUE 3 2 2 3 1 1

HS.0027 Cross Docking FALSE 0 0

HS.0033 Data management TRUE 4 0.5 2 1 2 0.5

HS.0034

Defective/Missing

Product/Discrepancy Reporting and

Resolution

FALSE 0 0

HS.0046 ERP Systems TRUE 3 0.5 2 1 1 0.5

HS.0049 ID & Damage Inspection TRUE 3 2 3 2 0 0

HS.0058 Inventory Management FALSE 0 0

HS.0066 Legislation and Standards TRUE 3 0.25 1 0.5 2 0.25

HS.0069 Logistics Management TRUE 1 0.5 1 1 0 0.5

HS.0071 Logistics/Freight TRUE 2 0.5 1 1 1 0.5

HS.0080

MSDS/CoC/BoL/Environmental

InterpretationFALSE 0 0

HS.0106 Property Control and Disposition TRUE 3 1 2 1 1 0

HS.0119 Return Management

FALSE 0 0

HS.0139

Supplier Relationship Management

(SRM)TRUE 1 0.5 1 1 0 0.5

Staff:9.7

5

Train:

9

Hire:4.7

5


Opportunity Analysis Aggregate

Opportunity Analysis

Project Named/Number Example Project

Description Example Booking

Year of Impact

Baseline 2006 2007 2008 2009 2010

Net Sales $705,600

Cost of Sales

Total Cost of Sales $527,600 0 182 147 147 25

Gross Profit $178,000 0 (182) (147) (147) (25)

Supply-Chain Management Expense

Order Management Cost $28,102 (45) (460) (455) (250) (150)

Material (Product Acquisition) Cost $10,796 - (796) (860) (750) (251)

Planning and Finance Cost $5,086 - (372) (240) (240) (145)

Inventory Carrying Cost $21,510 - (1,528) (1,145) (1,005) (920)

IT Cost for Supply-Chain -0-

Total Supply-Chain Management Expense $65,494 (45) (3,338) (2,847) (2,392) (1,491)

Operating Income $76,800 45 3,520 2,944 2,539 1,516


THE VALUE OF SCOR


SCM Asset Returns: Superior Valuation

Comparison of Fortune-1000 Council member company share price aggregate growth from 2003 present to S&P 500 and DOW indices.

Growth inflected after 2 years, and the spread between SCOR index companies and other industrials has grown to almost 30 points.

Growth is increasing exponentially: Compound interest on SC performance.

Correlates SCC Membership/SCOR investments with Shareholder value.

Same pattern evident in FTSE-100, DAX, NIKKEI and other indices.


More Value1

Improvement of operating results of an average of 3% in the initial SCOR implementation phase by means of cost reduction and improvement in customer services

Increase in profitability (between 2x and 6x) with regards to project investments costs within first 12 months of implementation

Reduction in IT costs through minimizing system customization and making better use of standard functionality

Continuous actualization of process change portfolio by continuous conversion of Supply Chain improvements with the objective of increasing annual profits by 1% to 3%

1Poluha (2007) Application of the SCOR Model in Supply Chain Management New York, USA


Typical Potential Improvements1

Area Improvement

Raw materials purchase cost 25%

Cost of Distribution 35%

Total resource deployed 50%

Manufacturing space 50%

Investment in Tooling 50%

Order cycle time 60%

New product development cycle 60%

Inventory 70%

Paperwork and Documentation 80%

Quality Defects 100%1Hughes & Michels (1998) Transform your supply chain. Releasing value in business. London, UK


About Supply Chain Council

SCC is an independent, not-for-profit, trade association

Membership open to all companies and organizations

Founded in 1996

Regional representation (chapters) worldwide: North America,

Europe, Japan, Southern Africa, Latin America, Australia/New

Zealand, Southeast Asia, Greater China, and Middle East

Focus on research, application and advancement and advancing

state-of-the-art supply chain management systems and practices

Developer and endorser of the Supply Chain Operations Reference

(SCOR) as a cross-industry standard for supply chain management

Offers Training, Certification, Benchmarking, Research, Team

Development, Coaching, and Cross-standard Integration focused on

the SCOR framework

Approaching 1000 Association Members within global chapters


Sample of Industry Membership Scope


MANY THANKS!

W: www.supply-chain.orgE: [email protected]

[email protected]

[email protected]

[email protected]

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