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Supply Chain Operations Reference (SCOR) Model Convergence with Lean and Six Sigma

Using Supply Chain Architecture to Manage Enterprise TransformationTransformation

SCORSCOR

LEANLEAN

ConvergeConverge

SIXSIX

SIGMASIGMA

Matthew J. Milas

© 2006 Matthew Milas

Agenda

What is Convergence

How is SCOR Used for Convergence

C i f M th d l iComparison of Methodologies

Benefits of Convergenceg

Why Convergence

2


Integrated Improvement… SCOR, Six Sigma and Lean

SCOR, Six Sigma and Lean aim to improve the business by optimizing system performance, reducing variation, and eliminating wasteful activities.

LeanSix Sigma

Y= f (X1= f (X= f (X1 , ... , XN, ... , X, ... , XN )

SCOR

μ

σ

• Speed in the value chain• Waste elimination• Value system redesign

• Variation reduction• Problem solving methodology• Stability and accuracy

• Top-Down Analysis• End-to-End View• Optimizing supply-chain

as a whole

3


Convergence is a Coordinated Approach

Business StrategyLean 6σ

SCOR

Combined

SCOR

Strategy

Supply Chain Benchmarking

Supply Chain

SYMB

Lean Six

Supply Chain Assessment

Value Stream Mapping



IOTIC

SYNERGISTIC

Lean Six Sigma Six Sigma Projects

and Kaizen

Bottom-line Results

Six Sigma Projects and Kaizen

Bottom-line Results

Six Sigma Projects and Kaizen

Bottom-line Results

C

4

ResultsResultsResults


The SCOR Framework

SCOR defines supply chain as the integrated processes of Plan, Source, Make, Deliver and Return, spanning your suppliers’

li t t ’ t li d ith O ti l supplier to your customers’ customer, aligned with Operational Strategy, Material, Work & Information Flows.

Plan

PlanPlanPlanPlan

Make DeliverSource Make DeliverMakeSourceDeliver SourceDeliverSource

PlanPlanPlanPlan

Supplier Customer Customer’sCustomer

Suppliers’Supplier

Internal or External Internal or External

YOUR COMPANY

Return

5

Supply Chain Operations Reference Model


What is a Process Reference Model?

Process reference models integrate the well-known concepts of business process reengineering benchmarking and process

Best Practices Process ReferenceBusiness Process

business process reengineering, benchmarking, and process measurement into a cross-functional framework

BenchmarkingBest Practices

AnalysisProcess Reference

Model

Capture the “as-is” state of a process and derive the

Business Process Reengineering

Capture the “as-is” state of a process and derive the desired “to-be” future

Quantify the operational performance of similar companies and establish internal targets

and derive the desired “to-be” future state

Quantify the operational performance of similar companies and establish

the desired to-be future state

internal targets based on “best-in-class” results Characterize the

management practices and software solutions that result in “best-in class”

companies and establish internal targets based on “best-in-class” results

Characterize the management practices and

ft l ti

6

in-class performance software solutions

that result in “best-in-class” performance


SCOR Structure for Convergence

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Example SCOR Geo Map – Aerospace Mod Kits

Manufacturer Sqdn

S1, DR1, DR2

S1, DR1, DR2

Supplier B

S1, S2, M2, D2

D2

D1Supplier C

Supp e

Supplier ASqdn

D2

S1, DR1, DR2 Distribution

Sqdn

S1, D1, DR1, DR2

8


DeliveryExample Problem Identification

P1P1

P1P1

Delivery PerformanceGoal – 90%

Delivery Performance Actual - 66%

P

11

PP

11

P

P3P3

Actual - 66%Supplier

on time deliveryActual – 95%

Candidate for: P4P4

P2P2

P4P4

P2P2

D2

D2

S2

S2• Level 3 Process Review• Kaizen• Lean Event

D1 S1 S1M1 D1 S1 D1• Six Sigma• Process Improvement

SuppliersS d

9

Distribution centerManufacturerLevel 1 Level 2

Squadron


S 1.4Exceeding Requirements

Meeting Requirements

Level 3 SCOR VSM Map

Transfer Product

Meeting Requirements

Missing Requirements

Unknown Transportation 0.5 days

M 2.1 M 2.2

Issue

M 2.3 M 2.4 M 2.5 M 2.6Manufacturing

Schedule Productio

n Activities

Issue Sourced /

In-Process Product

Produce and Test Package

Stage Finished Product

Release Finished Product

to DeliverI

10 days 5 days 3 days 1 day

D 2.1 D 2.2 D 2.3Reserve

D 2.4 D 2.5 D 2.6 D 2.7 D 2.9D 2.8Sales

30 days

Process Inquiry

and Quote

Receive, Configure, Enter

and Validate Quote

Reserve Resource

s & Determine Delivery

DateConsolid

ate Orders

Build Loads

Route Shipment

s

Select Carriers & Rate

Shipments

Pick Product

Receive Product

from Source or

MakeI I I II

10

I I I II25 days

10 days

4 days15 days

6 days12 days

15 days5 days

5 days1 day60 days


Convergence Implementation Approach

Identify

SCOR PrioritizeOpportunitiesPlan Strategy

& BenchmarkOpportunities

Measure Allocate

LeanImprovement

Allocate Resources

Six SigmaImplement Solutions Discover

Select Approach

11

Discover Root Causes


Comparison of Methodology Strengths

12


Benefits of Convergence

Standard framework

System’s opportunity identification

S t i ibilitSystem visibility

13


Benefits of a Standard Framework

Standard process and metrics framework for organizing enterprise processes and improvements– Manage processes across enterprise– Common processes across “different” products,

programs & business unitsprograms, & business units– Measure, track, categorize, and align operational

improvements– Library of categorized best practices– Cataloging system for process improvement ideas

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Benefits of Opportunity Identification

High-level system’s process assessment tool

– Identifying, prioritizing, and aligning improvements• Prioritizing based on alignment to specific strategies, system g g p g , y

impact, focus area, or other criteria

– Linking business strategy to improvement effortsLinking business strategy to improvement efforts• Resource planning and allocation

Strategic competitive assessment and benchmarking– Strategic competitive assessment and benchmarking• Internal processes across enterprise• External competitive performance with system metrics

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Benefits of System Visibility

A system’s view of processes & performance– Map the whole system to avoid system sub-

optimization through local optimizationIdentify constraints and critical paths to improve– Identify constraints and critical paths to improve performance

– Manage multiple projects running concurrently across g j g yenterprise

– Identify high-level improvement disconnects and opportunitiesopportunities

– Collaborate with suppliers and customers to improve relations

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Why Convergence

Large companies experience disarray implementing ti i tcontinuous improvement

– Lack of “true” leadership and cultural change management– Lack of architecture for managing enterprise transformation

An Imperfect world is the reality, but we must continue to competep

Convergence instills a structured approach that is more systematic, manageable, and holistic y g– Mitigates imperfections and augments continuous improvement

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Convergence bridges the gap between strategic enterprise planning, continuous improvement, and transformation

Download - Scor Model Convergence With Lean & Six Sigma

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