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Supply Chain Council&
Supply Chain Operations Reference (SCOR)Model Overview
Scott Stephens
Chief Technology Officer
Supply-Chain Council, Inc.
303 Freeport Road
Pittsburgh, PA 15215 USA
www.supply-chain.org
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Supply Chain Management Changing Times
! Eighteen months ago boom! Central issues
!Revenue Capture!Demand forecast
!Speed! One month ago bust
! Central Issues!Cost!
Inventory! Now Uncertainty! Emerging Issues
!Just-in-case vs. just-in-time!Consumer confidence
! Supply chain management is now a watchword in business, WallStreet, and in the news media
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Supply Chain Management&
The Supply Chain Council
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The SCC is an independent, not-for-profit, global corporation withmembership open to all companies and organizations interested inapplying and advancing state-of-the-art supply chain managementsystems and practices.
Over 700 Company Members
Cross-industry representation
Chapters in Australia/New Zealand, Europe, Japan, Korea,Latin America, and South East Asia with petitions for additionalchapters pending.
Over 30 new members per month
The Supply-Chain Council (SCC) has developed and endorsed theSupply Chain Operations Reference-model (SCOR) as the cross-industry standard for supply chain management
The SCC was organized in 1996 by Pittiglio Rabin Todd & McGrath (PRTM) and AdvancedManufacturing Research (AMR), and initially included 69 voluntary member companies
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SCC Organization - Chapters and Staffing
SydneyAustralia / New Zealand
Accantia
SydneyAustralia / New Zealand
Accantia
SingaporeSouthEast Asia
Intel
SingaporeSouthEast Asia
Intel
Tokyo, Japan
Hitachi
Tokyo, Japan
Hitachi
Seoul, Korea
Korean Management
Assoc.
Seoul, Korea
Korean Management
Assoc.
Mexico City, Latin America
EXEL
Mexico City, Latin America
EXEL
Pittsburgh, PA
Bayer
Headquarters*Executive Director
Pittsburgh, PA
Bayer
HeadquartersHeadquarters*Executive Director
Amsterdam- Europe
Siemens
Amsterdam- Europe
Siemens
Under Development: Hong Kong, India
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Membership
! 700+ SCC members,! Compos i t ion
! 40%: Pract i t io ners
! 25%: Enabl ing Techno logy Provid ers
! 20%: Consul tants! 15%: Universi t ies, Associat ion s, Government Organizat ions
S CC Member Compos i tion
P ractitioners
S oftw are V en dors
C on sultants
U niversities/G ov.
O rgs /A ssns .
S CC Members hip by R egion
N orth A m e rica
E urop e
Japan
O the r
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C-Dennis Zagrodnik Daimler/Chrylser
VC -Paul Welch - Nokia
Current Technical Committee Structure
Integration Committee
Plan Committee
Source Committee
Make Committee
Deliver Committee
Metrics Committee
C-Peter Bolstorff Pragmatek
V-Larry Gray CobreGroup
C-Katie Kaspar -
VC -Oscar ChappelTech Connection C -Ed Biancarelli Washington Group
VC -Irving Briks BellSouth
C -Dan Swartwood Pragmatek
VC - Rick Hughes Lockheed Martin
Intel Siemens
RosettaNet
George Brown INTELHerbert Heinzel - Siemens
C- Major Scott Koster (USMC)
Return Committee
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Supply-Chain Operations Reference-model(SCOR) Overview
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Quantify theoperationalperformance ofsimilar companiesand establishinternal targetsbased on best-in-
class results
Quantify theoperationalperformance ofsimilar companiesand establishinternal targetsbased on best-in-
class results
Benchmarking
Characterize themanagementpractices andsoftware solutionsthat result in best-in-classperformance
Characterize themanagementpractices andsoftware solutionsthat result in best-in-classperformance
Best PracticesAnalysis
Process ReferenceModel
Capture the as-isstate of a process
and derive thedesired to-befuture state
Capture the as-isstate of a processand derive thedesired to-befuture state
Business ProcessReengineering
Capture the as-is stateof a process and derivethe desired to-be futurestate
Quantify the operationalperformance of similarcompanies and establishinternal targets based onbest-in-class results
Characterize themanagementpractices andsoftware solutionsthat result in best-in-class performance
What is a process reference model?
! Process reference models integrate the well-known concepts ofbusiness process reengineering, benchmarking, and processmeasurement into a cross-functional framework
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Supplier
Plan
CustomerCustomersCustomer
Suppliers
Supplier
Make DeliverSource Make DeliverMakeSourceDeliver SourceDeliver
Internal or External Internal or External
Your Company
Source
SCOR is structured around five distinctmanagement processes
SCOR ModelSCOR Model
Return Return ReturnReturn Return Return
Return Return
Building Block Approach
Processes Metrics
Best Practice Technology
Supply Chain Operations Reference model
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Customers
Su
ppliers
P1 Plan Supply ChainPlanPlan
P2 Plan Source P3 Plan Make P4 Plan Deliver
Source Make Deliver
S1 Source Stocked Products M1 Make-to-Stock
M2 Make-to-Order
M3 Engineer-to-Order
D1 Deliver Stocked Products
D2 Deliver MTO Products
D3 Deliver ETO Products
S2 Source MTO Products
S3 Source ETO Products
Supply-Chain Operations Reference-model(SCOR) 5.0 - Processes
Return
Source
P5 Plan Returns
Return
Deliver
Enable
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#
Level
Schematic Comments
1
2
3
4
ConfigurationLevel
(ProcessCategories)
ProcessElement Level
(DecomposeProcesses)
Plan
DeliverMakeSource
A companys supply chain can be configured-to-order at Level 2 from approximately 24 core processcategories.
Companies implement their operations strategythrough their unique supply chain configuration.
Companies fine tune their Operations Strategy atLevel 3
Level 3 defines a companys ability to competesuccessfully in its chosen markets and consists of: Process element definitions Process element information inputs and outputs Process performance metrics Best practices, where applicable System capabilities required to support best
practices
ImplementationLevel
(DecomposeProcess
Elements)
Companies implement specific supply chainmanagement practices at this level
Level 4 defines practices to achieve competitiveadvantage and to adapt to changing businessconditions
Su
pplyChainOperationsReference
model
Top Level
(Process Types)
Level 1 defines the scope and content for the SupplyChain Operations Reference model
Here basis of competition performance targets are set
Notin
Scope
Description
Balance Production Resources withProduction Requirements
Establish DetailedProduction Plans
Identify, Prioritize, and AggregateProduction Requirements
Identify, Assess, and AggregateProduction Resources
P3.1
P3.3 P3.4
P3.2
SCOR Contains 3 Levels of Detail
ReturnReturn
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Mapping material flow
Latin AmericanLatin American
SuppliersSuppliers
(D1)
WarehouseWarehouse
Other SuppliersOther Suppliers(D1)
ManufacturingManufacturing
European SupplierEuropean Supplier(S1)
(SR1,SR3)
Customer
Customer
Customer
Customer
(S1, D1)(SR1,DR1,DR3)
(S1, S2, M1, D1)
(SR1,SR3,DR3)
(D2)
(DR1)
WarehouseWarehouse
WarehouseWarehouse
WarehouseWarehouse
(S1, D1)(SR1,DR1,DR3)
(S1, D1)(SR1,DR1,DR3)
(S1, D1)(SR1,DR1,DR3)
(S1)
(SR1,SR3)
(S1)
(SR1,SR3)
(S1)
(SR1,SR3
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Mapping the processes
Consumer
P2P2
P4P4
P3P3
P4P4
S1 D1 S1
P2P2
P2P2
P3P3
P4P4
M2S2 D2
M1 D1 S1S2D1
M1
EuropeanRM Supplier
EuropeanRM Supplier
Key OtherRM
Suppliers
Key OtherRM
Suppliers
S1
AlphaRegional
WarehousesRM Suppliers ConsumerALPHA
P1P1
P1P1
P1P1
Li ki S l Ch i P f Att ib t d
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PerformanceAttribute
Performance Attribute Definition Level 1 Metric
Supply ChainDelivery Reliability
The performance of the supply chain indelivering: the correct product, to the correctplace, at the correct time, in the correct condition
and packaging, in the correct quantity, with thecorrect documentation, to the correct customer.
Delivery Performance
Fill Rates
Perfect Order Fulfillment
Supply ChainResponsiveness
The velocity at which a at which a supply chainprovides products to the customer.
Order Fulfillment Lead Times
Supply ChainFlexibility
The agility of a supply chain in responding tomarketplace changes to gain or maintaincompetitive advantage.
Supply Chain Response Time
Production Flexibility
Supply Chain Costs The costs associated with operating the supplychain.
Cost of Goods Sold
Total Supply Chain ManagementCosts
Value-Added Productivity
Warranty / Returns ProcessingCosts
Supply Chain AssetManagementEfficiency
The effectiveness of an organization in managingassets to support demand satisfaction. Thisincludes the management of all assets: fixed and
working capital.
Cash-to-Cash Cycle Time
Inventory Days of Supply
Asset Turns
Linking Supply Chain Performance Attributes andLevel 1 Metrics
upp y a n car ap na ys s
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upp y a n car ap na ys sNEW Product Line
50%
$30M Revenue
$30M Indirect Cost
35 days
97 days
0%
63%
Supply Chain SCORcard Performance Versus Comp et i t ive Populat ionOverview Metrics SCOR Level 1 Metrics Actual Parity Advantage Superior Value from Improvements
Delivery Performance to
Commit Date85% 90% 95%
Fill Rates 94% 96% 98%
EXTER
NAL
SupplySupply
ChainChain
ReliabilityReliability
Perfect Order Fulfillment 80% 85% 90%
Order Fulfillment Lead times7 days 5 days 3 days
Flexibility
Responsiveness
Production Flexibility 30 days 25 days 20 days
Total SCM ManagementCost 19% 13% 8% 3%
INTERNAL Cost Warranty Cost NA NA NA NA NA
Value Added Employee
ProductivityNA $156K $306K $460K NA
Inventory Days of Supply 119 days 55 days 38 days 22 days NA
AssetsCash-to-Cash Cycle Time
196 days 80 days 46 days 28 days
Net Asset Turns (Working
Capital)2.2 turns 8 turns 12 turns 19 turns NA
Supply Chain ResponseTime 82 days 55 days 13 days
45 days
$7 M Capital Charge
Key enabler to cost andasset improvements
$30M Revenue
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S1 D1 S1
M2S2 D2
M1 D1 S1
S2
D1M1
S1
Cycle Time
ScheduleAchievement
Perfect OrderFulfillment
DeliveryPerformance
Supplieron time delivery
Perfect OrderFulfillment
Supplieron time delivery
Perfect OrderFulfillment
On Time
In Full
Docs
Damage
On Time
In Full
Docs
Damage
RevenueAccounts Receivable
Cash Flow
Decomposing Metrics
EuropeanRM Supplier
EuropeanRM Supplier
Key OtherRM
Suppliers
Key OtherRM
Suppliers
ConsumeAlpha
RegionalWarehouses
RM Suppliers ConsumerALPHA
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Consumer
RMSuppliers
S1 D1 S1
M2S2 D2
M1 D1 S1
S2
D1M1
S1
Cycle Time
ScheduleAchievement
Perfect OrderFulfillment
DeliveryPerformance
Supplieron time delivery
Perfect OrderFulfillment
Supplieron time delivery
Perfect OrderFulfillment
On Time
In Full
Docs
Damage
On Time
In Full
Docs
Damage
RevenueAccounts Receivable
Cash Flow
Perfect OrderFulfillment
Actual - 85%
Perfect OrderFulfillmentGoal 95%
ScheduleAchievementActual 95%
Perfect OrderFulfillment
Actual 90%
Delivery
PerformanceActual 99%
Supplieron time delivery
Actual 85%
MetricsConflict
Inventory
Under-performance
Process
Systems
Under-performanceProcess
Systems
Performance Measurement
ConsumeAlpha
RegionalWarehouses
RM Suppliers ConsumerALPHA
EuropeanRM Supplier
EuropeanRM Supplier
Key OtherRM
Suppliers
Key OtherRM
Suppliers
SCOR Project Roadmap
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Material FlowMaterial Flow
SCOR Level 1
OperationsOperations
StrategyStrategy
Analyze Basisof
Competition
SCOR Level 2
Configuresupply chain
AlignPerformance
Levels, Practices,and Systems
Implementsupply chain
Processes andSystems
Implementsupply chain
Processes and
Systems
SCOR Project Roadmap
Competitive Performance RequirementsPerformance MetricsSupply Chain ScorecardScorecard Gap AnalysisProject Plan
AS IS Geographic MapAS IS Thread DiagramDesign SpecificationsTO BE Thread DiagramTO BE Geographic Map
Informationand Work Flow
AS IS Level 2, 3, and 4 MapsDisconnectsDesign SpecificationsTO BE Level 2, 3, and 4 Maps
Develop,Test, andRoll Out
OrganizationTechnologyProcessPeople
SCOR Level 3
SCOR I l t ti
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SCOR Implementations
! Plan, development, and formation of a company to support a new product line
(Complete)! Re-engineering of supply chain processes for a corporation (138 divisions, 190
countries, 770 sites) (In process)
! Implementation of SCOR processes corporate-wide
! Level 1 Metrics used as executive evaluation criteria
! Re-organization of logistics groups into Plan, Source, Make, Deliver (Complete)
! Multiple organizations
! Collaborative forecasting
! Contracts and purchase orders
Thinking is easy, acting is difficult, and
to put one's thoughts into action is the
most difficult thing in the world. Goethe
SCOR P j t A Wid R f Ad ti
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SCOR Projects A Wide Range of AdoptionSCOR Projects A Wide Range of Adoption
! Consumer Foods
! Project Time (Start to Finish) 3 months
! Investment - $50,000 US
! 1st Year Return - $4,300,000 US
! Electronics
! Project Time (Start to Finish) 6 months
! Investment - $3-5 Million US
! Projected Return on Investment - $ 230 Million US
! Software and Planning
! SAP bases APO key performance indicators (KPIs) on SCOR Model
! Aerospace and Defense
! SCOR Benchmarking and use of SCOR metrics to specify performancecriteria and provide basis for contracts / purchase orders
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Supply Chain Council Outreach
! SCOR Workshops (2000)
! Atlanta, January 20-21
! Chandler, AZ (Intel), February 8-9
! Fountainbleu, March 9-10
! Oregon (Intel) March 28-29
! Chicago, April 12-13
! Sydney, May 4-5
! Singapore, June 1-2
! Detroit, June 22-23
! London, July 11-12! Philadelphia (SAP), July 18-19
! Waldorf, Germany (SAP), August 1-2
! Auckland, NZ, August 3-4
! Singapore (SAP), August 8-9
! Chandler, AZ (Intel) August
! Amsterdam, September 28-29
! Tokyo, October 5-6
! Mexico City, October 12-13
! St. Louis, October 26-27
!Sydney, November 6-16 (3 - public, SAP, CHH)
! Hanover, Germany November 9-10
! Oslo, Norway Dec 3-5
!Currently working with Intel to develop an instructor training course
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2000 - 2001 Technical Accomplishments
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2000 2001 Technical Accomplishments
! Released Version 5.0! Completed Return Processes
! Began updating the Models best practice (e-business)
! Began metrics restructure and glossary update
! (Note of caution to users previous to SCOR 5.0)! Research
! Joint APICS research publication
! Continued support of Penn State / Manugistics Research
! Formation of Research Strategies Advisory Board! Workshop material development and conduct
! 5 versions of workshop developed and delivered Over 500members have attended SCOR Workshops with companies likeIntel, HP, EDS, US Department of Defense, Compaq Baxter, SAP,
hosting in-house Workshops
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SCOR Model Timeline - 6.0
! After completing Version 5.0 changes committees began workingVersion 6.0 - tentatively scheduled for release in Spring 2002
!Metrics Revision and Decomposition Trees! Return Metrics and Best Practice Complete
! Best Practice and e-Business Improvement
!Collaboration
SCOR Model Directions
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SCOR Model Directions
! Changes anticipated to shift from structural issues to implementationissues
! Product Development
! Customer/Supplier Relationship Management
! Import / Export! E-business
! Reverse logistics / warranty returns
! Inventory optimization
! Service environment! Synchronizing advanced planning and business planning
! Special Industry Groups / International Chapters
! Finance and metrics
! Benchmarking regional issues
SCC provides the forum - SCOR documents the
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plearning
! Process Model provides a toolset for rapidly modeling and understanding thesupply chain
!
Metrics provide a toolset for evaluating the supply chain and rapidly identifyinghigh value opportunities
! Best practices and features provide a candidate list of improvement options
! The SCOR Model is the only model of its type that links these elements andprovides a means for assessment of the supply chain outside of the individual
organization! Council members have demonstrated dramatic implementation successes in
virtually every industry in every region of the world.
! The pace and number of SCOR implementations is accelerating and more and
more organizations are adopting SCOR as the framework for their supply chainimprovements.
The Bottom Line -
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The Bottom Line
! Council members have demonstrated dramatic implementationsuccesses in virtually every industry in every region of the world.
! The pace and number of SCOR implementations is accelerating andmore and more organizations are adopting SCOR as the framework fortheir supply chain improvements.