SCOR Benchmarking - Presentation

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SCOR Benchmarking - Presentation

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<ul><li><p>Keeping SCOR in your Supply ChainBenchmarking</p><p>Joseph FrancisExecutive Director Supply-Chain Council</p><p>SCOR Benchmarking - Presentation</p></li><li><p>SCOR BenchmarkingUnderstand the Context of SCORProcessMetricsBest PracticesUnderstand the 7 Steps of a Benchmarking ProgramSupply Chain CouncilHistoryValue*SCOR Benchmarking - Presentation</p><p>SCOR Benchmarking - Presentation</p></li><li><p>What is a Supply-ChainSCOR Benchmarking - PresentationSupplier processesProduct DesignDCORCustomer processesSupply Chain SCORSales &amp; Support CCORProduct Management*</p><p>SCOR Benchmarking - Presentation</p></li><li><p>The SCOR model an industry open standard SCOR is a supply chain process reference model containing over 200 process elements, 550 metrics, and 500 best practices including risk and environmental management Organized around the five primary management processes of Plan, Source, Make, Deliver and ReturnAny interested organization can participate in its continual developmentSCOR Benchmarking - PresentationSupplierCustomerCustomers CustomerSuppliers SupplierMakeDeliverMakeDeliverMakeSourceDeliverSourceInternal or ExternalInternal or ExternalYour CompanySource*</p><p>SCOR Benchmarking - Presentation</p></li><li><p>SCOR ProcessesSCOR Benchmarking - PresentationS1 Source Stocked ProductSupply-ChainSourceS1.2 Receive ProductStandard SCOR definitionsCompany/Industry definitionsEDIXML*</p><p>Level 1Level 2Level 3Level 4Level 5ScopeConfigurationActivityWorkflowTransactions</p><p>Differentiates BusinessDifferentiates ComplexityNames TasksSequences StepsLinks TransactionsDefines ScopeDifferentiates CapabilitiesLinks, Metrics, Tasks and PracticesJob DetailsDetails of AutomationFramework LanguageFramework LanguageFramework LanguageIndustry or Company Specific LanguageTechnology Specific Language</p><p>SCOR Benchmarking - Presentation</p></li><li><p>Performance MetricsSCOR metrics: Standard Strategic (Level 1) MetricsSCOR Benchmarking - Presentation upside and downside adaptability metrics CustomerInternal*</p><p>AttributeMetric (Strategic)ReliabilityPerfect Order FulfillmentResponsivenessOrder Fulfillment Cycle TimeAgilitySupply Chain FlexibilitySupply Chain AdaptabilityCostSupply Chain Management CostCost of Goods SoldAssetsCash-to-Cash Cycle TimeReturn on Supply Chain Fixed AssetsReturn on Working Capital</p><p>SCOR Benchmarking - Presentation</p></li><li><p>Best PracticesBest practice: "A current, structured, proven and repeatable method for making a positive impact on desired operational results."</p><p>Current Must not be emerging and can not be antiquatedStructured Has clearly stated Goal, Scope, Process, and ProcedureProven Success has been demonstrated in a working environment and can be linked to key metricsRepeatable The practice has been proven in multiple environments.</p><p>SCOR Benchmarking - Presentation*</p><p>SCOR Benchmarking - Presentation</p></li><li><p>BenchmarkingThe SCOR Reference ProcessSCOR Benchmarking - Presentation*</p><p>SCOR Benchmarking - Presentation</p></li><li><p>What is BenchmarkingQualitative BenchmarkingComparing best practices among organizationsMaturity AssessmentsQuantitative BenchmarkingComparing levels of measured performanceAssessment of Performance GapsCompetitive BenchmarkingQuantitative Benchmarking between companiesIdentifies superior relative performance*SCOR Benchmarking - Presentation</p><p>SCOR Benchmarking - Presentation</p></li><li><p>7 Steps of a Benchmarking ProgramSupply Chain DefinitionSupply Chain PrioritizationSupply Chain StrategySelecting MetricsSourcing DataCreating a Balanced SCORcardPerforming Benchmark*SCOR Benchmarking - Presentation</p><p>SCOR Benchmarking - Presentation</p></li><li><p>What is a Supply-ChainSCOR Benchmarking - PresentationSupplier processesProduct DesignDCORCustomer processesSupply Chain SCORSales &amp; Support CCORProduct Management*</p><p>SCOR Benchmarking - Presentation</p></li><li><p>Supply-Chain DefinitionSupply Chains are the Totality of processes spanning operations from supplier to end-customer, focused on material, work and information flowWe use a tool called the Supply Chain Definition Matrix to define the supply-chains within an enterpriseThe Supply Chain Definition (i/o Matrix) Matrix helps determine the number and size of supply chainsColumns: Customers (Output)Rows: Products (Input)The intersection of each column and row if the goods or services flow to the customer is a supply chain*SCOR Benchmarking - Presentation</p><p>SCOR Benchmarking - Presentation</p></li><li><p>The columns in the matrix are focused on demand e.g. channels or segments or customers start with making a list of customer groups, level by level.Ask your Sales or Marketing functions for customer segmentation informationWhere you have one customer base with different fulfillment models create two customer segments one for each modelIn general you can go to any level of detail you want but be sensible.Examples:</p><p>Column Definition*SCOR Benchmarking - Presentation</p><p>Level 1Level 2Level 3Europe, Asia, USMajor AccountsSame-Day ShippingCommercial, RetailGrouped AccountsBulk ShippingEastern, Western RegionOne-Time BuyerMOQ 1 Ordering</p><p>SCOR Benchmarking - Presentation</p></li><li><p>The rows in the matrix are focused on supply e.g. business lines or products or locations or suppliers start by making a list of products, level by levelAsk product divisions for product hierarchy dataIf you have the same product that may be build two different create two different products.In general you can go to any level of detail you want but be sensible.Examples:</p><p>Row Definition*SCOR Benchmarking - Presentation</p><p>Level 1Level 2Level 3Business DivisionsProduct LinesProduct FamiliesFulfillment ModelsSupplier GroupsPartsPlanning ModelsWarehouses</p><p>SCOR Benchmarking - Presentation</p></li><li><p>We now place the customer list as column headings repeating until finishedAnd then the products list as row headings repeating until finishedFor each product that flows to a customer, we put an X in the cellIts that simple.The Matrix*SCOR Benchmarking - PresentationXXXXXXX</p><p>Group 1Group 2Customer ACustomer BCustomer CCustomer D</p><p>Group 1Group 2Customer ACustomer BCustomer CCustomer DBusiness 1Product 1Product 2Business 2Product 3Product 4</p><p>SCOR Benchmarking - Presentation</p></li><li><p>Columns are Retail/Commercial, and sub-segmentedRows are the Major Product Lines</p><p>Example: Air Conditioning Company*SCOR Benchmarking - Presentation</p><p>SCOR Benchmarking - Presentation</p></li><li><p>Some supply-chains are not unique, group supply chains together where they have common management and goalsEach group is considered a logical supply chainKey Differentiators:Logical Supply Chain*SCOR Benchmarking - Presentation</p><p>Build StrategyModelLifecycleOtherMakeBTOIntroductionRegionBuyBTSMid-LifeTax RegimeETOCommodityLogistics StrategyEOLCustoms/DutyERP System</p><p>SCOR Benchmarking - Presentation</p></li><li><p>Columns are Retail/Commercial, and sub-segmentedRows are the Major Product Lines</p><p>Example: Air Conditioning Company*SCOR Benchmarking - Presentation</p><p>SCOR Benchmarking - Presentation</p></li><li><p>Supply Chain PrioritizationWe use a tool called the Supply Chain Prioritization Matrix to order the supply-chains according to relevanceEach supply chain can be ranked by a number of featuresWe suggest: size (revenue, volume, and margin),complexity (# SKUs)strategic importanceYou can also look at them byCash ConsumptionRiskVolume variabilityEtc.</p><p>*SCOR Benchmarking - Presentation</p><p>SCOR Benchmarking - Presentation</p></li><li><p>Each supply chain is given a rank in each categoryThe total of the values gives the final overall rankingWeightings and other criteria may apply</p><p>Supply Chain Priority*SCOR Benchmarking - Presentation1=low 3=high</p><p>RevenueGross Margin %# of SKUsUnit VolumeStrategic ValueRankBig Air3222211Small Air2133110Commercial131139</p><p>SCOR Benchmarking - Presentation</p></li><li><p>We use a tool called the Supply Chain Strategy Matrix to Identify priority strategic features or attributes of supply-chains.Each supply chain strategy is indicated by a collection of ranked features:</p><p>Supply Chain Strategy*SCOR Benchmarking - Presentation</p><p>ReliabilityOn time? Complete? Undamaged?ResponsivenessFrom Customer Request to final acceptanceFlexibilityHow long to scale up? How expensive to scale down?CostCost of Processes? Cost of Goods Sold?AssetsWorking Capital? Return on Investments?</p><p>SCOR Benchmarking - Presentation</p></li><li><p>We advocate using a simple ranking system for industry comparisonEach rank corresponds to a specific percentile in industry performanceWe do not use averages or other statistical testsOur key ranks:</p><p>Comparative Ranking*SCOR Benchmarking - Presentation</p><p>PerformancePercentileChoicesInterpretationSuperior90th1Top 10 performerAdvantage70th2Top Half performerParity50th2Half better/Half worse</p><p>SCOR Benchmarking - Presentation</p></li><li><p>Supply Chain Strategy in 5 MinutesSCOR Benchmarking - Presentation*</p><p>Build StrategyModelLifecycleLikely PriorityBuyAssetsCostMakeETOReliabilityResponseBTOAssetsReliabilityBTSStartFlexibilityResponseMiddleCostReliabilityCommodityCostAssetsEOLAssetsCost</p><p>SCOR Benchmarking - Presentation</p></li><li><p>Each unique combination of ratings defines Your Supply Chain Strategy for the channelThink of the rating as a desired state, NOT where you want to improve the most</p><p>Supply-Chain Strategy Matrix*SCOR Benchmarking - PresentationSAAPP</p><p>SCOR Benchmarking - Presentation</p></li><li><p>The SCORcardWe use a tool called the Supply Chain SCORcard to Identify performance characteristics of supply-chains.Each SCORcard is built from a subset of hundreds of SCOR metrics.For supply-chain benchmarking we generally use only Level 1, 2 and 3 metricsThe SCOR Manual provides all necessary definitions</p><p>SCOR Benchmarking - Presentation*</p><p>SCOR Benchmarking - Presentation</p></li><li><p>SCOR metrics: Standard Strategic (Level 1) MetricsPerformance Metrics*SCOR Benchmarking - Presentation upside and downside adaptability metrics CustomerInternal</p><p>AttributeMetric (Strategic)ReliabilityPerfect Order FulfillmentResponsivenessOrder Fulfillment Cycle TimeAgilitySupply Chain FlexibilitySupply Chain AdaptabilityCostSupply Chain Management CostCost of Goods SoldAssetsCash-to-Cash Cycle TimeReturn on Supply Chain Fixed AssetsReturn on Working Capital</p><p>SCOR Benchmarking - Presentation</p></li><li><p>PhilosophyYou need to have the most data where performance is most criticalYou need to have least data where performance is least critical</p><p>SCORcards in 5 Minutes*SCOR Benchmarking - Presentation</p><p>For EverySuperiorAdvantageParitySelectLevel 1 MetricLevel 1 MetricLevel 1 MetricandLevel 2 MetricLevel 2 MetricandLevel 3 Metric</p><p>SCOR Benchmarking - Presentation</p></li><li><p>A Metrics ArchitectureSCOR Benchmarking - Presentation*</p><p>SCOR Benchmarking - Presentation</p></li><li><p>Metrics Selection*SCOR Benchmarking - Presentation</p><p>SCOR Benchmarking - Presentation</p></li><li><p>Planning Data Gathering: Sources of DataFinancial Data10-K data, Company Annual Reports, Cost Center ReportsMust be Verified by Financial Team (Controller)Non-Financial DataCustomersDelivery PerformanceTotal Cycle-Time PerformanceIT SystemsProcess-to-Process TransactionsPlanning System Parameters (Lead Times)Suppliers3PL Providers</p><p>*SCOR Benchmarking - Presentation</p><p>SCOR Benchmarking - Presentation</p></li><li><p>Look at who owns the dataConsider where the transactions may beOrganize to alert data owners to gather dataCollect and assess Data QualityUse SCOR Metrics Definition as a guideData Gathering Plan*SCOR Benchmarking - Presentation</p><p>MetricProcessOwnerDue DateStatusOn-Time DeliveryD1.16Logistics2/2/2008CompleteUndamagedD1.173PL Provider2/15/200850% CollectedOrder Fulfillment Cycle TimeD1.1 D1.17Deliver Team2/22/2008Not startedEtc</p><p>SCOR Benchmarking - Presentation</p></li><li><p>Based on average data averaged over many samplesComes from root transactions, not aggregatesSix-Sigma team support a big help</p><p>The Create the SCORcard*SCOR Benchmarking - Presentation</p><p>AttributeSAPMetric (level 1)YouParityAdvSuperiorGapReliabilitySPerfect Order Fulfillment97%ResponseAOrder Fulfillment Cycle Time14 daysFlexibilityPUps. Supply Chain Flexibility62 daysCostPSupply Chain Mgmt Cost12.2%AssetsACash-to-Cash Cycle Time35 days</p><p>SCOR Benchmarking - Presentation</p></li><li><p>SCORmarkOnce the SCORcard is defined, and data for most metrics are gatheredData are submitted electronically to the SCORmark systemWith days or weeks, an electronic report is returned with the results of comparison against selected demographic groupsThe principal function of the Benchmark is to determine the gap between actual performance and performance corresponding to desired strategic positioning.The Benchmark is a component of Phase I and II of the SCOR Implementation Roadmap*SCOR Benchmarking - Presentation</p><p>SCOR Benchmarking - Presentation</p></li><li><p>Interpreting the DataUsed for choosing target performanceCritical to understand Performance in a particular DemographicCan be internal (competing against other supply chains in same company)Aligns Strategy, Performance, and Performance Goals</p><p>SCOR Benchmarking - Presentation*</p><p>AttributeSAPMetric (level 1)YouParityAdvSuperiorGapReliabilitySPerfect Order Fulfillment97%92%95%98%1%ResponseAOrder Fulfillment Cycle Time14 days8 days6 days4 days8 DaysFlexibilityPUps. Supply Chain Flexibility62 days80 days60 days40 days0CostPSupply Chain Mgmt Cost12.2%10.8%10.4%10.2%1.4%AssetsACash-to-Cash Cycle Time35 days45 days33 days20 days2 Days</p><p>SCOR Benchmarking - Presentation</p></li><li><p>PlanningSupply-Chain Definition1-2 Day workshopSupply-Chain Prioritization1 Day Data GatheringSupply-Chain Strategy1 Day workshopSupply-Chain Performance1 Day workshopData and BenchmarkingDays/Weeks</p><p>*SCOR Benchmarking - Presentation</p><p>SCOR Benchmarking - Presentation</p></li><li><p>SCOR AND SUPPLY CHAIN COUNCILSupply Chain Excellence Tools*SCOR Benchmarking - Presentation</p><p>SCOR Benchmarking - Presentation</p></li><li><p>A Bit of History: 1930-1950Bank Robber Slick Willie SuttonWhen asked why he robbed banks, Sutton simply replied"Because that's where the money is." SCOR Benchmarking - Presentation*</p><p>SCOR Benchmarking - Presentation</p></li><li><p>Supply-chain generally accounts for between 60% and 90% of all company costs1A 2% improvement in process efficiency for supply-chain processes has 3000% - 5000% the impact of a 2% improvement in efficiency for IT, HR, Finance1 SalesAny surprise most Process Methodologies or techniques had their origin primarily in Supply-Chain Management?Six-Sigma Lean BPR ERP ISO MRP-II TQM</p><p>Where the Money Is*SCOR Benchmarking - Presentation1 Exclusive of Financial Services companies 2 Source: Hoovers 2006 Financial Data, Supply-Chain Council 2006 SCM Benchmark data on SCM cost for discrete &amp; process industries</p><p>Fortune-10 Company Supply-Chain Cost % Total Costs2GMFordConocoWal-MartChevronIBMExxonGECiti1AIG194%93%90%90%88%77%75%63%0%0%</p><p>SCOR Benchmarking - Presentation</p></li><li><p>SCC: An independent, non-profit global association Formed in 1996 to create and evolve a standard industry process reference model of the supply chain for the benefit of helping companies rapidly and dramatically improve supply chain operationsSCC has established the supply chain worlds most widely accepted framework the SCOR process reference model for evaluating and comparing supply chain activities and their performance It can be used to describe supply chains that are very simple or very complex using a common set of definitions and enabling a common understandingIt lets companies quickly determine and compare the performance of supply chai...</p></li></ul>