scor executive overview scwna

This presentation is the exclusive property of the SupplyChain Council. Copyright © Supply Chain Council. 2006.All rights reserved. The marks SCOR®, CCOR™, DCOR™and SCOR Roadmap™ are the exclusive property of theSupply Chain Council.

Supply-Chain Council

Executive Overview

Supply Chain World North America

|Copyright © Supply Chain Council. 2006. All rights reserved.Copyright © Supply Chain Council. 2006. All rights reserved.Copyright © Supply Chain Council. 2006. All rights reserved.Copyright © Supply Chain Council. 2006. All rights reserved. Supply Chain Council - Executive Overview

Agenda Next 4 Hours

• Supply-Chains

• History of SCC & SCOR

• Focusing on Process

• SCOR Outline

• Performance Management & Metrics

• Varieties of Transformation

• Benefits of SCOR

• Case Studies

• Open Discussion


Speaker Introduction

Caspar Hunsche

• Supply chain operational background:logistics, supply/demand planning,management reporting and centralback-office.

• Wide experience in high tech, chemical,transportation, government, manufacturing, automotiveand retail

• HP/Compaq supply chain merger planning using SCOR

• SCOR practitioner since version 4.0

• Original author of the Design Chain and Customer Chainreference models


A Bit of History: 1930-1950

• Bank Robber“Slick Willie”Sutton

• When asked whyhe robbedbanks, Suttonsimply replied

• "Because that'swhere themoney is."


Where the Money Is

• Supply-chain generally accounts for between 60% and 90%of all company costs1

• A 2% improvement in process efficiency for supply-chainprocesses has 30,000% - 50,000% the impact of a 2%improvement in efficiency for… IT… HR… Finance1… Sales…

• Any surprise most Process Methodologies or techniques hadtheir origin primarily in Supply-Chain Management?• Six-Sigma Lean BPR ERP ISO MRP-II TQM…

Fortune-10 Company Supply-Chain Cost % Total Costs2

GM Ford Conoco Wal-Mart Chevron IBM Exxon GE Citi1 AIG1

94% 93% 90% 90% 88% 77% 75% 63% 0% 0%

1 Exclusive of Financial Services companies2 Source: Hoovers 2006 Financial Data, Supply-Chain Council 2006 SCM Benchmark data on SCM cost for discrete & process industries


What is a Supply-Chain

Supp

lierp

roce

sses

Product DesignDCOR™

Custom

erprocesses

Supply Chain SCOR™

Sales & SupportCCOR™

Product Management


Supply-Chain Council

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

• Membership open to all companies and organizations

• Focus is on research, application and advancement and advancingstate-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 chainmanagement

• Offers Training, Certification, Benchmarking, Research, TeamDevelopment, Coaching, and Cross-standard Integration focusedon the SCOR® framework

• Founded in 1996

• Approaching 1000 Association Members

• Chapters in North America, Europe, Japan, South Africa, LatinAmerica, Australia/New Zealand, South East Asia and GreaterChina, with developing Chapters India and Middle East

Driving value through the use of SCOR®Driving value through the use of SCOR®


Industry Membership Scope


SCOR Curriculum

Learn Pilot Deploy Mature RenewBasisTraining

SCORFramework

SCORImplementation

SCORTeam

SCOR and Six-Sigma/Lean

DCOR

ExecutiveTrack

Executive SCORFramework

Executive SCORImplementation

Executive SCORTeam

Executive SCORBusiness Benefit

Executive SCORBusiness Trends

AdvancedTrack

SCOR AdviserAdvanced SCORModeling

SCOR for PBLSCOR for RiskManagement

Advanced SCORAnalysis

SCOR for ITSCOR PracticesBenchmarking

AdvancedSCOR Workshop

SCOR for HR SCOR for M&A

Rapid SCORSCOR forIndustries

SCOR forISO9000

SCOR PracticumSCOR forServices

SCOR forSOX404

SCOR FinancialsSCOR forManagement

Current SCC offering

Future or Vendor offering


Training & Certification

Level Key Requirements

SCORScholar(SCOR/S)*

• SCOR University Curriculum

• SCOR Level 0 Exam

SCORProfessional(SCOR/P)

• SCOR Framework

• SCOR Implementation


SCORExpert(SCOR/E)

• SCOR/P

• SCOR Project Case Study

• SCOR Project Peer Review


SCORMaster(SCOR/M)

• SCOR/E

• 5 years SCM Experience• 2 in SCOR Areas

• 2 years SCOR Experience

• SCOR Practicum

• Instruction Workshop


• Positive Training Evaluations

SCORSubjectMaster

(SSM in…)

• SCOR/M

• Subject Training

• Positive Subject Training Evaluation

23SCOR 8.0 Convergence Training |Copyright ©Supply ChainCouncil. 2006. All rightsreserved.

By Mandat e f r om t he Boar d of Dir e ct or shas conf er r ed upon

J oh n DoeHaving compl et e d t he r e qu ir e me nt s of and

r e ceiving t he t it l e of

Ce r t if ie d SCOR Mast e rGive n at Washingt on, D.C. Th is 1s t Day of

Novembe r 2006

Ch ief Te chnol ogy Of f ice r

23SCOR 8.0 Convergence Training |Copyright ©Supply ChainCouncil. 2006. All rightsreserved.

By Mandat e f r om t he Boar d of Dir e ct or shas conf er r ed upon

J oh n DoeHaving compl et e d t he r e qu ir e me nt s of and

r e ceiving t he t it l e of

Ce r t if ie d SCOR Mast e rGive n at Washingt on, D.C. Th is 1s t Day of

Novembe r 2006

Ch ief Te chnol ogy Of f ice r

10

*reserved for University Students in SCM Studies


Benchmarking

11


Design Chain

• The central role of the Design Chain processesSu

pplie

rpro

cess

es


Custom

erprocesses



Product/Portfolio Management


Customer Chain

• The central role of the Customer Chain processesSu

pplie

rpro

cess

es


Custom

erprocesses



Product/Portfolio Management


The Value of SCOR


Why Focus on Process


In the 80’s

Dep

artmen

t1

Dep

artmen

t2

Dep

artmen

t3

Heavy Emphasis wasmade on organizing adepartment’sactivities aroundcorporate goalscreating “silos” ofactivity

Heavy Emphasis wasmade on organizing adepartment’sactivities aroundcorporate goalscreating “silos” ofactivity

Company Objectives


In the early 90’s

Dep

artmen

t1

Dep

artmen

t2

Dep

artmen

t3

BusinessReengineering beganto focus even furtheron optimizing adepartment’sactivities –deepeningthe silo. However lackof accountability tocustomers began totake effect…

BusinessReengineering beganto focus even furtheron optimizing adepartment’sactivities –deepeningthe silo. However lackof accountability tocustomers began totake effect…

Company Objectives


In the late 90’s

Dep

artmen

t1

Dep

artmen

t2

Dep

artmen

t3

Company Objectives

Custom

ers

Resulting in attemptsto horizontallyintegrate departmentsand processes at theexpense of companyobjectives

Resulting in attemptsto horizontallyintegrate departmentsand processes at theexpense of companyobjectives


Today

Dep

artmen

t1

Dep

artmen

t2

Dep

artmen

t3

Company Objectives

Custom

ers

We now recognizeboth needs forflexibility –“vertically” forcompany objectives,and “horizontally” forintegrated customerfocus.

We now recognizeboth needs forflexibility –“vertically” forcompany objectives,and “horizontally” forintegrated customerfocus.


Common Denominator: Process

• Vertical alignment assures that process goals reflect theorganization’s strategic goals

• By aligning strategy, process, and implementation, theorganization is better positioned to assure thateveryone is working to achieve common objectives

• At the same time, if change is required, verticalalignment makes it easier to identify exactly whatneeds to be changed to refocus on new objectives.

• Horizontal alignment makes sure that customers needsare integrated and focused across organizations.

• As customer requirements change, horizontalintegration also makes it easier to identify exactly whatneeds to be changed to refocus on new objectives.

• Both must be achieved simultaneously


ProcessEngineering

ProcessDefinitionMetrics,

Practices

A Spectrum of Approaches

21

ISO9000

ERP

Six-Sigma

BPR

BPA

SCOR

TQM

Lean

Workflow

BSC

BaldridgeBenchmarking

Tiger Team

MRP

Class-A

EA

EIS

ITIL

BPM


What is SCOR Exactly

|Copyright © Supply Chain Council. 2006. All rights reserved.Copyright © Supply Chain Council. 2006. All rights reserved.Copyright © Supply Chain Council. 2006. All rights reserved.Copyright © Supply Chain Council. 2006. All rights reserved. Supply Chain Council - Executive Overview 23Copyright © Supply Chain Council, 2008. All rights reserved

SCOR: A Process Framework

• Process frameworks deliver the well-known concepts ofbusiness process reengineering, benchmarking, and bestpractices into a cross-functional framework• Standard processes: Plan, Source, Make, Deliver, Return,

Enable

• Standard metrics: Perfect Order Fulfillment, Cash-to-CashCycle Time, Cost of Goods Sold, Order Fulfillment Cycle Time,etcetera

• Standard practices: EDI, CPFR, Cross-Training, Sales &Operations Planning, etcetera

• Pre-defined relationships between processes, metrics andpractices and inputs and outputs

23

24Copyright © Supply Chain Council, 2008. All rights reserved

SCOR Processes

24

Supplier CustomerSuppliers’Supplier

Source

Internal or External Internal or External

Your Company

ReturnDeliver MakeSource

Return

PlanDeliver

ReturnSourceReturn

MakeSourceReturn

PlanDeliver

Return

DeliverMake

Plan

Return Return

Customers’Customer

SCOR reference model

• Whether from Cow to Cone or from Rock to Ring SCOR is not limited byorganizational boundaries


SCOR Hierarchy

Level 1 Level 2 Level 3 Level 4 Level 5

Scope Configuration Activity Workflow Transactions

DifferentiatesBusiness

DifferentiatesComplexity

Names Tasks Sequences Steps LinksTransactions

Defines Scope DifferentiatesCapabilities

Links, Metrics,Tasks andPractices

Job Details Details ofAutomation

FrameworkLanguage

FrameworkLanguage

FrameworkLanguage

Industry orCompanySpecificLanguage

TechnologySpecificLanguage

S1Source

Stocked Product

S1Source

Stocked ProductSupply-Chain

SourceSupply-Chain

SourceS1.2

Receive ProductS1.2

Receive Product

Standard SCOR definitions Company/Industry definitions

EDIEDIXMLXML


Supply-Chain

26

Cu

stomer

processes

Cu

stomer

processesS

up

plie

rp

roce

sses

Su

pp

lier

pro

cess

es

Supply ChainSupply Chain Cu

stomer

processesS

up

plie

rp

roce

sses

Supply Chain

Process, arrow indicates material flow direction

Process, no material flow Information flow

DeliverDeliverMakeMakeSourceSource

ReturnReturnReturnReturn

PlanPlan


Stocked Product (S1) Make-to-Order (S2) Engineer-to-Order (S3)

S2.1 Schedule ProductDeliveries

S3.1 Identify Sources ofSupply

S3.2 Select Final Supplier(s)and Negotiate



S1.2 Receive Product S2.2 Receive Product S3.4 Receive Product

S1.3 Verify Product S2.3 Verify Product S3.5 Verify Product

S1.4 Transfer Product S2.4 Transfer Product S3.6 Transfer Product

S1.5 Authorize SupplierPayment



Source Process Elements

27

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S2.2ReceiveProduct

S2.4TransferProduct

S2.5AuthorizeSupplierPayment

S2.1ScheduleProduct

Deliveries

S2.2ReceiveProduct

S2.3Verify

Product

S2.4TransferProduct


S2.1ScheduleProduct

Deliveries

S2.2ReceiveProduct

S2.3Verify

Product

S2.4TransferProduct


S2.1ScheduleProduct

Deliveries

Copyright © Supply Chain Council, 2008. All rights reserved

Question: Process Flows

28

• Which of the following flows is/are correct?


D1.3Reserve Inv.

Calculate Date


Result: The Workflow Diagram

29

mp3

HQ

(Cuper

tino)

mp3

Fact

ory

(Shen

zhen

)Ret

ail,

inc.

(Am

ster

dam

)

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

CxOEvP, SVP

SVPVP

VP, DirectorLine Manager

ManagerTeam Lead

Team LeadIndividuals

StrategicDecision-Making

Line of BusinessManagement

ActivitiesManagement

Job Management TransactionManagement

EnterpriseSupply-ChainRequirements

OperationsStrategy

Fine-TuningOperations

AdjustingProcessPerformance

TuningTechnologyPerformance

S1Source

Stocked Product

S1Source

Stocked ProductSupply-Chain

SourceSupply-Chain

SourceS1.2

Receive ProductS1.2

Receive Product

Standard SCOR program Company/Industry implementation

EDIEDIXMLXML


Attribute Metric (level 1)

Reliability Perfect Order Fulfillment

Responsiveness Order Fulfillment Cycle Time

Agility (Flexibility) Supply Chain Flexibility

Supply Chain Adaptability †

Cost Supply Chain Management Cost

Cost of Goods Sold

Assets Cash-to-Cash Cycle Time

Return on Supply Chain Fixed Assets

Return on Working Capital

Metrics

SCOR metrics: Standard Level 1 Metrics

Cust

om

erIn

tern

al

† upside and downside adaptability metrics

31


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 customer’s definition of on-time, completedocumentation and in the right condition

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

DiagnosticMetrics:(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; Anorder must be: AND on-time AND in-full AND right condition


Strategic Reliability Metric

32


Best Practices

Best practice: "A current, structured, proven and repeatablemethod 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 environmentand can be linked to key metrics

• RepeatableThe practice has been proven in multiple environments.

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The SCOR Project Roadmap

Phase Name Deliverable Resolves

ORGANIZE • Organizational Support Who is the sponsor?

I DISCOVER• Supply-Chain Definition• Supply-Chain Priorities• Project Charter

What will the program cover?

II ANALYZE• Scorecard• Benchmark• Competitive Requirements

What are the strategicrequirements of your supply-chain?

III MATERIAL• Geo Map• Thread Diagram• Disconnect Analysis

Initial Analysis – where are theproblems?

IV WORK• Transactions• Level 3, Level 4 Processes• Best Practices Analysis

Final Analysis – where are thesolutions?

V IMPLEMENT• Opportunity Analysis• Project Definition• Deployment Organization

How to deploy?


Analyze Basis for Competition• Scorecard• Benchmark• Competitive Requirements

Focus: Scorecard: Appropriate Level MetricsBenchmark: Select and Use Industry SourceRequirements: Prioritization and Ratification

Approach: Initial Data and Transaction CaptureFinancial ValidationEarly “Defect” analysis of performance gaps

Deliverables: Defined Metrics for program focus

Stage gate: Supply-Chain Selected and Metrics Described

SCOR Roadmap: Analyze

35


Performance Management and Metrics


If You Can’t Measure It…

• Today’s Performance to Service Level Objectives

• This Month’s Performance Relative to Historic Trends

• One Division’s Performance Relative to Another

• Our Supply Chain’s Performance Relative toCompetitor’s

• Our Supply Chain’s Performance Relative to its Industry

• Our Supply Chain’s Performance Relative to nearIndustries


Key Metric Requirements

• Metrics are Defined One Way• Calculations

• Interpretations

• Points of Measurement

• Metrics are Owned• Responsible/Accountable

• Cascading Metrics

• Metrics are Appropriate• Simplicity

• Balanced Scorcards

• Relevant to Customer/Market


Example: ComfyCo

• Continuing Information on our Example Company, what arethe distinct supply-chains


Supply Chain Priority

1=low3=high

Your CompanySupply Chainstaken from theDefinition Matrix

Supply Chain Priority MatrixWhen assigning rank; the highest number should correspond to the highest rank. The supply chainwith the highest overall rating takes the biggest priority.

Criteria Revenue Gross Margin % # of SKUs Unit Volume Strategic Value

Weight 20% 20% 20% 20% 20%

Overall Rank Result Rank Result Rank Result Rank Result Rank Result

Big Air 2.2 3 0.6 2 0.4 2 0.4 2 0.4 2 0.4

Small Air 2 2 0.4 1 0.2 3 0.6 3 0.6 1 0.2

Commercial 1.8 1 0.2 3 0.6 1 0.2 1 0.2 3 0.6


Supply-Chain Strategy Matrix

• Each uniquecombination ofratings defines YourSupply ChainStrategy for thechannel

• Think of the ratingas a desired state,NOT where youwant to improve themost

41


Supply-Chain Performance

• We use a tool called theSupply Chain SCORcard™to Identify performancecharacteristics of supply-chains.

• Each SCORcard™ is builtfrom a subset of hundredsof SCOR metrics.

• For supply-chainbenchmarking wegenerally use only Level-1, 2 and 3 metrics

• The SCOR Manualprovides all necessarydefinitions

42


Metrics Selection

43


A SCORcard Example

• The ComfyCo “Commercial” Supply-Chain has beenprioritized by sponsor for improvement.

• We’ve created a benchmark

• We’ve looked at “parity gaps” to understand wherethere may be problems, and to hypothesize what couldbe root causes

Attribute Metric (level 1) You Parity AdvSuperio

rParityGap

ReqGap

Reliability Perfect Order Fulfillment 98% 92% 96% 98% -6%

Responsiveness Order Fulfillment Cycle Time 14 days 8 days 6 days 4 days 6 days

Flexibility Ups. Supply Chain Flexibility 62 days 80 days 62 days 40 days -18 days

Cost Supply Chain Mgmt Cost 10.1% 10.8% 10.4% 10.2% -0.7%

Assets Cash-to-Cash Cycle Time 22 days 45 days 30 days 20 days -23 days


Parity, Advantage, Superior

Attribute Metric (level 1) You Parity Adv SuperiorParityGap

ReqGap

Reliability Perfect Order Fulfillment 98% 92% 96% 98% -6%

Responsiveness Order Fulfillment Cycle Time 14 days 8 days 6 days 4 days 6 days 8 days

Flexibility Ups. Supply Chain Flexibility 62 days 80 days 62 days 40 days-18days

Cost Supply Chain Mgmt Cost 10.1% 10.8% 10.4% 10.2% -0.7%

Assets Cash-to-Cash Cycle Time 22 days 45 days 30 days 20 days-23days

We now link strategy,performance, and benchmarkto identify performancerequired of strategy

Parity Median ofStatistical Sample

Advantage Midpoint of Parityand Superior

Superior 90th percentile ofpopulation

minus equals


Benchmark Data Sources

Source Benchmark Link Pricing Note

APQC SCM Surveys www.aqpc.org FreeMust ShareData

AMR SCM www.amrresearch.com Subscription SCC Founder

CAPS Procurement www.capsresearch.org Subscription

Hoovers Financial www.hoovers.com Subscription

MPI Subset SCM www.mpi-group.net Subscription

PMG SCM-SCOR www.pmgbenchmarking.com Per Survey SCC Founder

SCC SCM L1 www.supply-chain.org Membership

eSCM SCOR www.escm.org.sg Subscription Asia Focus

WERC SCM www.werc.org Subscription Emerging

PLUS Internal Benchmarking Data Sources1:1 Customer Interviews


Benchmarking

47


Varieties of Transformation


The Top-10 Transformations

• Improve/Optimize Performance

• Merger, Acquisition, Divestiture

• Streamlining

• New Business Development

• Management Alignment

• Process Audit

• Balanced Scorecard

• ERP Implementation

• Workflow Implementation

• IT Solution Development


The SCOR Project Roadmap

Phase Name Deliverable Resolves

Initial BUILD • Organizational Support Who is the sponsor?

I DISCOVER• Supply-Chain Definition• Supply-Chain Priorities• Project Charter

What will the programcover?

II ANALYZE• Scorecard• Benchmark• Competitive Requirements

What are the strategicrequirements of yoursupply-chain?

III MATERIAL• Geo Map• Thread Diagram• Disconnect Analysis

Initial Analysis – whereare the problems?

IV WORK• Transactions• Level 3, Level 4 Processes• Best Practices Analysis

Final Analysis – whereare the solutions?

V IMPLEMENT• Opportunity Analysis• Project Definition• Deployment Organization

How to deploy?


A SCM Program with SCOR

• Key Events• Supply-Chain Scope

• Leadership

• Supply Chain Definition

• Scorecard

• Competitive Requirements

• Geographic Map

• Analysis Review

• Brainstorm Event

• Process Worksheet

• Project Definition

• Key Documents/Templates• Setup

• Supply Chain Definition Matrix

• Priority Matrix

• Scorecard


• Disconnects

• Geographic Map

• Thread Diagram

• Brainstorm Event

• Fishbone Diagram

• Pareto Analysis

• Process Worksheet

• Process Diagrams• Practices Assessment

• Transaction Analysis

• RACI

• Level 4 Processes

• Opportunity Grid

• Opportunity Analysis

• Program Definition


SCOR Roadmap Initial : Organize

Building Organizational Support

• Identify appropriate Sponsors, Stakeholders, Evangelists

• Create Steering, Design, and Analysis Teams

Focus: Build a core steering group for the SCOR program

Identification of Supply-Chain Scope

Communication of SCOR throughout organization

Approach: Identification of key players

• Outline of Complete Supply-Chain being examined

• Core Steering Teams and Extended Teams

• Communicate, Communicate, Communicate!

• Creation of Design Team

• Creation of Analysis Team

Deliverables: Sponsors & Stakeholders

Stage gate: Kickoff Event


SCOR Roadmap Phase I: Discover

Discover the Opportunity

• Supply-Chain Definition• Supply-Chain Priorities• Project Charter

Focus: Supply-Chain: generate a clear definition

Priorities: Align to Business Strategy

Resources: identify and secure process owners/actors

Approach: Sponsor and stakeholders interviews:

• Work towards a problem statement based on metrics –current v. desired performance

• Capture customer-identified solutions i.e. a technology orpractice

Deliverables: Project Charter

Stage gate: Project Charter acceptance


SCOR Roadmap Phase II: Analyze

Analyze Basis for Competition

• Scorecard

• Benchmark


Focus: Scorecard: Appropriate Level Metrics

Benchmark: Select and Use Industry Source

Requirements: Prioritization and Ratification

Approach: Initial Data and Transaction Capture

Financial Validation

Early “Defect” analysis of performance gaps

Deliverables: Defined Metrics for program focus

Stage gate: Supply-Chain Selected and Metrics Described


SCOR Roadmap Phase III: Material

Design Material Flow

• Create a common understanding of to-be process

• Document proposed to-be (=desired) process

Focus: AS IS: SCOR Material Flow Model

Disconnect Analysis: Deep Dive on Transactions

TO BE: Identify Early changes

Approach: Facilitated workshops, dedicated design teams

Geographic Mapping, Thread Diagrams

Brainstorming, Opportunity Aggregation

Deliverables: Process design documentation

Opportunities for Change

Stage gate: Review captured information with key stakeholders


Drive SupplierD1, P1, P4

BatterySupplier

D1, P1, P4

Retail, IncS1, P2

MP3 FactoryP3, S1, M1,

D1

HQP1, P2, D2,

S2


Result: The Geographic Map

56

•Question: No flow from HQ; Why?


Result: The Thread Diagram

57

Suppliers mp3 Incorporated Customers

BatterySupplier

DriveSupplier

mp3 Incfactorymp3 Inc HQ mp3 Inc

warehouse Retail, Inc

D1

D1

S1

S2

P1

M1

D1

S1

D1

S1

P2

P3

P2

P4


SCOR Roadmap Phase IV: Work

Work and Information Flow Design

• Collect and analyze detail work and information data

• Create detailed base of changes to SC environment

Focus: Transactions: Productivity and Yield

Process: Level 3 and Level 4 SCOR information

Analysis: As-Is, Disconnect, To-Be

Approach: Facilitated workshops, interviews and modeling

• “Staple-Yourself-To" approach

• Cover all: process, technology, people, objectives

• RACI, and Practice Assessment

Deliverables: Facilitated workshops, interviews and preliminaries

Stage gate: Review captured information with key stakeholders


Staple Yourself Worksheet

• The Transaction AnalysisWorksheet summarizesinformation regarding• SCOR Level Three Process

Description

• Primary Input(s) andOutput(s) to SCOR Element –Information

• Level Four Process Steps – nomore than ten withdepartment of personperforming the step – Work

• Technology Used to performProcess Steps

• Transaction (output) Eventand Elapsed Time

• Business Rules (Policy andInformal)

• Disconnects Causing Eventand Elapsed Time Gaps andYield less than 100%

Interviewees:

Accountable

Step Responsible

1

2

3

4

5

6

7

8

9

10

Technology UsedTotal Event Time for

Process Steps

Initials RelativeWeight

Problem StatementNumber

DisconnectDescription, Relative

Weight, andFishbone Number

Business Rules

Disconnect Description

Process Steps (>4and <11)

Description

Output(s) - Highlight PrimaryOutputInput(s) - Highlight Primary Input SCOR Element

Event Time


Transaction Productivity Analysis

Status SCOR Efficiency Yield Practices Vol Time Elapsed

Receipt D2.1 75% 90% 80% 100 1.5h 2h

Entry D2.2 75% 90% 80% 100 1.5h 2h

Allocate D2.3 4% 90% 20% 100 1h 24h

Drop M2.1 2% 90% 70% 100 1.5h 72h

Pack M2.2- 2.6, D2.8 5% 90% 70% 100 6h 120h

Ship D2.9- 2.12 8% 90% 70% 100 2h 24h

POD D2.12- D2.13 92% 90% 70% 100 44h 48h

• The yellow sections driven by a Transaction Data Collectioneffort utilizing “order status” events and time stamps• Column 1 – Order Status Event• Column 4 – Order rework• Column 6 – Order volume through the status• Column 8 – Difference of time stamps

• The white sections are based on the Staple Yourself to anOrder Interviews


And yet more analysis…

MultivotingCommon

CauseVariation

OperationalDefinition

ValueStream

C&E MatrixVisualControl

ANOVAImpact& Effort

KappaCritical

Path

Obser-vation

Time SeriesTravelerChecksheet

CustomerInterview

StratifiedData

Product& Service

GridsChi-square

Simu-lation

Range,StandardDeviation,Variance

TPM

ValueStream

SpecialCause

VariationRACI

FrequencyPlots

5 Whys CVSMDegrees ofFreedom

PughMatrix

CentralTendency

(Mean,Median,Mode)

5S

Value-Add(VA)

ControlCharts

LocationChecksheet

Six-• Scatter PlotComplexity

AnalysisDesign of

ExperimentFMEA Box Plots

InternalBenchmark

NVA ImR ChartStable

PopulationSampling

GrossDisconnect

HypothesisTest

PCEDestruction

Lead Time FlowchartFrequency

orHistogram

Cross-Industry

Benchmark

Time Value p-Chart Gage R&R 5 Whys T-testBIC

BenchmarkLean Quick Fix

Non-NormalDistribution

Phase-Gate

AffinityDiagrams

InferentialStatistics

Stratif-ication

CapabilityAnalysis

FishboneWork CellAnalysis

MultipleRegression

CostEstimatio

n

Discrimi-nation

CapacityConstraint

BNVA•,r charts•,S charts

Measure-ment

SystemAnalysis

5S

ErrorAnalysis

(Type I, II,Power,p-Value

What-if NVA Cost KPOVNormal

DistributionRisk

Takt TimeWork CellAnalysis

Bias CVSM CorrelationIndustry

Benchmark

ProcessCycle

Efficiency

WIPTIP

CentralLimits

Mistake-Proofing

BrainstormDescriptiveStatistics

Measure-ment

Selection

Np-Chart,C-Chart, u-

ChartPareto

ProcessBalancing

RegressionSolutionSelection

MatrixStability Time Trap


SCOR Phase V: Implement

Implementation Planning

• Ensure the implementation or deployment teams havethorough understanding of the designs

• Designs and plans are validated

Focus: Projects: Aggregate Problem Statements into Projects

Impact: Decision Matrices

Approach: Implementation, Charter, and Sequence

Approach: Establish detailed requirements documentation and, ifpossible, integrate team members in deployment teams

Deliverables: High level deployment plans for change projects, to-beprocess documentation/training materials and/orrequirements documentation

Stage gate: Release documentation to and education to (staffed, fundedand named) process deployment teams


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


Opportunity Analysis by Project

Projected Annualized Benefit Year 1

Perfect OrderFulfillment

Order FulfillmentCycle Time

Supply ChainFlexibility

Supply ChainMgmt Cost

Cash-to-CashCycle Time

ScorecardBaseline

95.0% 14 (days) 62 (days) 10.1% 22 (days)

Direct Ship 0.5% 3.0 2.0 -0.05% 3

AutomatedATP

1.0 0.01% 1

3x FactorySchedule

0.2% 3.0 -1.0 0.01% 3

3x dailypickup

1.0 0.5 0.02% 1

Customer EDI 0.5 0.02%

StatisticalFCST

.25 0.01%

NET Projects 0.7% 8.75 1.3 0.02% 8

Total 95.7% 5.25 63.3 10.12% 14


Deploy: Change Management

Skills

Incentives

ResourcesXAction Plan

vision

Key Change Management Attributes Result

Vision Skills Incentives Resources Action Plan Change

Incentives Resources Action Plan Confusion

Vision Resources Action Plan Anxiety

Vision Skills Action Plan Delays

Vision Skills Incentives Frustration

Vision Skills Incentives Resources

X

X

X

X

Incentives

Resources

Action Plan

False Starts

Skills

© 2005, Process Core Group

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Deployment Timeline

Entities,Metrics, orProjexts

Plant 1

DC1

Supplier

Planning

RFID

Stat FCST

Cycle Time

CostImprovement

L+30

Direct ShipDirect Ship

VisibilityVisibility

L+60 L+90

DC1Shutdown?

DC1Shutdown? ûû

ûû

Aging RptAging Rpt

ûû

Auto-ReceivingAuto-Receiving

11d 8d 7d 6d

0.1% 0.2% 0.25%

Plan ReplenPlan Replen

0.3%


The Value of SCOR


The Value of SCOR

• Companies with SCOR process management

• Are over 780% more profitable on average than peers1.

• Exhibit greater share growth than leading marketindicators2.

68

1 Supply-chain Council 2003 – profit and revenue analysis.2 Process Core Group Research 2006 – SCOR company share performance


An Open Standard

• SCOR, DCOR, CCOR, MCOR are “Open Standards”

• The terms "open" and "standard" have a wide range of meanings associatedwith their usage. The term "open" is usually restricted to royalty-freetechnologies while the term "standard" is sometimes restricted totechnologies approved by formalized committees that are open toparticipation by all interested parties and operate on a consensus basis.

• Anyone can use and be trained on them with no fee for use

• Any company can use and implement them with no fee foruse

• Any software organization can use the data for processlibraries with no fee for use

• Any practitioner company, academic organization, consultingorganization, software enabling can participate indevelopment

69


Standard Benefits Seen

• Improvement in company’s stock market value (beatthe DOW)

• Increase of Profits and Margins (780% the average)

• Increase of the available financial means byimplementation of investments (portfolio management)

• Reduction of overall costs

• Optimization of Enterprise Resource Planning

• But there’s even more data now!

70


More Value1

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

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

• Reduction in IT costs through minimizing systemcustomization and making better use of standardfunctionality

• Continuous actualization of process change portfolio bycontinuous conversion of Supply Chain improvementswith the objective of increasing annual profits by 1% to3%

71

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 developmentcycle

60%

Inventory 70%

Paperwork and Documentation 80%

Quality Defects 100%

72

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


Comparative Data1

Improvement Area Range

Delivery performance 16% - 28%

Inventory Cost Reduction 25% - 60%

Reduction in order fulfillmentcycle time

30% - 50%

Improvement to forecastaccuracy

25% - 80%

Increase in overall productivity 10% - 16%

Lower supply chain costs 25% - 50%

Improvement of fill rates 20% - 30%

Improved capacity realization 10% - 20%

73

1Stephens (2000) 1997 Comparative Study Pittsburg, USA


Maturity Results1

3:1

14%

50%

50%

50%

38%

MedianPerformanceCategory

Low High

Cost 4.50% 87%

Schedule 20% 90%

Productivity 11% 376%

Quality 29% 94%

Customer Satisfaction 10% 55%

Return on Investment 2:1 13:1

74

1CMU SEI organization, 4 March 2005 Results


Case Studies

• Royal Australian Air Force

• United Space Alliance

• BASF

• United Defense

• Molex

• US Navy


Further Information

www.supply-chain.org

[email protected]

scor executive overview scwna

Documents

review captured

5authorize

supply chain

performance

chain definition

chain source

supply chain

supply chain