supply chain operations reference model (scor) ozgun c. demirag

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Supply Chain Operations Reference Model (SCOR) Ozgun C. Demirag Slide 2 Supply Chain Operations Reference Model (SCOR): Information about (SCC) Developed by Supply Chain Council (SCC) SCC: Independent, not-for-profit corporation organized in 1996 by: Global management-consulting firm, Pittiglio Rabin Todd & McGrath (PRTM) and Market research firm, Advanced Manufacturing Research (AMR) in Cambridge, Massachusetts. Started with 69 voluntary companies; now close to 1000 members. SCC Objective: To develop a standard supply-chain process reference model enabling effective communication among the supply chain partners, by Using standard terminology to better communicate and learn the supply chain issues Using standard metrics to compare and measure their performances Slide 3 Supply Chain Operations Reference Model (SCOR) SCOR: Integrates Business Process Reengineering, Benchmarking, and Process Measurement into a cross-functional framework. Benchmarking Best Practices Analysis Process Reference Model Business Process Reengineering Quantify the operational performance of similar companies and establish internal targets based on best-in- class results Characterize the management practices and software solutions that result in best- in-class performance Capture the as-is state of a process and derive the desired to-be future state Quantify the operational performance of similar companies and establish internal targets based on best-in-class results Characterize the management practices and software solutions that result in best-in- class performance Slide 4 Supply Chain Operations Reference Model (SCOR) The Primary Use of SCOR: To describe, measure and evaluate supply chain configurations. SCOR contains: Standard descriptions of management processes A framework of relationships among the standard processes Standard metrics to measure process performance Management practices that produce best-in-class performance Enables the companies to: Evaluate and compare their performances with other companies effectively Identify and pursue specific competitive advantages Identify software tools best suited to their specific process requirements Slide 5 Supply Chain Operations Reference Model (SCOR): Boundaries SCOR spans: All customer interactions, from order entry through paid invoice. All product (physical material and service) transactions, from suppliers supplier to customers customer, including equipment, supplies, spare parts, bulk product, software, etc. All market interactions, from the understanding of aggregate demand to the fulfillment of each order SCOR does not attempt to describe every business process or activity, including: Sales and marketing (demand generation) Research and technology development Product development Some elements of post-delivery customer support Slide 6 Supply Chain Operations Reference Model (SCOR):Basic Management Processes Plan-Source-Make-Deliver-Return Suppliers Supplier Make DeliverSourceMake DeliverMakeSource Deliver Source Deliver Source Customers Customer Plan Supplier (Internal or External) Your Company Customer (Internal or External) Return Plan-Source-Make-Deliver-Return provide the organizational structure of the SCOR-model Slide 7 Scopes of Basic Management Processes Plan (Processes that balance aggregate demand and supply to develop a course of action which best meets sourcing, production and delivery requirements) Balance resources with requirements Establish/communicate plans for the whole supply chain Source (Processes that procure goods and services to meet planned or actual demand) Schedule deliveries (receive, verify, transfer) Make (Processes that transform product to a finished state to meet planned or actual demand) Schedule production Deliver (Processes that provide finished goods and services to meet planned or actual demand, typically including order management, transportation management, and distribution management) Warehouse management from receiving and picking product to load and ship product. Return (Processes associated with returning or receiving returned products) Manage Return business rules Slide 8 Return Level Description Schematic Comments Top Level (Process Types) Level 1 defines the scope and content for the Supply chain Operations Reference-model. Here basis of competition performance targets are set. Source Make Deliver Plan 1 # Configuration Level (Process Categories) A companys supply chain can be configured- to-order at Level 2 from the core process categories. Companies implement their operations strategy through the configuration they choose for their supply chain. 2 Process Element Level (Decompose Processes) Level 3 defines a companys ability to compete successfully 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 Systems/tools 3 P1.1 Identify, Prioritize, and Aggregate Supply-Chain Requirements P1.2 Identify, Assess, and Aggregate Supply-Chain Requirements P1.3 Balance Production Resources with Supply-Chain Requirements P1.4 Establish and Communicate Supply-Chain Plans Implementation Level (Decompose Process Elements) 4 Not in Scope Return Three Levels of Process Detail Companies implement specific supply-chain management practices at this level. Level 4 defines practices to achieve competitive advantage and to adapt to changing business conditions. Supply Chain Operations Reference Model Slide 9 Customer-Facing Level 1 Performance Metrics Assets Supply Chain Reliability Cost Responsiveness Delivery performance Fill rate Perfect order fulfillment Order fulfillment lead time Supply Chain Response Time Production flexibility Total SCM cost Cost of Goods Sold Value-added productivity Warranty cost or returns processing cost Cash-to-cash cycle time Inventory days of supply Asset turns Internal-Facing Flexibility Performance Attributes Slide 10 Level Metrics Facts Level 1 Metrics are primary, high level measures that may cross multiple SCOR processes. They do not necessarily relate to a SCOR Level 1 process (Plan-Source- Make-Deliver-Return). There is hierarchy among the metrics in different levels. Level 1 Metrics are created from lower level calculations ( Level 2 metrics) Level 2 Metrics: Associated with a narrower subset of processes. Example: Metric related with Delivery Performance: Total number of products delivered on time and in full based on a commit date. Metric related with Production: Ratio Of Actual To Theoretical Cycle Time Slide 11 Level 2 Process Types and Definitions Planning: A process that aligns expected resources to meet expected demand requirements. Balance aggregated demand and supply Consider consistent planning horizon (Generally) occur at regular, periodic intervals Execution: A process triggered by planned or actual demand that changes the state of material goods. Scheduling/sequencing Transforming product Moving product to the next process Enable: A process that prepares, maintains, or manages information or relationships on which planning and execution processes rely Slide 12 Level 2 Process Categories P1: Plan Supply Chain P2-P5: Plan SCOR Process S1: Source Stocked Product S3: Source Engineer-to-Order Product S2: Source Make-to-Order Product M1: Make-to-Stock M2: Make-to-Order M3: Engineer-to-Order D1: Deliver Stocked Product D2: Deliver Make-to-Order Product D3: Deliver Engineer-to-Order Product D4: Deliver Retail Product (New in Version 6.0) SR1/DR1: Return Defective Product (Source Return/Deliver Return) SR2: Source Return MRO Product (Maintenance, Repair and Overhaul) DR2: Deliver Return MRO Product SR3/DR3: Return Excess Product (Source Return/Deliver Return) EP, ES, EM, ED, ER: Enable corresponding SCOR Processes Slide 13 Slide 14 Slide 15 Process Category: Source Stocked Product Process Number: S1 Process Category Definition The procurement, delivery, receipt and transfer of raw material items, subassemblies, product and or services. Performance AttributesMetric Reliability% Orders/lines processed complete ResponsivenessTotal Source Cycle Time to Completion FlexibilityTime and Cost related to Expediting the Sourcing Processes of Procurement, Delivery, Receiving and Transfer. CostProduct Acquisition Costs AssetsInventory DOS Best PracticesFeatures Joint Service Agreements Alliance and Leverage agreements None Identified Example Continued Slide 16 Process Element: Transfer Product Process Element Number: S1.4 Process Element Definition The transfer of accepted product to the appropriate stocking location within the supply chain. This includes all of the activities associated with repackaging, staging, transferring and stocking product. For service this is the transfer or application of service to the final customer or end user. Performance AttributesMetric Reliability% Product transferred damage free % Product transferred complete % Product transferred on-time to demand requirement % Product transferred without transaction errors ResponsivenessTransfer Cycle Time FlexibilityTime and Cost Reduction related to Expediting the Transfer Process. CostTransfer & Product storage costs as a % of Product Acquisition Costs AssetsInventory DOS Best PracticesFeatures Drive deliveries directly to stock or point-of- use in manufacturing to reduce costs and cycle time Pay on receipt Specify delivery location and time (to the minute) Specify delivery sequence Capability Transfer to OrganizationNone Identified Example Continued Slide 17 InputsPlanSourceMakeDeliver Product Pull SignalsMD Product Inventory LocationES.4 WIP Inventory LocationEM Finished Goods Inventory Location ED OutputsPlanSourceMakeDeliver Inventory AvailabilityP2.2ES.4M1.2, M2.2, M3.3 D1.8, D4.2 Daily Replenishment Requirements D4.1 Loaded CartD4.4 Example Continued Slide 18 Slide 19 Slide 20 Some Graphical Tools: 1 st Ste

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