supply chain world - april, 2000 how do i use scor? supply chain world - april, 2000 peter bolstorff...
TRANSCRIPT
How Do I Use SCOR?Supply Chain World - April, 2000Supply Chain World - April, 2000
Peter Bolstorff [email protected] Consulting Group, Ltd.www.pragmatek.com
2
Supplier
Plan
Customer Customer’sCustomer
Suppliers’Supplier
Make DeliverSource Make DeliverMakeSourceDeliver SourceDeliver
Internal or External Internal or External
Your Company
Source
What is Supply Chain?
Supply Chain Operations Reference Model
The integrated processes of Plan, Source, Make and Deliver, spanning your suppliers’ supplier to your customers’ customer, aligned with Operational Strategy, Material, Work & Information Flows.
3
Material Flow
Operations StrategyAnalyze
Basis of Competition
ConfigureSupply Chain
AlignPerformance
Levels, Practices,
and Systems
AlignPerformance
Levels, Practices,
and Systems
ImplementSupply-Chain
Changes
ImplementSupply-Chain
Changes
SCOR Project Roadmap•Supply Chain Scope•Performance Metrics•Supply Chain SCORcard•Competitive Performance Requirements•SCORcard Gap Analysis•Business Case
•AS IS Geographic Map•Disconnects & ROI•Design Specifications•TO BE Geographic Map •AS IS Process Flow •TO BE Process Flow
Informationand Work Flow
•AS IS Work/Information Map•Disconnects•Design Specifications•TO BE Work/Information Map•Prioritized List of Changes
Implementation •Master Schedule of Projects•Detail Design•Technology Selection•Pilot•Roll Out
4
Project Approach
Analyze Basis of Competition
Configure Supply Chain
Implement Supply Chain Changes
3-4 Months 6+ Months1-2 Weeks
Discover Analyze Design Develop Implement
OpportunityOpportunity StrategyStrategy SolutionSolution PrototypePrototype InstallInstall
Align Performance Levels, Practices &
Systems
SCOR Project Roadmap
Educate
SupportSupport
1 Week
• Workshops• Executive
Briefings• Customized
Training
5
Educate for Support
WHO
– The Evangelist– Core Team Buy IN– Active Executive
Sponsorship
WHAT
– General SCOR Workshops
– Customized SCOR Workshops
– Executive Briefing
6
Discover Opportunity
Business Team
Value PropositionProfit & Loss StatementBalance SheetCritical Success FactorsCritical Business Issues Internal ProfileExternal Profile
7
Discover Opportunity
Performance Issues
Deficiency ImprovementCore Competency
Investment
Goals, Design, & Management
OrganizationProcessTechnology Jobs/People
8
Discover DeliverableProject Charter
I. IntroductionMaintenance of the Project
Charter
II. Project OverviewScopeBusiness ObjectivesProject Objectives
III. Project ApproachMethodologyProject ScheduleProject Milestones &
DeliverablesDependencies
IV. Project Budget
V. Project OrganizationOrganization ChartProject ResourcesRoles and Responsibilities
VI. Measures of SuccessStakeholder ExpectationsBenchmarksBenefit Analysis 8
VII. Project CommunicationCommunication PlanControl Procedures
9
PRAGMATEK SMEPRAGMATEK SME
CLIENT Advisory/Steering CommitteeCLIENT Advisory/Steering Committee
PRAGMATEK Project ManagerPRAGMATEK Project ManagerCLIENT Project ManagerCLIENT Project Manager
PRAGMATEK Extended TeamPRAGMATEK Extended Team CLIENT Extended TeamCLIENT Extended TeamCLIENT Design TeamCLIENT Design Team
CLIENT Project SponsorCLIENT Project Sponsor
Discover DeliverableProject Organization
10
Discover DeliverableProject Plan
3/20 5/1 6/1 7/1 8/1 9/1 +
Supply Chain Design/PilotRoll OutQuick Hit Changes
Roll Out Non-Technical Changes
Bus
ines
s
Technology Assessment/ Optimization
FunctionalRequirements
ConferenceRoom Pilot
Roll Out Integrated Solution
Tech
nica
l
Analyze Design Develop Implement
11
Analyze
Drive a Tight Supply Chain Scope Benchmark Defines Business Opportunity Supply Chain SCORcard “Hot Links” to the
P&L Business Management Team Ownership
12
Analyze DeliverableSCORcard
Cu
sto
mer
Facin
gIn
tern
al
Facin
g
Actual SCORcard
SCOR Level 1 Metric Actual Parity Advantage Superior Value from Improvements
Order Fillrate98% 76% 87% 97%
Need To Maintain Superior Performance
Delivery Reliability
Line Fillrate N/A 90% 96% 98+% N/A
Flexibility & Responsiveness
Fulfillment Leadtime, (Order Receipt to Customer Receipt)
5 - 12 days 3 days 2 days 1 day Opportunity for Competitive Advantage
COGS, (Cost of Sales % to Net Sales)
34.7% 60.0% TBD TBD Need To Maintain Superior Performance
Warranty/Returns, (Returns as % of Net Sales)
16.0% TBD TBD TBD Opportunity for Performance Improvement
CostTotal Supply Chain Cost, (As a % of Net Sales)
----- 8.0% 7.0% 5.0%Opportunity for SG&A
Reduction
Order Management, (Customer Service Allocation + Freight + Fulf illment)
8.5% 4.0% 3.0% 1.5% $2.5M estimated Home Delivery opportunity
Material Acquisition Very Low 3.0% 2.0% 0.5% Need To Maintain Superior Performance
AssetsCash to-Cash, (Inventory days of supply + days sales outstanding - average payment period)
7 days 65 days 40 days 20 daysNeed To Maintain Superior
Performance
Net Asset Turns, (Total gross product revenue/Total net assets)
TBD 2.5 5 7 TBD
Actual Performance Versus Consumer Packaged Goods Benchmarks
13
Analyze DeliverableCompetitive Performance Requirements
Superior
Legend
Advantage Parity
Delivery Reliability
Flexibility/ Responsiveness
Cost
Asset
Performance Attribute
MATURE NEW
Performance vs.
Competition
14
DesignMaterial Flow
Geographic Map– Physical Locations– Product ID, SKU, and/or Family
Disconnects– Drive the ROI– Prioritize the Work
SCOR Level 2 defines types of processes used by physical location– “Lean Manufacturing” concepts
15
DesignMaterial Flow Deliverable
M anufacturing
D istributor
O E M S up p lier
W arehouse
C ustom erD istributor
D istributor
D istributor
W arehouse
W arehouse
W arehouse
C ustom er
C ustom er
C ustom er
Texas Supplier
(S2, M2, D2)
(S1, D1) (S1, D1)
(S2, M1, D1)
(D2)
(S1)
(S1, M1, D1)
16
DesignMaterial Flow Deliverable
1 = Forecasting 2 = Competitive Part Material Flow 3 = Non-working Inventory 4 = Inbound Freight 5 = Reorder Point 6 = Schedule Agreements 7 = Current/Non-current (TBD)
17
DesignMaterial Flow Deliverable
4. Inbound Transportation between Suppliers is not optimized which includesboth Parcel and LTL, normal and expedite shipping, and cross dockoperations. This is further complicated by the conflict between physicalspace for staging shipments to support truck utilization AND leadtime todealer order needs.
Metric P&L Line ImpactLine Fillrate Net Sales No impact on Line Fillrate.BackorderDuration
Net SalesCVA/EVA
Minimum of 2 days of backorderduration due to transportation time.
COGS Gross Profit Inbound transportation as a ruleshows up in STANDARD COST,MFG Variance and PurchaseVariance. 60% of the shipmentsare parcel. Actual spend in 1999was $2.5M.
Supply ChainCost
Direct ProfitContribution
The inbound cost of supply chaincost shows up in Warehouse linevia allocation. Actual spend in1999 was $.5M.
Assets CVA/EVA The FOB destination as currentlypracticed, is the Supplier’s dockwhich impacts the Inventory by anestimated $.1M (25 days)
18
DesignMaterial Flow Deliverable
Ease of Implementation
Easy Tough
Bu
sin
ess
Imp
act Small
Pay-Off
Big Pay-Off
Quick Hits Caution
Gems Extra Effort4
7
6 5
32
1
$ 1M Annual Savings$ 1M Annual Savings
19
DesignWork & Information Flow
Defines the work and information which moves the material
Incorporates the major system applications and transactions
“Swim Diagram” approach Illustrates the impact of “e” to your business Additive to the ROI derived in Material Flow
20
As-Is Level 3 OperationsW ork and Inform ation Flow
Pac
k/S
tock
Ord
er F
ill/
Sh
ipIn
ven
tory
Co
ntr
ol
Ord
er F
ill/
Sh
ipP
urc
has
ing
Pac
k/S
tock
Rec
eivi
ng
Rec
eivi
ng
DC
2D
C1
HQ
S2.1 & S1.1Schedule Material
Deliveries
P2.4 EstablishDetailed Sourcing
P lans
S2.2 & S1.2Receive and Verify
Material
S2.3 & S1.3Transfer Material
S2.2 & S1.2Receive and Verify
Material
S2.3 & S1.3Transfer Material
Pkg S lipfrom
Supplier
S tockxportfromDC2
Receip tTo AP
Pick T icket
Release to stockM ove ticket
Release toInspect
Pkg S lipfrom
Supplier
S tockxportfrom
Plants
Receip tTo AP
ToSupplier
JITSchedule
PO toSupplier
To M FG(all p lants)
S tockxport
F irmReq
???
P2.3 BalanceMaterial
Resources withMat'l Reqm ts
P2.2 Identify,Assess, &
Aggregate Mat'lResources
?? ??
D1.1 Process Inqu iry &Q uote
D1.2 Receive, Enter &Validate O rder
D1.3 Reserve Inventoryand Determine Delivery
Date
D1.4 ConsolidateOrders
D1.5 P lan & BuildLoads
CustomerDefined Route
DeliveryDue L ist
F romPlantsStockxports
StockO rdersFrom
Customer
D irectO rdersFrom
Customer
Backorders
P2.1 Identify,Prioritize, &
Aggregate MaterialResources
CustomerBackorders
ConsumptionRe-order
poin ttripped
M arketingP lan
NewPart
Setup
ProductionSchedule
(seasonal)
???
D1.4 ConsolidateOrders
D1.5 P lan & BuildLoads
CustomerDefined Route
DeliveryDue L ist
D irectO rdersFrom
Customer
D1.6 RouteShipm ents
CustomerDefined Route
DeliveryDue L ist
D1.6 RouteShipm ents
CustomerDefined Route
DeliveryDue L ist
S1.1 & S1.3SUBCONTRACT
PROCESS(per child)
PO toSupplier
541542
Parent S1.1
D1.7 Select Carriers andRate Shipments
CustomerDefinedRoute
P icking T ickets
P icking T ickets1/line
D1.8, S2.2, & S1.2Receive & Verify
Material (P roduct)
D1.8, S2.2, S2.3,S1.2 & S1.3
Receive, Verify,and Transfer
Material (P roduct)
D1.9 P ick Product
Availab le
Inventory
D1.9 P ick Product
Availab le
Inventory
FromSubcontract
Process541
PostG oodsIssue
D1.10 LoadVehicle, GenerateShip Docs, & Ship
ToDC2
Stockxport
D1.10 LoadVehicle, GenerateShip Docs, & Ship
HandwrittenP ick T icket
HandwrittenP ick T icket
XferPosting
Post G oodsIssue
ToVendorR -ticket
BO L
To P lantM ovement
TypeBO L
To CustomerPacking S lip
BO L
M1.1 ScheduleManufacturing
Activities
Re-orderPoin t
SafetyStock
D1.11 Receive & VerifyM ateria l a t Customer
S ite
M1.3 Manufacture& Test (K itting)
D1.13 Invo ice & ReceivePayment
Post G oodsIssue
M1.2 IssueMaterial
ProductionW orkorder
P3 P lan Make(K itting)
SAP ProductionP icklist
M1.4 Package
M1.5 S tageProduct
Physica lM ove
M1.6 ReleaseProduct to
Deliver
ProductionO rder
Backflush
Release to S tockM ateria l M oveTo D1.8, S1.1
P4.4 EstablishDetailed
Delivery P lans
P4.3 BalanceDelivery
Resources withDelivery Reqm ts
To D1.3D1.5
P4.2 Identify,Assess, &Aggregate
DeliveryResources
P4.1 Identify,Prioritize, &Aggregate
Delivery Reqm ts
Same asP2.1
P1.4 EstablishSupply Chain
P lans
???
P1.3 BalanceSupply-Chain
Resources withSupply-Chain
Reqm ts
??
P1.2 Identify,Assess, &Aggregate
Supply-ChainResources
BudgetRqmts
ServiceLevelRqmts
TurnG oals
Sales $
ToD ist
SalesG oals $
P1.1 Identify,Prioritize, and
AggregateSupply-Chain
Rqm ts
F in ishedG oodsUnits in
O peration
Ave PartsUseage
$/O peration
SalesH istory
$
ToCustomer
Packing S lipBO L
DesignWork & Information Flow Deliverable
21
Inve
nto
ryC
on
tro
lP
urc
has
ing
AS IS
DesignWork & Information Flow Deliverable
P1.4 Establish Supply Chain
Plans
P1.4 Establish Supply Chain
Plans
P1.3 Balance Supply Chain
Resources with Supply Chain Requirements
P1.3 Balance Supply Chain
Resources with Supply Chain Requirements
P1.2 Identify, Assess, &
Aggregate Supply Chain Resources
P1.2 Identify, Assess, &
Aggregate Supply Chain Resources
P1.1 Identify, Prioritize, and
Aggregate Supply Chain
Requirements
P1.1 Identify, Prioritize, and
Aggregate Supply Chain
Requirements
??
??
BudgetRqmts
Sales$
Service Level
Rqmts
Turn Goals
Sales Goals $
Finished Goods Units in
Operation
Sales History
$
Avg Product Usage
22
Inv
ento
ryC
on
tro
lP
urc
has
ing
Mar
keti
ng
Man
ufa
ctu
rin
g
TO BE
DesignWork & Information Flow Deliverable
P1.3 Balance Supply Chain
Resources With Supply
Chain Reqmts
P1.3 Balance Supply Chain
Resources With Supply
Chain Reqmts
P1.2 Identify,
Assess, & Aggregate
Supply Chain
Resources
P1.2 Identify,
Assess, & Aggregate
Supply Chain
Resources
P1.1 Identify,
Prioritize, and
Aggregate Supply Chain
Reqmts
P1.1 Identify,
Prioritize, and
Aggregate Supply Chain
Reqmts
P1.4 Establish Supply
Chain Plans
P1.4 Establish Supply
Chain Plans
Unit Forecast
Existing Inventory
Net Unit Supply
Plan ProfitContribut
ion $$
Consensus Unit Plan
Rolling 12 mo Aggregate
Unit Plan (to P2)
23
Develop Solution
Balance Quick Hits and Non-Technology Changes with Longer payback projects
Leverage a Conference Room Pilot Scenario Link a formal Technology Selection Process to
the Design Process Transition Team from “Design” to
“Implementation” Detail “TO BE” Design at Level 4
24
Challenges/Dependencies:
- Define Requirements
- Explore tool options
- Test/prove design
- Enlist support from MRP controllers
- Data integrity
.
Recommendation: Design, test and implement an integrated supply chain demand planning/forecasting solution for Business Unit
Project Manager:Elaine Reichardt
Change Required:
- Organizational metrics
- Process changes/additions
- Separate demand and supply planning
- Technology changes
Opportunity/Benefit:$2MInventory reduction
Develop Solution DeliverableRecommendation Summary
25
Develop Solution
Pace of Change
Fast Measured
Sc
op
e o
f C
ha
ng
e
Tactical
Strategic
Focused Improvement
Continuous Improvement
Focused Restructuring
Business Process Innovation
Balanced Project Mix
26
TYPE PROJECT NAME START SCOR PROJECT MANAGER RESULTS PLAN END JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DECSUPPLY CHAIN SCOPE
Strategic Available to Promise Service Flexibility 02/08/00
Deliver Jo Ellsw orth Cost Assets 12/31/00
Strategic Make-to-Order Service Flexibility 10/01/99
Make David Hendrickson Assets 06/30/00
Strategic Outsource Reconfiguration Service Flexibility 12/03/99
Source Deb Lynch Cost Assets 12/31/00
Deficiency Non Working Inventory Reduction 07/19/99
Deliver Jay Gaustad Assets 04/30/00
Deficiency Integrated Supply Chain Planning Service Flexibility 08/16/99
Plan Peter Bolstorff Cost Assets TBD
Deficiency Texas Consignment Service Flexibility Determine Schedule
Source Joe Comerford Cost Assets
Strategic Efficient Material Acquisition Determine Schedule
Source Elaine Reichardt Cost
Strategic Direct to Consumer Transportation Service Flexibility 03/01/00 2001 plan
Deliver Rick Hardcopf Assets 12/31/00
CompleteCapital Plan
Complete Test
BrainstormingSession
QuarterlyActionPlan
Complete 2ndQuarter Plan
Complete 3rdQuarter Plan
Complete 4thQuarter Plan
CompleteImplementation
Process DesignValidation
Process Cutover
PlanningReview
NWIData Integration
DisconnectsReviewed
Action Plan
Monthly Action Plan Reviews - Plants
BrainstormProject Objectives;
Set Strategy
Develop Solution DeliverableMaster Project Schedule
27
Develop Solution DeliverableLevel 4 Work & Information Flow
SalesManageme
nt
FieldSales
Inside
Sales
Customer
Business
Analysis
P1.1
Planning
Marketing
BDU
Determ ine SignificantNet Custom er Change
@ SKU @ W eek
M aintain Item M asterL ist
Update New ProductIntroduction Plan @SKU w / appropriate
Forecast
ApproveRecom m ended SKU
Retirem ents
new SKU w/forecast
inactive SKUrecommended
SKU retirements
Run M onth EndForecast Update w /
Forecast M ethod A, 1,and 2
activeSKU list w/
consolidatedhistory
Run Exception ReportUsing DT @ Product
Code @ 60-90Foreccast
updatedJBA &
DTsystems
Analyze SKUExceptions and
Consolidate Input
SKU>± 25%
from 80%case volume
list
Determ ine SignificantM ix im pact @ SKU @
Custom er @ W eek
Analyze Prom otionalPerform ance @ SKU
@ W eek
M aintain Prom otionalPerform ance H istory
@ SKU @ W eek
M aintain Prom otionalCalendar @ SKU @
W eek
Rem odel Forecast
SKUExceptionChange
Summary
PromotionalH istoryInput
PromotionalImpact
M ix H istoryInput
Net CustomerChange Input
PromotionChanges
PromotionalH istoryInput
Achieve Consensuson 30-60 and 60-90
day Forecast
RecommendedSKU Forecast
Adjustments forExceptions
Achieve Consensuson 30-60 and 60-90
day Forecast
Achieve Consensuson 30-60 and 60-90
day Forecast
Achieve Consensuson 30-60 and 60-90
day Forecast
SKU>± 25%
from 80%case volume
list
SKU>± 25%
from 80%case volume
list
SKU>± 25%
from 80%case volume
list
28
Implement
Implementation of supply changes can be described in 3 phases– Transition– Installation– Institutionalization
Installation is an iterative process– Develop– Prepare– Cut-Over– Evaluate
29
Implementation DeliverableDashboard, Self Funding Project
P & L
Results
As Is To Be
Rev Rev(COGS) (COGS)
Gross Gross(SG&A) (SG&A)
NOI NOI (Inv + AR (Inv + AR -AP/I%) -AP/I%)
EVA EVA
Define
PlanPlan
SourceSource
MakeMake
DeliverDeliver
Processes
Design & Improve
Flows
INFORMATION
WORK FLOW
MATERIALS
OPS Strategy
Measure
Performance
Inventory Days
DSO/AR
Order Lead-time
Fill Rate
Rework
Asset Turns
METRICS
Logistics Cost
Cash Cycle Time