Presentation on theme: "Supply Chain Operations Reference Model (SCOR)"— Presentation transcript:
1 Supply Chain Operations Reference Model (SCOR) Ozgun C. Demirag
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) andMarket 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, byUsing standard terminology to better communicate and learn the supply chain issuesUsing standard metrics to compare and measure their performances
3 Supply Chain Operations Reference Model (SCOR) Integrates Business Process Reengineering, Benchmarking, and Process Measurement into a cross-functional framework.Capture the “as-is” state of a process and derive the desired “to-be” future stateQuantify the operational performance of similar companies and establish internal targets based on “best-in- class” resultsCharacterize the management practices and software solutions that result in “best- in-class” performanceCapture the “as-is” state of a process and derive the desired “to-be” future stateQuantify the operational performance of similar companies and establish internal targets based on “best-in-class” resultsCharacterize the management practices and software solutions that result in “best-in- class” performanceBusiness Process ReengineeringBenchmarkingBest Practices AnalysisProcess Reference Model
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 processesA framework of relationships among the standard processesStandard metrics to measure process performanceManagement practices that produce best-in-class performanceEnables the companies to:Evaluate and compare their performances with other companies effectivelyIdentify and pursue specific competitive advantagesIdentify software tools best suited to their specific process requirements
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 supplier’s supplier to customer’s customer, including equipment, supplies, spare parts, bulk product, software, etc.• All market interactions, from the understanding of aggregate demand to the fulfillment of each orderSCOR 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
6 Customer (Internal or External) Supplier (Internal or External) Supply Chain Operations Reference Model (SCOR):Basic Management ProcessesPlan-Source-Make-Deliver-ReturnPlanSourceMakeDeliverDeliverSourceMakeDeliverSourceMakeDeliverSourceReturnReturnReturnReturnSupplier’s SupplierReturnReturnCustomer’s CustomerCustomer (Internal or External)Supplier (Internal or External)Your CompanyPlan-Source-Make-Deliver-Return provide the organizational structure of the SCOR-model
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 requirementsEstablish/communicate plans for the whole supply chainSource (Processes that procure goods and services to meet planned oractual demand)Schedule deliveries (receive, verify, transfer)Make (Processes that transform product to a finished state to meet planned or actual demand)Schedule productionDeliver (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
8 Three Levels of Process Detail ReturnLevelDescriptionSchematicCommentsTop 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.SourceMakeDeliverPlan1#Configuration Level (Process Categories)A company’s 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.2Process Element Level (Decompose Processes)Level 3 defines a company’s ability to compete successfully in its chosen markets, and consists of:Process element definitionsProcess element information inputs, and outputsProcess performance metricsBest practices, where applicableSystem capabilities required to support best practicesSystems/tools3P1.1Identify, Prioritize, and Aggregate Supply-Chain RequirementsP1.2Identify, Assess, and Aggregate Supply-Chain RequirementsP1.3Balance Production Resources with Supply-Chain RequirementsP1.4CommunicateEstablish andSupply-Chain PlansImplementation Level (Decompose Process Elements)4Notin ScopeSupply Chain Operations Reference ModelCompanies implement specific supply-chain management practices at this level. Level 4 defines practices to achieve competitive advantage and to adapt to changing business conditions.
9 Level 1 Performance Metrics Customer-Facing Internal-Facing Supply ChainReliabilityResponsivenessFlexibilityCostAssetsPerformance AttributesDelivery 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
10 Level Metrics FactsLevel 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
11 Level 2 Process Types and Definitions Planning: A process that aligns expected resources to meet expected demand requirements.Balance aggregated demand and supplyConsider consistent planning horizon(Generally) occur at regular, periodic intervalsExecution: A process triggered by planned or actual demand that changes the state of material goods.Scheduling/sequencingTransforming productMoving product to the next processEnable: A process that prepares, maintains, or manages information or relationships on which planning and execution processes rely
12 Level 2 Process Categories P1: Plan Supply ChainP2-P5: Plan SCOR ProcessS1: Source Stocked ProductS3: Source Engineer-to-Order ProductS2: Source Make-to-Order ProductM1: Make-to-StockM2: Make-to-OrderM3: Engineer-to-OrderD1: Deliver Stocked ProductD2: Deliver Make-to-Order ProductD3: Deliver Engineer-to-Order ProductD4: 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 ProductSR3/DR3: Return Excess Product (Source Return/Deliver Return)EP, ES, EM, ED, ER: Enable corresponding SCOR ProcessesLevel 2 Process Categories
15 Example ContinuedProcess Category: Source Stocked ProductProcess Number: S1Process Category DefinitionThe procurement, delivery, receipt and transfer of raw material items, subassemblies, product and or services.Performance AttributesMetricReliability% Orders/lines processed completeResponsivenessTotal Source Cycle Time to CompletionFlexibilityTime and Cost related to Expediting the Sourcing Processes of Procurement, Delivery, Receiving and Transfer.CostProduct Acquisition CostsAssetsInventory DOSBest PracticesFeaturesJoint Service AgreementsAlliance and Leverage agreementsNone Identified
16 Example Continued Process Element: Transfer Product Process Element Number: S1.4Process Element DefinitionThe 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 AttributesMetricReliability% Product transferred damage free% Product transferred complete% Product transferred on-time to demand requirement% Product transferred without transaction errorsResponsivenessTransfer Cycle TimeFlexibilityTime and Cost Reduction related to Expediting the Transfer Process.CostTransfer & Product storage costs as a % of Product Acquisition CostsAssetsInventory DOSBest PracticesFeaturesDrive deliveries directly to stock or point-of-use in manufacturing to reduce costs and cycle timePay on receiptSpecify delivery location and time (to the minute)Specify delivery sequenceCapability Transfer to OrganizationNone Identified
20 Some Graphical Tools:1st Step in configuring a SC: Illustrate physical layout, material flow and place Level 2 execution process categories to describe activities at each location.
21 SCOR Process Maps2nd Step: Create the SCOR Process Maps: Place planning process categories, using dashed lines to show links with execution processes
22 Software Package for Modeling SCOR: ARIS EasySCOR The ARIS Toolset and ARIS Easy Design are process modeling tools. The ARIS Toolset is a BPR tool, Easy Design is used for process capture.The EasySCOR Modeler is a software package that includes the ARIS Easy Design modeling kit and the SCOR model in ARIS format.ARIS EasySCOR consists of process models that describe the SCOR levels 1 to 3. Implementation level, level 4 is not included.
23 Process Map Example created in ARIS EasySCOR Suppliers SupplierSuppliersAssemble/ PackageDistribution CentersGeo Ports of EntryAmericas--->Europe--->Asia--->
24 ObservationsSCOR describes processes not functions. In other words, the Model focuses on the activity involved, not the person or organizational element that performs the activity.Implementation level, Level 4, is not described in SCOR.