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Presentation on theme: "This presentation is the exclusive property of the Supply Chain Council. Copyright © Supply Chain Council. 2006. All rights reserved. The marks SCOR®,"— Presentation transcript:

1 This presentation is the exclusive property of the Supply Chain Council. Copyright © Supply Chain Council All rights reserved. The marks SCOR®, CCOR™, DCOR™ and SCOR Roadmap™ are the exclusive property of the Supply Chain Council. SCOR Framework Introducing all elements of the Supply Chain reference model: Standard processes, metrics and best practices

2 2 Copyright © Supply Chain Council, All rights reserved SCOR Framework Workshop Understand the History and Context of SCOR Learn the Components of the SCOR Framework Process Nomenclature Process Metrics Process Best Practices Understand how to model a Supply-Chain with SCOR Understand how to characterize a Supply-Chain with SCOR metrics Apply the SCOR framework using a simplified SCOR Project Roadmap 2

3 3 Copyright © Supply Chain Council, All rights reserved 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 advancing state-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 chain management Offers Training, Certification, Benchmarking, Research, Team Development, Coaching, and Cross-standard Integration focused on the SCOR® framework Founded in 1996 Approaching 1000 Association Members Chapters in North America, Europe, Japan, South Africa, Latin America, Australia/New Zealand, South East Asia and Greater China, with developing Chapters India and Middle East Driving value through the use of SCOR® 3

4 4 Customer processes Supplier processes Product/Portfolio Management Supply Chain SCOR ® Supply Chain SCOR ® Product Design DCOR™ Product Design DCOR™ Sales & Support CCOR™ Sales & Support CCOR™ Customer processes Supplier processes Product/Portfolio Management Supply Chain SCOR ® Product Design DCOR™ Sales & Support CCOR™ Copyright © Supply Chain Council, All rights reserved Supply-Chain 4

5 5 Copyright © Supply Chain Council, All rights reserved Supply-Chain 5 Customer processes Supplier processes Supply Chain Customer processes Supplier processes Supply Chain Process, arrow indicates material flow direction Process, no material flowInformation flow Deliver Make Source Return Plan

6 6 Copyright © Supply Chain Council, All rights reserved SCOR: A Process Framework 6 Process frameworks deliver the well-known concepts of business process reengineering, benchmarking, and best practices into a cross-functional framework Standard processes: Plan, Source, Make, Deliver, Return, Enable Standard metrics: Perfect Order Fulfillment, Cash-to-Cash Cycle 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 and practices and inputs and outputs

7 7 Copyright © Supply Chain Council, All rights reserved Capture the ‘As-is’ business activity structure and derive the future ‘To-be’ 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 superior performance Capture the ‘As-is’ business activity structure and derive the future ‘To-be’ 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 superior performance Business Process Re-Engineering BenchmarkingBest Practices Analysis Process Reference Framework Combines Best Techniques 7 3 techniques become 1 integrated approach

8 8 Copyright © Supply Chain Council, All rights reserved End-to-End Supply Chain 8 Supplier Customer Suppliers’ Supplier Source Internal or External Your Company Return Deliver Make Source Return Plan Deliver Return Source Return Make Source Return Plan Deliver Return DeliverMake Plan Return Customers’ Customer SCOR reference model Whether from Cow to Cone or from Rock to Ring SCOR is not limited by organizational boundaries

9 9 Copyright © Supply Chain Council, All rights reserved End-to-End Supply Chain 9 Customer’s CustomerCustomer MP3 Company SupplierSupplier’s Supplier Sub assembliesManufacturerRetailerConsumerComponents Source Deliver Source Deliver Make Source Deliver Make Source Deliver Make Source Process, arrow indicates material flow direction

10 10 Level 1Level 2Level 3Level 4Level 5 ScopeConfigurationActivityWorkflowTransactions Differentiates Business Differentiates Complexity Names TasksSequences StepsLinks Transactions Defines Scope Differentiates Capabilities Links, Metrics, Tasks and Practices Job Details Details of Automation Framework Language Industry or Company Language Technology Specific Language Copyright © Supply Chain Council, All rights reserved EDI XML SCOR Hierarchy 10 S1 Source Stocked Product S Source S1.2 Receive Product Standard SCOR practicesCompany/Industry definitions

11 11 Copyright © Supply Chain Council, All rights reserved Level 1Level 2Level 3Level 4Level 5 ScopeConfigurationActivityWorkflowTransactions Differentiates Business Differentiates Complexity Names TasksSequences StepsLinks Transactions Defines Scope Differentiates Capabilities Links, Metrics, Tasks and Practices Job Details Details of Automation CxO (COO, CIO) EVP SVP VP Director Line Manager Manager Team Lead Individuals Programmer Organization focusedActivity focused Organizational Hierarchy 11 EDI XML S1 Source Stocked Product S Source S1.2 Receive Product

12 12 Copyright © Supply Chain Council, All rights reserved SCOR Process Codification 12 SCOR processes have unique identifiers: 1. One capital only are level 1 processes: P, S, M, D and R (5 in total) 2. A capital plus a number are level 2: P1, S2, M3, D2, D4 (15 in total) Two groups of exceptions for level 2: Enable: EP, ES, EM, ED and ER (5 in total) and Return: SR1, DR1, SR2, DR2, SR3, DR3 (6 in total) 3. A capital plus a number, a period and a number are level 3 processes: P1.1, P1.2, S2.1, M1.5, D3.12 (111 processes in total) Two groups of exceptions for level 3: Enable: EP.1, ES.3, EM.4, ED.8, ER.1 (47 in total) Return: SR1.1, DR1.3, SR2.2, DR2.4, SR3.5, DR3.1 (27 in total) X = level 1, Xn = level 2, Xn.m = level 3

13 13 750g minced steak1 onion (rings) 1 tsp Worcestershire sauce4 sesame seed buns 2 tbsp mustard10 shredded lettuce leaves 2 sliced tomatoes2 sliced dill pickles 10 thin slices Swiss cheeseSalt and pepper Copyright © Supply Chain Council, All rights reserved Exercises: The Dinner Party The supply chain used for the exercises is a dinner party You will host a party this weekend with of your dearest friends You will serve them burgers from your grill (barbecue) You are responsible for organizing the event, ingredients, grill, tools and utensils and general well-being of your guests We will be using “The Dinner Party” through the rest of today to exercise different modeling characteristics Ingredients of a burger:

14 14 Copyright © Supply Chain Council, All rights reserved Execution Processes 14 Customer processes Supplier processes Supply Chain Customer processes Supplier processes Supply Chain Deliver Make Source Return Plan Processes: Source, Make and Deliver Objective: value-add, revenue generating

15 15 Copyright © Supply Chain Council, All rights reserved Level: Different capabilities Stocked Product (S1, M1, D1) Inventory Driven (Plan) Standard Material Orders High Fill-rate, short turnaround Make-to-Order (S2, M2, D2) Customer Order Driven Configurable Materials Longer turn-around times Engineer-to-Order (S3, M3, D3) Customer Requirements Driven Sourcing New Materials Longest long lead-times, low fill rates D1R1I1M1S1D1 I2 R1 D2R2D2 S1 M2S2I3 R1 D3R3 R1 R2 D3 R1 M3S3 S1 S2 Capability Models 15

16 16 Copyright © Supply Chain Council, All rights reserved Source (Process ID: S) Objectives of this process: The ordering, delivery, receipt and transfer of raw material items, subassemblies, product and/or services. Key processes comprehended: Schedule product deliveries Receive, inspect, and hold materials Issue material to Make or Deliver processes Supplier/Vendor Agreements Vendor certification and feedback, sourcing quality Manage Raw Materials inventories Freight, import/export documentation Hint: Receiving processes? Probably Source in SCOR 16

17 17 Copyright © Supply Chain Council, All rights reserved Source Configurations Configurations: Source Stocked Product (Process ID: S1) The ordering and receiving of existing products, components and services from existing contracts, based on requirement plans. Source Make-to-Order (Process ID: S2) The ordering and receiving of existing products, components and services for a unique and identified customer order. Source Engineer-to-Order (Process ID: S3) The selection, ordering and receiving of specialized products or services that are designed and/or built based on the requirements or specifications of a particular customer order or contract. 17

18 18 Copyright © Supply Chain Council, All rights reserved Stocked Product (S1)Make-to-Order (S2)Engineer-to-Order (S3) S2.1Schedule Product Deliveries S3.1 Identify Sources of Supply S3.2Select Final Supplier(s) and Negotiate S1.1Schedule Product Deliveries S3.3Schedule Product Deliveries S1.2Receive ProductS2.2Receive ProductS3.4Receive Product S1.3Verify ProductS2.3 Verify ProductS3.5Verify Product S1.4Transfer ProductS2.4 Transfer ProductS3.6 Transfer Product S1.5 Authorize Supplier Payment S2.5Authorize Supplier Payment S3.7Authorize Supplier Payment Source Process Elements 18

19 19 S2.2 Receive Product S2.4 Transfer Product S2.5 Authorize Supplier Payment S2.1 Schedule Product Deliveries S2.2 Receive Product S2.3 Verify Product S2.4 Transfer Product S2.5 Authorize Supplier Payment S2.1 Schedule Product Deliveries S2.2 Receive Product S2.3 Verify Product S2.4 Transfer Product S2.5 Authorize Supplier Payment S2.1 Schedule Product Deliveries Copyright © Supply Chain Council, All rights reserved Question: Process Flows 19 Which of the following flows is/are correct?

20 20 Copyright © Supply Chain Council, All rights reserved Source Process Exercise 20 A supply chain manager finds that a high percentage of finished goods need to be reworked as a certain component that is ordered specifically for customer orders is showing high failure rates when installed in the product. Which (1) level 3 process should catch faulty materials before they are used in production? Which metric indicates the yield of this process? Where do this process’ inputs come from? Which best practices could this manager consider if he wants to reduce the time it takes to complete the materials testing?

21 21 Copyright © Supply Chain Council, All rights reserved Make (Process ID: M) 21 Objectives of this process: The process of adding value to products through mixing, separating, forming, machining, and chemical processes. Key Processes Comprehended: Schedule production, request and receive material from Source and/or Make processes Manufacture, assemble/disassemble and test product, package, hold/release product Managing product quality and engineering changes Managing facilities and equipment, production status workflow and capacity management Manage Work-In-Process (WIP) inventories Hint: Itemnumber change? Probably Make in SCOR

22 22 Copyright © Supply Chain Council, All rights reserved Make Configurations Make-to-Stock (Process ID: M1) The making of standard products and services. Planning (Plan) processes determine what, how much and when to make. Make-to-Order (Process ID: M2) The making of standard or configurable products and services for unique customer orders. Customer orders determine what, how much and when to make. Customer orders can be traced throughout the Make process. Engineer-to-Order (Process ID: M3) The making of specialized products or services that are fully or partially designed and made based on the unique requirements and specifications of a particular customer order or contract. Customer orders and specifications can be traced throughout the Make process. 22

23 23 Copyright © Supply Chain Council, All rights reserved Make-to-Stock (M1)Make-to-Order (M2)Engineer-to-Order (M3) M1.1Schedule Production Activities M2.1Schedule Production Activities M3.1Finalize Production Engineering M3.2Schedule Production Activities M1.2Issue Material M2.2Issue Sourced/In- Process Product M3.3Issue Sourced/In-Process Product M1.3Produce and TestM2.3Produce and TestM3.4Produce and Test M1.4PackageM2.4PackageM3.5Package M1.5Stage ProductM2.5Stage Finished ProductM3.6Stage Finished Product M1.6Release Product to Deliver M2.6Release Finished Product to Deliver M3.7Release Product to Deliver M1.7Waste DisposalM2.7Waste DisposalM3.8Waste Disposal Make Process Elements 23

24 24 Copyright © Supply Chain Council, All rights reserved Make Process Exercise 24 A production manager finds that her engineer-to-order shop is unable to meet the daily schedules; down-time, change-over- times and misalignment between sequence and materials seem to be the key problems: Which (1) level 3 process should she investigate? Which metric or metrics should she monitor to continuously track this problem? Where do relevant inputs come from? Which best practices could this manager consider?

25 25 Copyright © Supply Chain Council, All rights reserved Deliver (Process ID: D) Objectives of this process: Perform customer-facing order management and order fulfillment activities including outbound logistics. Key processes comprehended: Product, service and price quotations Order entry and maintenance Order consolidation, picking, packing, labeling and shipping Import/export documentation Customer delivery and installation Logistics and Freight Management Manage Finished Goods inventories Hint: Order taking or Shipping? Probably Deliver in SCOR

26 26 Copyright © Supply Chain Council, All rights reserved Deliver Configurations 26 Deliver Stocked Product (Process ID: D1) The delivery of standard products (and services) that are maintained in a finished goods state prior to the receipt of a customer order. Deliver Make-to-Order Product (Process ID: D2) The delivery of standard or configurable products and services that are obtained (Source or Make) for a customer order. Deliver Engineer-to-Order Product (Process ID: D3) The delivery of specialized products and services that have been fully or partially designed in negotiation and based on requirements from a customer order and customer provided specifications Deliver Retail Product (Process ID: D4) The delivery of standards goods in a retail store

27 27 Copyright © Supply Chain Council, All rights reserved Deliver Process Elements (1/3) 27 Stocked Products (D1)Make-to-Order (D2)Engineer-to-Order (D3) D1.1Process Inquiry & QuoteD2.1Process Inquiry & Quote D3.1Obtain & Respond to RFP/RFQ¹ D1.2Receive, Enter & Validate Order D2.2Receive, Configure, Enter & Validate Order D3.2Negotiate & Receive Contract D1.3Reserve Inventory & Determine Delivery Date D2.3Reserve Inventory & Determine Delivery Date D3.3Enter Order, Commit Resources & Launch Program D1.4Consolidate OrdersD2.4Consolidate OrdersD3.4Schedule Installation D1.5Build LoadsD2.5Build LoadsD3.5Build Loads D1.6Route ShipmentsD2.6Route ShipmentsD3.6Route Shipments D1.7Select Carriers & Rate Shipments D2.7Select Carriers & Rate Shipments D3.7Select Carriers & Rate Shipments ¹ RFP = Request for Proposal, RFQ = Request for Quote

28 28 Copyright © Supply Chain Council, All rights reserved Deliver Process Elements (2/3) 28 Stocked Products (D1)Make-to-Order (D2)Engineer-to-Order (D3) D1.8Receive Product from Source or Make D2.8Receive Product from Source or Make D3.8Receive Product from Source or Make D1.9Pick ProductD2.9Pick ProductD3.9Pick Product D1.10Pack ProductD2.10Pack ProductD3.10Pack Product D1.11Load Product & Create Documentation D2.11Load Product & Create Documentation D3.11Load Product & Create Documentation D1.12Ship ProductD2.12Ship ProductD3.12Ship Product D1.13Receive & Verify Product by Customer D1.14Install ProductD2.14Install ProductD3.14Install Product D1.15InvoiceD2.15InvoiceD3.15Invoice

29 29 Copyright © Supply Chain Council, All rights reserved Deliver Process Elements (3/3) The Retail supply chain model does not match up to the Manufacturing supply chain model, therefore processes are quite different 29 Retail Products (D4) D4.1Generate Stocking Schedule D4.2Receive Product at Store D4.3Pick Product from Backroom D4.4Stock Shelf D4.5Fill Shopping Cart D4.6Checkout D4.7Deliver and/or Install

30 30 Copyright © Supply Chain Council, All rights reserved Control processes: Plan, Enable Plan and Enable processes prepare the supply-chain to ensure smooth execution Planning processes balance the need for resources, materials, capacity, etc. with the availability of these resources. This includes prioritization if needed. Enable processes address 8 control aspects for the supply chain. They monitor compliance, deliver information from other process areas and highlight dependencies on these other process areas. They also support maintenance of relationships with suppliers. 30

31 31 Copyright © Supply Chain Council, All rights reserved Planning Processes 31 Customer processes Supplier processes Supply Chain Customer processes Supplier processes Supply Chain Deliver Make Source Return Plan Processes: Plan Objective: Drive/coordinate execution processes

32 32 Copyright © Supply Chain Council, All rights reserved Plan (Process ID: P) 32 Objectives of this process: The process of determining requirements and corrective actions to achieve supply chain objectives Key Processes Comprehended: Supply chain revenue planning/forecasting Materials requirement planning Factory, repair, maintenance facilities capacity planning Distribution requirements planning Manage planning parameters Hint: Forecasting, S&OP, MRP? Probably Plan in SCOR

33 33 Copyright © Supply Chain Council, All rights reserved Plan Configurations (1/2) 33 Plan Supply Chain (Process ID: P1) Planning overall supply chain targets. Plan Supply Chain drives and coordinates P2, P3, P4 and P5 plans (Compare to “Revenue plan”, or “Budget” in certain industries) Plan Source (Process ID: P2) Planning of material ordering and receiving activities. Plan Source calculates which materials need to be available when to support the production plan (P3) and/or the delivery plan (P4). (Compare to “Materials Requirements Plan”) Plan Make (Process ID: P3) Planning of production and/or MRO activities. Plan Make ensures the production resources (capacity) are in place as needed and may generate production orders. (Compare to “Production Plan”)

34 34 Copyright © Supply Chain Council, All rights reserved Plan Configurations (2/2) 34 Plan Deliver (Process ID: P4) Planning of order management, material handling and transportation activities. Plan Deliver ensures resources are in place as needed and may generate or recalculate shipping dates based on material availability. (Compare to “Shipment Plan”, “Load Planning”) Plan Return (Process ID: P5) Planning of the reverse logistics shipping and material handling capacity. Note: This does not include the maintenance, repair or overhaul activity planning as those are Make processes.

35 35 Plan Make Plan Source Plan Supply Chain P1.1 P1.2 P1.3P1.4 P1.1 P1.2 P1.3P1.4 P2.1 P2.2 P2.3P2.4 P3.1 P3.2 P3.3P to P3.2 end full cyclebegin next cycle Copyright © Supply Chain Council, All rights reserved Plan Processes Planning is an iterative process: 1. The output of Plan Supply Chain is the input for Plan Source, Plan Make, Plan Deliver and Plan Return 2. The output of Plan Source, Plan Make, Plan Deliver and Plan Return are inputs for Plan Supply Chain; The output of one cycle is the input for the next cycle 35

36 36 Copyright © Supply Chain Council, All rights reserved Enable Processes 36 Customer processes Supplier processes Supply Chain Customer processes Supplier processes Supply Chain Deliver Make Source Return Plan Processes:Enable Plan, Enable Source, Enable Make, Enable Deliver and Enable Return

37 37 Copyright © Supply Chain Council, All rights reserved Enable Processes 37 Objective: The Enable processes are five groups of processes under Plan, Source, Make, Deliver and Return with 3 distinct types of objectives: 1. Manage process performance 2. Manage process control data 3. Manage process relationships Key processes comprehended: Managing business rules and monitoring adherence Measuring supply chain performance and determine corrective action Managing risk and environmental impact Managing the supply chain network and facilities Hint: Equipment or plant maintenance? Probably Enable

38 38 Copyright © Supply Chain Council, All rights reserved Enable Categories 38 Enable Plan (Process ID: EP) Performance, data and relationship management processes for all types of planning processes: Plan Supply Chain, Plan Source, Plan Make, Plan Deliver and Plan Return. Examples: maintain planning cycles, monitor planning accuracy, manage supply chain risks. Enable Source (Process ID: ES) Performance, data and relationship management processes for all receiving activities and supplier related processes. Examples: Monitor supplier performance, maintain what is sourced where. Enable Make (Process ID: EM) Enable management processes for manufacturing, repair and overhaul type processes. Examples: BOM maintenance, preventive equipment maintenance, monitoring capacity utilization/shortage.

39 39 Copyright © Supply Chain Council, All rights reserved Enable Categories 39 Enable Deliver (Process ID: ED) Performance, data and relationship management processes for all order management, warehouse and distribution activities and forwarder related processes. Examples: Monitor order management and forwarder performance, maintain a distribution network, managing risk. Enable Return (Process ID: ER) Enable management processes for all types of reverse logistics processes: MRO returns, defective product returns and excess inventory returns. Examples: Maintain return approval rules, Maintain issue tracking software, maintain a return distribution network.

40 40 Copyright © Supply Chain Council, All rights reserved Reverse Processes 40 Customer processes Supplier processes Supply Chain Customer processes Supplier processes Supply Chain Deliver Make Source Return Plan Processes: Return (Source Return, Deliver Return) Objective: reverse material flows

41 41 Copyright © Supply Chain Council, All rights reserved Return (Process ID: R) 41 Objective of this process: Moving material from customer back through supply chain to address defects in product, ordering, or manufacturing, or to perform upkeep activities. Key Processes Comprehended Identification of the need to return a product or asset Requesting and issuing return authorization Inspection and disposition decision-making Transfer/Disposition of product or asset Managing return transportation capacity Managing returned material inventories Hint: Reverse material flow? Probably Return in SCOR

42 42 Copyright © Supply Chain Council, All rights reserved Return Configurations 42 Return Defective Products (Process IDs: SR1 and DR1) The return of products because the product is defective, the wrong product was ordered or shipped. Return Maintenance, Repair & Overhaul (IDs: SR2 and DR2) The return of products or assets to perform preventative maintenance, (end-of-life) overhaul or repairs due to breakage/aging with use Return Excess Products (Process IDs SR3 and DR3) The return of excess inventories and inventories of product which will be retired (end-of-life excess). The product is new and in original packaging. SR = Source Return, DR = Deliver Return

43 Positioning Source Return and Deliver Return Consider the flow of goods; Notice the positions of Source and Deliver Now, notice the positions of Source Return and Deliver Return Supplier Customer My Company Deliver Return Source Return Deliver Return Customer My Company DeliverSource Deliver Supplier 43 Copyright © Supply Chain Council, All rights reserved Return Configurations 43

44 44 Copyright © Supply Chain Council, All rights reserved Modeling with SCOR Drivers for modeling: Why do you model Business opportunities: Strategy Development Merger, Acquisition or Divestiture (Companies or Supply Chains) Process optimization and Re-engineering Standardization, Streamlining and Management alignment New business start-up (Company and Supply Chain start-ups) Benchmarking Process Outsourcing Technology services: Software implementation (ERP, PLM, QC) Workflow & Service Oriented Architecture 44

45 45 Copyright © Supply Chain Council, All rights reserved Different Model Types SCOR recognizes different types of models. Each serving a different purpose: Business Scope diagram: Set the scope for a project or organization Geographic Map (a.k.a. Geo Map): Describes material flows in a geographic context; Highlights node¹ complexity or redundancy Thread Diagram: Material flow diagram, focused on level 2 process connectivity; Describes high level process complexity or redundancy Workflow or Process Models: Information, material and work flow diagram at level 3 (or beyond); Highlights information, people and system interaction issues ¹)A node represents a logical or geographic entity in a supply chain. Examples: Warehouse, Factory, Store 45

46 Steps to create a Business Scope Diagram 1. Create or open the business scope diagram template 2. Identify customers of your organization or project and enter these in the customers column in the scope diagram. 3. Identify and enter the key nodes within your organization or project. A node represents a logical or geographic entity in the supply chain. Consider: Warehouse, Factory, Store, HQ etc. 4. Identify and enter the suppliers of your organization or project 5. Optionally link the nodes to reflect material and/or information flows. Use a different color and/or stroke differentiate material and information flows. Example: 46 Copyright © Supply Chain Council, All rights reserved Creating a Scope Diagram 46 Material and information flow Information flow

47 SupplierMy OrganizationCustomer SupplierMy OrganizationCustomer SupplierMy OrganizationCustomer 47 Copyright © Supply Chain Council, All rights reserved Creating a Scope Diagram 47 Steps to create a Business Scope Diagram 1. Create or open the business scope diagram template 2. Identify and enter the customers of your project or organization 3. Identify and enter the key nodes within your project or organization 4. Identify and enter the suppliers of your project or organization 5. Optionally link the nodes to reflect material and/or information flows (using different color/stroke) Flash Inc. Battery ltd. Comps FactoryDCRetail Inc. mp3 HQ 234 Flash Inc. Battery ltd. Comps FactoryDCRetail Inc. mp3 HQ 55 1

48 Suppliersmp3, Inc.Customers Service Providers 48 Copyright © Supply Chain Council, All rights reserved The Result: Scope Diagram 48 Flash Inc. Battery ltd. Components Factory Warehouse Retail, Inc. mp3 HQ Material and information flow Information flow

49 49 Copyright © Supply Chain Council, All rights reserved Modeling with SCOR 49 Steps to create the Geographic Map: 1. Create geographic context (a.k.a. the map) 2. Draw and name your customers on the map a. Identify the level 2 processes b. List the level 2 processes in the customer on your map 3. Beginning with your customers, repeat this for every node on the map: a. Identify all supplying nodes (where does material come from) b. Draw and name these supplying nodes on the map c. Identify the level 2 processes d. list these in the node on your map e. Draw the material flows (arrows connecting the nodes) Repeat until you have included all your suppliers/nodes

50 50 Retail, Inc S1, P2 b France Spain UK Germany 2 China India Copyright © Supply Chain Council, All rights reserved Creating a Geographic Map 50 Steps to create the Geographic Map: 1. Create geographic context (a.k.a. the map) 2. Draw and name your customers on the map a. Identify the level 2 processes b. List the level 2 processes in the customer node 3. Starting with your customers, repeat for each node: a. Identify all supplying nodes b. Draw and name these supplying nodes c. Identify the level 2 processes d. List the level 2 processes in each node e. Draw the material flows (connecting arrows) Repeat until you have included all your suppliers 1 MP3 Factory S1, M1, D1 3 b¹b¹ d¹d¹ Drive Supplier D1, P1, P4 b²b² d²d² e²e² e¹e¹

51 51 Drive Supplier D1, P1, P4 Battery Supplier D1, P1, P4 Retail, Inc S1, P2 MP3 Factory P3, S1, M1, D1 HQ P1, P2, D2, S2 Copyright © Supply Chain Council, All rights reserved Result: The Geographic Map 51 Question: No flow from HQ; Why?

52 52 Copyright © Supply Chain Council, All rights reserved Modeling with SCOR 52 1.Orders are faxed in and entered in OMS 2.Every night the orders are scheduled 3.The orders are released to the factory based on the delivery date offset 4.Factory creates and schedules factory work orders in SFCS 1 D2.2 Receive, Enter, Validate Order D2.3 Reserve Inventory & Determine Delivery Date M2.1Schedule Production Activities 2 Steps to establish SCOR process models (workflows) 1. Obtain generic descriptions (this is what people describe) 2. Map these generic descriptions to SCOR process IDs (normalize) 3. Create swimming lanes to reflect organizational boundaries 4. Create workflow with these SCOR processes 5. Add description to workflows to reflect inputs/outputs of the processes 6. Optionally add other relevant information

53 53 Copyright © Supply Chain Council, All rights reserved Elements of a Business Process 53 not in SCOR organization activity business rules technology measurements inputsoutputs people metrics best practices geography platform interface skills Process is defined by more than just activity

54 54 Copyright © Supply Chain Council, All rights reserved Obtaining Generic Descriptions 54 Staple-Yourself-To-An-Order; Proven technique to obtain generic language process descriptions: Follow the logical flow of an order through the process. Each level 1 process has an order (except Plan): Customer order for Deliver, Production order for Make, Purchase order for Source and Return Authorization for Return. For each order start with the process of order creation and follow the order and document each activity until the order is completed/closed. Similarly follow the steps of the planning cycles you encounter. Finally cover any process you have missed so far; Use your SCOR list of processes as a check-list. Hint: To obtain generic descriptions for an end-to-end supply chain: Start with Plan, then Deliver, Make, Source.

55 55 Copyright © Supply Chain Council, All rights reserved Obtaining Generic Descriptions 55 The purpose of capturing process is to understand it and remove, adjust or repair it where needed Recognize process characteristics: 'Measurements': It takes 30 minutes to build… 'Business rule': The plan is updated weekly… 'People': This is handled by Joanna on Thursdays … 'Business rule': This is done to provide.. with.. data.. 'Inputs' or 'triggers': When we receive the document.. 'Outputs': We send them the document.. 'Technology': We print the document from the.. system.. 'Business rules': We need two copies of the form.. Verify hearsay statements, to eliminate perception

56 56 Copyright © Supply Chain Council, All rights reserved SCOR Metrics Definitions: Performance Attribute: a characteristic to describe a strategy. Performance attributes serve as classification for KPIs and metrics Key Performance Indicator (KPI): a metric that is representative to measure the overall performance or state-of-affairs Metric: a standard for measurement Measurement: an observation that reduces the amount of uncertainty about the value of a quantity SCOR metrics: Diagnostic metrics Linked to business objectives Highlight the gap in performance Change over time is more valuable than a single sample 56

57 57 AttributeStrategy Reliability (RL) Consistently getting the orders right, product meets quality requirements Responsiveness (RS) The consistent speed of providing products/services to customers Agility (AG) The ability to respond to changes in the market (external influences) Cost (CO) The cost associated with managing and operating the supply chain Assets (AM) The effectiveness in managing the supply chain’s assets in support of fulfillment Copyright © Supply Chain Council, All rights reserved Customer Internal Performance Attributes 57 Question:What is/are the most important attributes to achieve your supply chain strategy?

58 58 Copyright © Supply Chain Council, All rights reserved ‘Levels’ in Metrics Level 1: Strategic metrics a.k.a. Key Performance Indicators Measure overall supply chain performance; health of the supply chain Set the scope and objectives for a supply chain, project or organization Translate a business problem or strategy into something measurable Establish the priority or priorities for organization Level 2: Diagnostic metrics Measure a part of the supply chain and/or a part of the strategic metric Provide direction to where problems originate Caution: Level 2 metrics do not by definition add up to a level 1 metric Beyond level 1 and 2: all metrics are called level 3 SCOR does not specify levels for metrics that are not level 1 or 2 These metrics serve as further diagnostic tools 58

59 59 Copyright © Supply Chain Council, All rights reserved SCOR Metrics Codification 59 SCOR metrics have unique identifiers: 1. Two capitals are performance attributes: RL, RS, AG, CO and AM (5) 2. Two capitals, a period the number one (1) and a number are strategic (a.k.a. level 1) metrics: RL.1.1, RS.1.1, AG.1.1, CO.1.1, CO.1.2, AM.1.3 (10 in total) 3. Two capitals, a period the number two (2) and a number are diagnostic (a.k.a. level 2) metrics: RL.2.1, RS.2.1, AG.2.1, CO.2.1, CO.2.2, AM.2.7 (36 in total) 4. Two capitals, a period the number three (3) and a number are diagnostic (or level 3) metrics: RL.3.1, RS.3.1, AG.3.1, CO.3.149, CO.3.151, AM.3.44 (>500) XX = performance attribute, XX.1.n = level 1, XX.2.n = level 2, and so on

60 Measuring strategy: KPIs are strategic (level 1) metrics 60 AttributeStrategic metric ReliabilityRL.1.1 Perfect Order Fulfillment ResponsivenessRS.1.1 Order Fulfillment Cycle Time AgilityAG.1.1 Upside Supply Chain Flexibility AG.1.2 Supply Chain Upside Adaptability AG.1.3 Supply Chain Downside Adaptability CostCO.1.1 Supply Chain Management Cost CO.1.2 Cost of Goods Sold AssetsAM.1.1 Cash-to-Cash Cycle Time AM.1.2 Return on Supply Chain Fixed Assets AM.1.3 Return on Working Capital Copyright © Supply Chain Council, All rights reserved Customer Internal KPIs; Strategic Metrics 60

61 61 Metric:RL.1.1 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, complete documentation and in the right condition Calculation:[Total Perfect Orders] / [Total Number of Orders] Diagnostic Metrics: (examples) RL.2.1 % Orders Delivered in Full RL.2.4 Perfect Condition RL.3.19 % Orders Received Defect Free RL.3.24 % Orders Received Damage Free Notes:An order is perfect only if all L2/L3 metrics are perfect; An order must be: on-time AND in-full AND right condition AND right documentation Copyright © Supply Chain Council, All rights reserved Strategic Reliability Metric 61

62 62 Metric:RS.1.1 Order Fulfillment Cycle Time Definition: The average actual cycle time consistently achieved to fulfill customer orders. The actual cycle time starts with the receipt of the order and ends with the customer acceptance of the delivery. The unit of measure is days. Calculation: [Sum Actual Cycle Times For All Orders Delivered] / [Total Number Of Orders Delivered] Diagnostic Metrics: (examples) RS.2.2 Make Cycle Time RS.2.3 Deliver Cycle Time RS.3.96 Pick Product Cycle Time Notes:Order Fulfillment Cycle Time includes dwell time. Dwell time is the time no value add activities are performed on the order or product, imposed by customer requirements. Copyright © Supply Chain Council, All rights reserved Strategic Responsiveness Metric 62

63 63 Copyright © Supply Chain Council, All rights reserved Strategic Agility Metrics 63 Metric:AG.1.1 Upside Supply Chain Flexibility Definition: The number of days required to achieve an unplanned sustainable 20% increase in quantities delivered. Seasonality is not considered unplanned/unforeseen. The unit of measure for flexibility is calendar days. Calculation: The larger of the number of days required to achieve sustainable increase for Source, Make and Deliver Diagnostic Metrics: AG.2.1 Upside Source Flexibility AG.2.2 Upside Make Flexibility AG.2.3 Upside Deliver Flexibility Notes:This metric may have more than one Source, Make and Deliver Flexibility component depending on the complexity of the supply chain.

64 64 Copyright © Supply Chain Council, All rights reserved Metric:AM.1.1 Cash-to-Cash Cycle Time Definition: The time it takes for cash invested in materials to flow back into the company after finished goods have been delivered to customers. The unit of measure for Cash-to-Cash Cycle Time is calendar days Calculation: [Inventory Days of Supply] + [Days Sales Outstanding] – [Days Payable Outstanding] Diagnostic Metrics: AM.2.1 Days Sales Outstanding (DSO) AM.2.2 Inventory Days of Supply (IDOS) AM.2.3 Days Payable Outstanding (DPO) Notes:For services, the time between paying the resources assigned to a service and receiving payment for the service delivery. Strategic Asset Metrics 64

65 65 Copyright © Supply Chain Council, All rights reserved Metric:AM.1.2 Return on Supply Chain Fixed Assets Definition: The return an organization receives on its invested capital in supply chain fixed assets. This includes the fixed assets used to Plan, Source, Make, Deliver and Return. Examples of fixed assets include land, buildings, machinery, trucks Calculation: ([Supply Chain Revenue] – [COGS] – [Supply Chain Management Costs]) / [Supply Chain Fixed Assets] Diagnostic Metrics: AM.3.11 Deliver Fixed Assets Value AM.3.18 Make Fixed Assets Value AM.3.20 Plan Fixed Asset Value AM.3.27 Source Fixed Assets Value Notes:Supply-Chain Revenue is the operating revenue generated from a supply chain. This does not include non-operating revenue, such as investments, etc.. Strategic Asset Metrics 65

66 66 Copyright © Supply Chain Council, All rights reserved Metrics and Analysis 66 Levels in metrics help root cause performance issues Strategic metrics (level 1) can be diagnosed by investigating the level 2 metrics. Different types of relationships exist between a metric (the ‘parent’) and it’s diagnostic metrics (the ‘children’): 1. The parent is the sum of it’s children (e.g. time and cost) 2. The children are multiplied to calculate the parent (e.g. yield) 3. The relationship is undefined (but can be statistically observed) Diagnostic metrics don’t necessarily add up to their parents: Order Fulfillment Cycle Time IS NOT the sum of Deliver Cycle Time + Make Cycle Time + Source Cycle Time for most supply chains

67 67 Copyright © Supply Chain Council, All rights reserved Metrics Data 67 Each company will need to develop a tool or instructions where to source the data for the SCOR metrics There are two types of data: Recorded data; obtain from transactional systems such as ERP (Enterprise Resource Planning), WMS (Warehouse Management System), financial systems, etc. For example: compare time-stamps in these systems to calculate cycle times. Observed data; obtain through interviews, error logs, audits and/or time- studies. For example the observed percentage of orders requiring additional customer setup in a system, percentage of manual repackaging events on the shipping dock. There is no easy button

68 68 Copyright © Supply Chain Council, All rights reserved Scorecards and SCORcards Definitions Scorecard: A visual display of the most important information needed to achieve one or more objectives, consolidated and arranged in a single view Balanced Scorecard: A scorecard providing metrics related to four organizational strategies: financial, customer, internal process, and employee learning and growth SCORcard: A scorecard providing metrics related to five supply chain strategies: reliability, responsiveness, Agility, cost and assets Importance Communicate supply chain priorities Monitor all strategic areas, not just the top priority 68

69 69 Copyright © Supply Chain Council, All rights reserved SCORcard Metrics Selection SCORcard metric requirements: Measurable and quantifiable Avoid 'feel good' metrics like supplier satisfaction or customer satisfaction, unless they are an aggregation of well-defined detail metrics. Framework-based metrics simplify the selection process. Linkage to responsibility Avoid metrics that have no impact on performance reviews (supplier or employee), ensure the metric is linked to the (right) process owner at the right level. Ensure metric is well-defined Multiple interpretations of a metric may lead to 'work-arounds' and negation of the effort. SCOR metrics are pre-defined; limiting the discussion on metric definitions. 69

70 70 Copyright © Supply Chain Council, All rights reserved Metrics Selection Interpreting the definitions Customer facing metrics should be measured as close to the customer experience as possible. The moment of order submission instead of order entry Delivered performance instead of shipping performance Received quality instead of produced or shipped quality Measure what makes sense: Don’t have data; approximate the missing component until you will be able to obtain the data Tip: It is not about how you think it should be measured, ask your customer what is important to him/her And: Internal focused metrics also have a customer 70

71 71 Copyright © Supply Chain Council, All rights reserved Benchmarking Definitions Benchmarking: Comparing an organization’s performance, products, practices, and/or services with those of other organizations that operate in the same or comparable industry Parity: Being equal in performance; No real advantage over others Advantage: Being in a favorable position; In a stronger position than Superior: Being of high rank or quality; Leading Usage Establish Goals. Know where you are relative to others (competitors or peers), and express where you're going. Monitor Performance. Track relative progress you and others (your competitors or peers) make. 71

72 72 Copyright © Supply Chain Council, All rights reserved Benchmark Requirements 72 Compare like for like Using standard metrics A numerical comparison of the performance of two companies in the same industry may not have value when the metric is different. Measuring the same process/business model Avoid comparing the performance of a make-to-stock process to an engineer-to-order process. The purpose of these processes is different, measure them accordingly. Demographics Make sure you understand the other organizations in the benchmark. Regional differences, and differences in product, or services may influence results.

73 73 Copyright © Supply Chain Council, All rights reserved Best Practices 73 Definitions: Best practice: "A current, structured, proven and repeatable method for making a positive impact on desired operational results." Current: Must not be emerging and can not be antiquated Structured: Has clearly stated Goal, Scope, Process, and Procedure Proven: Success has been demonstrated in a working environment and can be linked to key metrics Repeatable: The practice has been proven in multiple environments. Importance Alternatives to the way you do business Equalize the competitive landscape

74 74 Copyright © Supply Chain Council, All rights reserved Types of Practices Best practices are Current, structured, proven and repeatable methods for making a positive impact on desired operational results. Leading practices are innovations adopted by single companies or industries which provide dramatically improved performance in a process, but because of proprietary restrictions, or novelty, are not widely known or adopted. Worst practices or Poor practices: Practices that are known to produce negative impacts on operational results. 74

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


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