Supply Chain Operations Reference- model (SCOR) Overview

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Supply Chain Operations Reference- model (SCOR)
Overview

• Scott Stephens
• Chief Technology Officer
• Supply-Chain Council, Inc.

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• The SCC is an independent, not-for-profit,
  global corporation with membership open to all
  companies and organizations interested in
  applying and advancing state-of-the-art supply
  chain management systems and practices.
• Over 750 Company Members
• Cross-industry representation
• Chapters in Australia/New Zealand, Brazil,
  Europe, Japan, North America, and South East Asia
  with petitions for additional chapters pending.
• The Supply-Chain Council (SCC) has developed and
  endorsed the Supply Chain Operations
  Reference-model (SCOR) as the cross-industry
  standard for supply chain management

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SCC Organization - Chapters and Staffing
SCC Global Headquarters Pittsburgh, Pennsylvania,
USA HP
Japan Chapter Tokyo, Japan NEC
Europe Oslo, Norway Modus Media
North America Chapter Effective 7/1/03
South East Asia Chapter Singapore Venture Inc.
Brazil Chapter Effective 9/1/03
Southern Africa Johannesburg, South Africa UTi
Australia/New Zealand Chapter Sydney,
Australia Owens Global Logistics
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SCC Leadership Teams
Europe Modus Media C Gist, Inc.
VC UPM-Kymmene Oyj BASF Diversey Lever AMR
Research Jonker Adies SAP INSEAD Rhodia Sonoco
Products
South East Asia Vemtura Corporation C Phillips
CFT VC Modus Media Deloitte Singapore Institute
of Mfg. Technology SCM Institute Autoscan
Technology Precision Valve Asia Pacific
Breweries I2 Technologies Perentis Sdn Bhd
Board of Directors HP C Disney
VC AMR DaimlerChrysler MOPAR Business Process
Training Center Europe PeopleSoft I2
Technologies Georgia Institute of
Technology IBM SCE Limited ICI Supply
Chain Alcatel Americas PRTM Intel
Australia/New Zealand Owens Global Logistics
C Caltex Aus Petroleum VC Lexian SAP EXE
Technologies RMIT University MI
Services BHP Queensland Railway KPMG Deloitte
Japan NEC C JBC Create VC Mitsui Global
Strategic Studies Olympus Optical EXA Chubu
Electric Power J.D. Edwards Nihon
Unisys Hitachi Hokkaido University Matsushita
Electric Industrial Yamaha
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Membership

• 750 SCC members,
• Composition
• 40 Practitioners
• 25 Enabling Technology Providers
• 20 Consultants
• 15 Universities, Associations, Government
  Organizations

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Current Technical Projects
SCOR Technical Development Steering Committee
C - Tom Phelps HP V Paul Schiller BP Amoco
Supply Chain Event Mgt.
Collaboration
Katie Kasper (DRK Associates)
Retail Operations - 1
Retail Operations - 2
Tim Meester (Best Buy)
Steve Miller (Disney)
Product Development
Returns
Caspar Hunsche (HP)
Lt Col Scott Koster (USMC)
Metrics
MRO Returns
Michael Memmel (R.Reed)
Joe Burak (Boeing)
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Supply Chain Operations Reference-model (SCOR)
Overview
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What is a process reference model?

• Process reference models integrate the well-known
  concepts of business process reengineering,
  benchmarking, and process measurement into a
  cross-functional framework

Best Practices Analysis
Process Reference Model
Business Process Reengineering
Benchmarking
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
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
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SCOR is structured around five distinct
management processes
Deliver
Make
Deliver
Make
Source
Source
Make
Deliver
Source
CustomersCustomer
Your Company
Supplier
Customer
SuppliersSupplier
Internal or External
Internal or External
SCOR Model
Building Block Approach Processes Metrics Be
st Practice Technology
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Supply-Chain Operations Reference-model (SCOR)
5.0 - Processes
Plan
P1 Plan Supply Chain
P4 Plan Deliver
P5 Plan Returns
P2 Plan Source
P3 Plan Make
Source
Make
Deliver
M1 Make-to-Stock
S1 Source Stocked Products
D1 Deliver Stocked Products
Suppliers
D2 Deliver MTO Products
M2 Make-to-Order
S2 Source MTO Products
Customers
M3 Engineer-to-Order
S3 Source ETO Products
D3 Deliver ETO Products
Return Deliver
Return Source
Enable
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SCOR Boundaries

• SCOR Spans
• All supplier / customer interactions
• Order entry through paid invoice
• All physical material transactions
• From your suppliers supplier to your 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
• Returns

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SCOR Boundaries (contd)

• SCOR does not include
• Sales administration processes
• Technology development processes
• Product and process design and development
  processes
• Some post-delivery technical support processes
• SCOR assumes but does not explicitly address
• Training
• Quality
• Information Technology (IT) administration
  (non-SCM)

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SCOR Project Roadmap

• Competitive Performance Requirements
• Performance Metrics
• Supply Chain Scorecard
• Scorecard Gap Analysis
• Project Plan

Analyze Basis of Competition
Operations Strategy
SCOR Level 1

• AS IS Geographic Map
• AS IS Thread Diagram
• Design Specifications
• TO BE Thread Diagram
• TO BE Geographic Map

Configure supply chain
Material Flow
SCOR Level 2
Align Performance Levels, Practices, and Systems

• AS IS Level 2, 3, and 4 Maps
• Disconnects
• Design Specifications
• TO BE Level 2, 3, and 4 Maps

Information and Work Flow
SCOR Level 3
Implement supply chain Processes and Systems
Develop, Test, and Roll Out

• Organization
• Technology
• Process
• People

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Mapping material flow
(S1, D1)(SR1,DR1,DR3)
(S1, S2, M1, D1)(SR1,,DR1)
(S1)(SR1,SR3)
(S1)(SR1,SR3)
(D2)(DR1)
(S1, D1)(SR1,DR1,DR3)
(S1, D1)(SR1, DR3)
(D1)
(D1)
(S1)(SR1,SR3)
(S1)(SR1,SR3)
(S1, D1)(SR1,DR1,DR3)
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Mapping the execution processes
Americas Distributors
S1
SR1
M2
S2
D2
European RM Supplier
SR3
S2
D1
S1
M1
D1
S1
DR1
SR1
DR1
SR1
DR1
SR1
DR3
SR3
DR3
SR3
S1
D1
S1
M1
Key Other RM Suppliers
Alpha Regional Warehouses
RM Suppliers
Distributors
ALPHA
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Identifying Plan Activities
P1
P1
P1
P3
P2
P4
P3
P2
P4
P4
P2
M2
D2
S2
European RM Supplier
D1
S2
D1
S1
M1
S1
S1
M1
Key Other RM Suppliers
D1
S1
Alpha Regional Warehouses
Consumer
RM Suppliers
Distributors
ALPHA
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Linking Supply Chain Performance Attributes and
Level 1 Metrics
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Level 1 Performance Metrics
Customer-Facing
Internal-Facing
SCOR Level 1supply chain Management
Supply Chain Reliability
Responsiveness
Flexibility
Assets
Cost
Delivery performance
? Fill rate

? Perfect order fulfillment

? Order fulfillment lead time

? Supply Chain Response Time
? Production flexibility ? Total SCM
management 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 ?
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Supply Chain Scorecard Gap Analysis
Supply Chain SCORcard
Performance Versus Competitive Population
Overview Metrics
SCOR Level 1 Metrics
Actual
Parity
Advantage
Superior
Value from Improvements
Delivery Performance to
85
90
95
50
Supply Chain Reliability
Commit Date
63
94
96
98
Fill Rates
80
85
90
Perfect Order Fulfillment
30M Revenue
0
EXTERNAL
Order Fulfillment Lead times
35 days
Responsiveness
30M Revenue
7 days
5 days
3 days
Key enabler to cost and asset improvements
Supply Chain Response Time
97 days
Flexibility
82 days
55 days
13 days
30 days
25 days
20 days
Production Flexibility
45 days
Total SCM Management
30M Indirect Cost
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Cost
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Cost
NA
NA
NA
NA
NA
Warranty Cost
INTERNAL
Value Added Employee
NA
156K
306K
460K
NA
Productivity
119 days
55 days
38 days
22 days
NA
Inventory Days of Supply
Cash-to-Cash Cycle Time
Assets
196 days
80 days
46 days
28 days
7 M Capital Charge
Net Asset Turns (Working
2.2 turns
8 turns
12 turns
19 turns
NA
Capital)
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Decomposing Metrics
Revenue Accounts Receivable Cash Flow
Perfect Order Fulfillment
Cycle Time
Schedule Achievement
Supplier on time delivery
Perfect Order Fulfillment
On Time
On Time
Delivery Performance
In Full
In Full
Docs
Docs
European RM Supplier
Damage
D2
M2
S2
Damage
Supplier on time delivery
Perfect Order Fulfillment
S2
Key Other RM Suppliers
D1
S1
M1
D1
S1
S1
D1
M1
S1
Alpha Regional Warehouses
Consumer
RM Suppliers
Consumer
ALPHA
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Performance Measurement
Revenue Accounts Receivable Cash Flow
Perfect Order Fulfillment
Perfect Order Fulfillment Goal 95
Cycle Time
Inventory
Metrics Conflict
Schedule Achievement
Supplier on time delivery
Perfect Order Fulfillment
Schedule Achievement Actual 95
Perfect Order Fulfillment Actual 90
Supplier on time delivery Actual 85
Perfect Order Fulfillment Actual - 85
On Time
On Time
Delivery Performance
In Full
Delivery Performance Actual 99
In Full
Docs
Docs

• Under-performance
• Process
• Systems

European RM Supplier
Damage
D2
M2
S2
Damage
Supplier on time delivery
Perfect Order Fulfillment
S2

• Under-performance
• Process
• Systems

Key Other RM Suppliers
D1
S1
M1
D1
S1
S1
D1
M1
S1
Alpha Regional Warehouses
Consumer
Consumer
RM Suppliers
RM Suppliers
Consumer
ALPHA
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Cascading Dependent Metrics to Level 2
Perfect Order Fulfillment Order Fulfillment Lead
Time Supply Chain Response Time Total SCM
Management Cost Cash-to-Cash Cycle
P1
Schedule Achievement Make Cycle Time Unit
Cost WIP Days of Supply
Faultless Invoices Order Management Cycle
Time Order Management Cost Finished Good
Inventory Days Sales Outstanding
P3
P2
Supplier On Time Delivery Source Cycle
Time Material Acquisition Cost RM Days of
Supply Days of Payables
P4
M?
S?
D?
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Implementation Issues

• SCOR Implementations
• Vary in scope and objective
• Green Field
• Distribution analysis
• Planning Improvements
• Change Management / COTS-Consultant Selection
• How to conduct an ROI evaluation
• Senior Management support vs. Middle Manager
  resistance
• Project timelines
• Benchmarking
• Implementation
• Tools

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ATT Wireless Fixed Wireless Operations
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Intel As-Is Modeled in Easy SCOR
Suppliers Supplier
Suppliers
Assemble/ Package
Distribution Centers
Geo Ports of Entry
Americas---gt
Europe---gt
Asia---gt
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Goldn Plump Supply Chain Planning
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F404 Engine HP Rotor Assy
NAS
F/A18
NADEP
DSC
NAVICP
CV
25 On-Time
Fairchild Fasteners
60 of Requirement Accepted, 90 of that
Completed on time
Serviceable Modules 188 of Requirement, Svc
Engines 112 of Requirement
77SMA
Self Locking Nut
S1
S1
D1
D2
Serviceable
M2
D2
S1
D1
S1
Rotor
Assy
S2
(carcass)
Svc
M2
D1
Unserviced Engine Module
164 Days
32 Days
Engine
98 days
S2
(carcass)
Unserviceable
Rotor Assy
SR2
DR2
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Carter Holt Harvey Focus on Best Practice /
Change Management
COTS / Consultant Evaluations
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USMC SRAC IT Gaps and Redundancies
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SCOR Projects A Wide Range of Adoption

• Consumer Foods
• Project Time (Start to Finish) 3 months
• Investment - 50,000 US
• 1st Year Return - 4,300,000 US
• Electronics
• Project Time (Start to Finish) 6 months
• Investment - 3-5 Million US
• Projected Return on Investment - 230 Million US
• Software and Planning
• SAP bases APO key performance indicators (KPIs)
  on SCOR Model
• Aerospace and Defense
• SCOR Benchmarking and use of SCOR metrics to
  specify performance criteria and provide basis
  for contracts / purchase orders

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www.supply-chain.org

• scott.stephens_at_supply-chain.org