SCOR, Lean, and Six Sigma Convergence

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SCOR, Lean, and Six Sigma Convergence

• Bob ParkerApril, 2007

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Agenda

• The Economics of Transformation
• The Role of Convergence
• Enabling Implementation with Technology

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Linking Strategy to Execution
Innovation
Growth
Productivity
Strategic Goals
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Putting it in Practice
All the rules require that activities,
connections, and flow paths have built-in tests
to signal problems that make this seemingly rigid
system so flexible and adaptable to changing
circumstances Harvard Business Review on Toyota
Production System, November/December 1999
There have been many changes. We wanted to focus
more on technology, and we simplified our
business processes. Decision making in our
supply chain, for example, got a lot faster.
That has added agility to our organization. And
our organization has become much more
open. Jong-Yong Yun CEO, Samsung Electronics
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Supply Chain Decision Making
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Agenda

• The Economics of Transformation
• The Role of Convergence
• Enabling Implementation with Technology

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Lean Sigma Companies Outperform the Market
Faster Revenue Growth
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Lean Sigma Companies Outperform the Market
Higher Margins
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Lean Sigma Companies Outperform the Market
Lower Inventories (Inventory/Revenue)
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What is Convergence?

• SCOR
• Top-Down Analysis
• End-to-End View
• Optimizing Supply Chain

Converge

• SIX SIGMA
• Variation Reduction
• Problem Solving Methodology
• Stability and Accuracy

• LEAN
• Speed
• Waste Elimination
• Value System Redesign

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SCOR

• Purpose to assist companies in applying and
  advancing state-of-the-art supply chain systems
  and practices
• Approach Utilize the SCOR model (metrics,
  standard processes and definitions, and best
  practices) applied in a top-down approach
• Principles
• Define supply chains and establish competitive
  priorities
• Measure supply chain performance
• Analyze material flow
• Analyze work information flow
• Scope From individual process (Plan, Source,
  Make, Deliver, Return) up to one or more supply
  chains. Can span from suppliers suppliers to
  customers customer.

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Lean

• Purpose The reduction/ elimination of
  non-value-added work in processes, operations,
  and activities
• Approach Utilize VSM (value-stream mapping) to
  identify and eliminate waste .
• Principles
• Data-driven approach
• Methodology-focused
• Involve ALL employees to maximize the results
• Scope From individual process up to facility or
  business level. Can span from suppliers to
  customer

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Six Sigma

• Purpose To eliminate variability and defects in
  products, services and processes
• Approach Apply the DMAIC roadmap to specific
  opportunities
• Principles
• Data-driven approach
• Methodology-focused
• Scope Pinpoint opportunities within or between
  departments. Usually 4-6 month project duration
  is targeted

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Integrated Improvement SCOR, Six Sigma and Lean
SCOR, Six Sigma and Lean all aim to improve the
business by optimizing system performance,
reducing variation, and eliminating wasteful
activities.

• Variation reduction
• Problem solving methodology
• Stability and accuracy

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Convergence Implementation Approach
Identify Opportunities
Plan Strategy Benchmark
Prioritize Opportunities
SCOR
Measure Improvement
Allocate Resources
Lean Six Sigma
Select Approach
Implement Solutions
Discover Root Causes
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Convergence is a Coordinated Approach
Convergence bridges the gap between strategic
enterprise planning, continuous improvement, and
transformation
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Supply Chain Decision Making
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Agenda

• The Economics of Transformation
• The Role of Convergence
• Enabling Implementation with Technology

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IT Matters in Lean
Productivity improvement requires a combination
of best practices and IT
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Management Practices
0
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Intensity of IT deployment
Source London School of Economics and McKinsey
study of 100 manufacturers (France, Germany, UK,
U.S.)
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Decision Architecture

• Semantic information instead of relational data
• Aggregated structured data combined with
  semi-structured, or unstructured information
• External rules instead of embedded rules
• Allow the business to dynamically construct a set
  of business rules to support changing business
  conditions
• Process instead of workflow management
• Event triggers
• Running state management
• Predictive analytics
• Portable vs. proprietary information interfaces
• More intuitive and component based
• Common industry standards of document exchange

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SOFA From Device to Decision
State Management Services Complete closed loop
control
Analysis
Action
Awareness
Intelligence Services Aggregates workflow info
for decision making
Workflow Services Transactional information
flow
Schedule
Quality
Product
Cost
Asset
Agent Services Connects data to workflow
Device Services Manages data acquisition
Device
Device
Device
Device
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IT Governance Model
Business Strategy
Demand
Capabilities Needed
Office of ProcessPerformance Improvement
Supply
Prioritized NewInvestment
IT Value Platforms
Lean Sigma Organization
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In Conclusion

• Take advantage of tremendous opportunities in
  Manufacturing by
• Aligning Business Requirements of
• Consistent processes
• Increased collaboration
• Faster decision making
• With IT Value Platforms through
• Investment in enterprise applications
• Creation of intelligent decision models
• Incubating new technology and driving the cost of
  mature assets
• And by organizing around process improvement
  governance

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Additional Questions ?
How to Contact Bob Parker- Email
bparker_at_manufacturing-insights.com Phone 1
508-988-7861