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This presentation is the exclusive property of the Supply Chain Council. Copyright Supply Chain Council. 2006. All rights reserved. The marks SCOR, CCOR, DCOR and SCOR Roadmap are the exclusive property of the Supply Chain Council.
Speaker Introduction
Caspar Hunsche Supply chain operational background: logistics, supply/demand planning, management reporting and central back-office. Wide experience in high tech, chemical, transportation, government, manufacturing, automotive and retail HP/Compaq supply chain merger planning using SCOR SCOR practitioner since version 4.0 Original author of the Design Chain and Customer Chain reference models
Bank Robber Slick Willie Sutton When asked why he robbed banks, Sutton simply replied "Because that's where the money is."
Copyright Supply Chain Council. 2006. All rights reserved.
1 Exclusive of Financial Services companies 2 Source: Hoovers 2006 Financial Data, Supply-Chain Council 2006 SCM Benchmark data on SCM cost for discrete & process industries
What is a Supply-Chain
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
SCOR Curriculum
Learn
Basis Training Executive Track Advanced Track SCOR Framework Executive SCOR Framework
Pilot
SCOR Implementation Executive SCOR Implementation SCOR Adviser
Deploy
SCOR Team Executive SCOR Team Advanced SCOR Modeling Advanced SCOR Analysis Advanced SCOR Workshop Rapid SCOR
Mature
SCOR and SixSigma/Lean Executive SCOR Business Benefit SCOR for PBL SCOR for IT SCOR for HR SCOR for Industries SCOR for Services SCOR Financials
Renew
DCOR Executive SCOR Business Trends SCOR for Risk Management SCOR Practices Benchmarking SCOR for M&A SCOR for ISO9000 SCOR for SOX404 SCOR for Management
Key Requirements
SCOR University Curriculum SCOR Level 0 Exam SCOR Framework SCOR Implementation SCOR Level 1 Exam SCOR/P SCOR Project Case Study SCOR Project Peer Review SCOR Level 2 Exam
By Mand at e f r om t h e Boar d of Dir e ct or s By Mand athe f rconfter e ed u pon Dir e ct or s as om h r Boar d of h as conf er r ed u pon
2 years SCOR Experience SCOR Practicum Instruction Workshop SCOR Level 3 Exam Positive Training Evaluations SCOR Subject Master (SSM in)
*reserved for University Students in SCM Studies
Copyright Supply Chain Council. 2006. All rights reserved. Copyright Supply Chain Council. 2006. All rights reserved.
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Benchmarking
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Design Chain
The central role of the Design Chain processes
Product/Portfolio Management
Customer processes
Supplier processes
Customer Chain
The central role of the Customer Chain processes
Product/Portfolio Management
Customer processes
Supplier processes
Department 1
Department 2
Department 3
Supply Chain Council - Executive Overview
Department 1
Department 2
Department 3
Department 1
Department 2
Department 3
Customers
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Department 1
Department 2
Department 3
Customers
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A Spectrum of Approaches
Process Engineering
BPR Lean Six-Sigma MRP BPM ITIL SCOR Baldridge EIS BPA Metrics, Practices
Copyright Supply Chain Council. 2006. All rights reserved.
Class-A EA Workflow
TQM
Benchmarking BSC
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Pre-defined relationships between processes, metrics and practices and inputs and outputs
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SCOR Processes
Plan
Plan
Deliver Return Source Return Make Deliver Return
Source Return
Make
Deliver Return
Plan
Source Return Make Deliver Return Source Return
Suppliers Supplier
Supplier
Internal or External
Your Company
Customer
Internal or External
Customers Customer
SCOR reference model Whether from Cow to Cone or from Rock to Ring SCOR is not limited by organizational boundaries
Copyright Supply Chain Council, 2008. All rights reserved
24
SCOR Hierarchy
Level 1
Scope
Supply-Chain Supply-Chain Source Source
Level 2
Configuration
S1 S1 Source Source Stocked Product Stocked Product
Level 3
Activity
S1.2 S1.2 Receive Product Receive Product
Level 4
Workflow
Level 5
Transactions
EDI EDI XML XML
Sequences Steps Links Transactions Job Details Details of Automation Technology Specific Language
Framework Language
Company/Industry definitions
Supply Chain Council - Executive Overview
Supply-Chain
Source Source
Make Make
Deliver Deliver
Return Return
Return Return
Information flow
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Schedule Product Deliveries Receive Product Verify Product Transfer Product Authorize Supplier Payment
Schedule Product Deliveries Receive Product Verify Product Transfer Product Authorize Supplier Payment
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S2.2
Receive Product
S2.3
Verify Product
S2.4
Transfer Product
S2.5
Authorize Supplier Payment
S2.1
Schedule Product Deliveries
S2.5
Authorize Supplier Payment
S2.2
Receive Product
S2.3
Verify Product
S2.4
Transfer Product
S2.1
Schedule Product Deliveries
S2.2
Receive Product
S2.4
Transfer Product
S2.5
Authorize Supplier Payment
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S1.1
Schedule Prod. Deliveries
Customer P.O.
Delivery Commit
mp3 HQ (Cupertino)
D2.2
Receive, Enter, Validate Order
C.O.
D2.3
Reserve Inv. Calculate Date
C.O.
S2.1
Schedule Prod. Deliveries
Inter-Company P.O.
D1.2
Receive, Enter, Validate Order
D1.3
Reserve Inv. Calculate Date
C.O. = Customer Order, Inv. = Inventory, P.O. = Purchase Order, Prod. = Product
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Maps to Organizations
Level 1
Scope
Supply-Chain Supply-Chain Source Source
Level 2
Configuration
S1 S1 Source Source Stocked Product Stocked Product
Level 3
Activity
S1.2 S1.2 Receive Product Receive Product
Level 4
Workflow
Level 5
Transactions
EDI EDI XML XML
Company/Industry implementation
Supply Chain Council - Executive Overview
Metrics
SCOR metrics: Standard Level 1 Metrics
Attribute
Metric (level 1)
Perfect Order Fulfillment Order Fulfillment Cycle Time Supply Chain Flexibility Supply Chain Adaptability
Customer
Cost
Internal
Assets
Cash-to-Cash Cycle Time Return on Supply Chain Fixed Assets Return on Working Capital
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Notes:
An order is perfect only if all L2/L3 metrics are perfect; An order must be: AND on-time AND in-full AND right condition
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Best Practices
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.
DISCOVER
What will the program cover? What are the strategic requirements of your supplychain? Initial Analysis where are the problems? Final Analysis where are the solutions?
II
ANALYZE
III
MATERIAL
IV
WORK
IMPLEMENT
How to deploy?
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Focus: Scorecard: Appropriate Level Metrics Benchmark: Select and Use Industry Source Requirements: Prioritization and Ratification Approach: Initial Data and Transaction Capture Financial Validation Early Defect analysis of performance gaps Deliverables: Defined Metrics for program focus Stage gate: Supply-Chain Selected and Metrics Described
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Example: ComfyCo
Continuing Information on our Example Company, what are the distinct supply-chains
Supply Chain Priority Matrix When assigning rank; the highest number should correspond to the highest rank. The supply chain with the highest overall rating takes the biggest priority. Your Company Supply Chains taken from the Definition Matrix
Result
0.6
Result
0.4
Result
0.4
Result
0.4
Result
0.4
2.2 2 1.8
0.4
0.2
0.6
0.6
0.2
0.2
0.6
0.2
0.2
0.6
1=low 3=high
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Supply-Chain Performance
We use a tool called the Supply Chain SCORcard to Identify performance characteristics of supplychains. Each SCORcard is built from a subset of hundreds of SCOR metrics. For supply-chain benchmarking we generally use only Level1, 2 and 3 metrics The SCOR Manual provides all necessary definitions
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Metrics Selection
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A SCORcard Example
Attribute Reliability Responsiveness Metric (level 1)
Perfect Order Fulfillment Order Fulfillment Cycle Time
Req Gap
The ComfyCo Commercial Supply-Chain has been prioritized by sponsor for improvement. Weve created a benchmark Weve looked at parity gaps to understand where there may be problems, and to hypothesize what could be root causes
Copyright Supply Chain Council. 2006. All rights reserved.
Parity 92%
Req Gap
minus 8 days
80 days 10.8% 45 days
8 days
We now link strategy, performance, and benchmark to identify performance required of strategy
Median of Statistical Sample Midpoint of Parity and Superior 90th percentile of population
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Benchmarking
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Varieties of Transformation
DISCOVER
II
ANALYZE
III
MATERIAL
IV
WORK
IMPLEMENT
How to deploy?
Key Documents/Templates
Setup Supply Chain Definition Matrix Priority Matrix Scorecard Competitive Requirements Disconnects Geographic Map Thread Diagram Brainstorm Event Fishbone Diagram Pareto Analysis Process Worksheet Process Diagrams Practices Assessment Transaction Analysis RACI Level 4 Processes Opportunity Grid Opportunity Analysis Program Definition
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P 4
P 1 P 2 P 3
P 2
S 2 D 1 D 1 S 1
M 1
D 1 S 1 D 1
S 1
Battery Supplier
Drive Supplier
mp3 Inc HQ
Retail, Inc
Suppliers
mp3 Incorporated
Customers
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Inte rviewees: Accountable Input(s ) - Highlight Primary Input SCOR Element Output(s) - Highlight Prima ry Output
Step 1 2 3 4 5 6 7 8
Description
R esponsible
Event Time
B usiness Rule s
Disconnect Description
Initials
Relative Weight
The yellow sections driven by a Transaction Data Collection effort utilizing order status events and time stamps
Column Column Column Column 1 4 6 8 Order Status Event Order rework Order volume through the status Difference of time stamps
The white sections are based on the Staple Yourself to an Order Interviews
Observation
Time Series
Customer Interview
Stratified Data
Chi-square
Simulation
TPM
Value Stream
RACI
Frequency Plots
5 Whys
CVSM
Degrees of Freedom
Pugh Matrix
5S
Value-Add (VA)
Control Charts
Six-
Scatter Plot
Complexity Analysis
Design of Experiment
FMEA
Box Plots
NVA
ImR Chart
Gross Disconnect
Hypothesis Test
PCE Destruction
Lead Time
Flowchart
Time Value
p-Chart
Gage R&R
5 Whys
T-test
BIC Benchmark
Lean
Quick Fix
Phase-Gate
Affinity Diagrams
Inferential Statistics
Stratification
Capability Analysis
Fishbone
Multiple Regression
Cost Estimatio n
Discrimination
Capacity Constraint
BNVA
,r charts ,S charts
5S
What-if
NVA Cost
KPOV
Normal Distribution
Risk
Takt T ime
Bias
CVSM
Correlation
Industry Benchmark
Central Limits
MistakeProofing
Brainstorm
Descriptive Statistics
Measurement Selection
Pareto
Process Balancing
Regression
Stability
Time Trap
Scorecard Baseline Direct Ship Automated ATP 3x Factory Schedule 3x daily pickup Customer EDI Statistical FCST NET Projects Total
95.0% 0.5%
62 (days) 2.0
22 (days) 3 1 3 1
0.2%
-1.0 0.5
0.7% 95.7%
8.75 5.25
1.3 63.3
0.02% 10.12%
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Result
+ + + + +
Skills
Resources
Change
vision
X +
Skills
Resources
Vision
Skills
Vision
Skills
Vision
Skills
Vision
Skills
Deployment Timeline
L+30
Aging Rpt Aging Rpt Direct Ship Direct Ship
L+60
L+90
DC1
Auto-Receiving Auto-Receiving
RFID
Stat FCST
11d 8d 7d 6d
0.1%
0.2%
0.25%
0.3%
Companies with SCOR process management Are over 780% more profitable on average than peers1. Exhibit greater share growth than leading market indicators2.
1 Supply-chain Council 2003 profit and revenue analysis. 2 Process Core Group Research 2006 SCOR company share performance
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An Open Standard
SCOR, DCOR, CCOR, MCOR are Open Standards
The terms "open" and "standard" have a wide range of meanings associated with their usage. The term "open" is usually restricted to royalty-free technologies while the term "standard" is sometimes restricted to technologies approved by formalized committees that are open to participation by all interested parties and operate on a consensus basis.
Anyone can use and be trained on them with no fee for use Any company can use and implement them with no fee for use Any software organization can use the data for process libraries with no fee for use Any practitioner company, academic organization, consulting organization, software enabling can participate in development
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More Value1
Improvement of operating results of an average of 3% in the initial SCOR implementation phase by means of cost reduction and improvement in customer services Increase in profitability (between 2x and 6x) with regards to project investments costs within first 12 months of implementation Reduction in IT costs through minimizing system customization and making better use of standard functionality Continuous actualization of process change portfolio by continuous conversion of Supply Chain improvements with the objective of increasing annual profits by 1% to 3%
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Poluha (2007) Application of the SCOR Model in Supply Chain Management New York, USA
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Improvement 25% 35% 50% 50% 50% 60% 60% 70% 80% 100%
Hughes & Michels (1998) Transform your supply chain. Releasing value in business. London, UK
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Comparative Data1
Improvement Area Range Delivery performance 16% - 28% Inventory Cost Reduction 25% - 60% Reduction in order fulfillment 30% - 50% cycle time Improvement to forecast 25% - 80% accuracy Increase in overall productivity 10% - 16% Lower supply chain costs 25% - 50% Improvement of fill rates 20% - 30% Improved capacity realization 10% - 20%
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Maturity Results1
Performance Category Cost Schedule Productivity Quality Low 4.50% 20% 11% 29% Median 38% 50% 50% 50% 14% 3:1 High 87% 90% 376% 94% 55% 13:1
1CMU
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Case Studies
Royal Australian Air Force United Space Alliance BASF United Defense Molex US Navy
Further Information
www.supply-chain.org info@supply-chain.org