SCOR and SCC Overview - Supply Chain Council
SCOR and SCC Overview - Supply Chain Council
SCOR and SCC Overview - Supply Chain Council
Create successful ePaper yourself
Turn your PDF publications into a flip-book with our unique Google optimized e-Paper software.
<strong>SCOR</strong> <strong>and</strong> <strong>SCC</strong> <strong>Overview</strong><br />
SCW Europe 2010<br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 1 | November 2, 10
<strong>Supply</strong> <strong>Chain</strong><br />
It’s a<br />
SPEAR<br />
!<br />
It’s a<br />
FAN!<br />
It’s a<br />
SNAKE!<br />
It’s a<br />
TREE!<br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 2 | November 2, 10<br />
It’s a<br />
WALL!<br />
It’s a<br />
ROPE!
Defining <strong>Supply</strong> <strong>Chain</strong><br />
Supplier processes<br />
Product/Portfolio Management<br />
Product Design<br />
DCOR<br />
<strong>Supply</strong> <strong>Chain</strong><br />
<strong>SCOR</strong> ®<br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 3 | November 2, 10<br />
Sales & Support<br />
CCOR<br />
Customer processes
<strong>SCOR</strong>: A Process Framework<br />
• Process frameworks deliver the well-known concepts of business process<br />
reengineering, benchmarking, <strong>and</strong> best practices into a cross-functional<br />
framework<br />
› St<strong>and</strong>ard processes:<br />
Plan, Source, Make, Deliver, Return, Enable<br />
› St<strong>and</strong>ard metrics:<br />
Perfect Delivery, Cash Cycle Time, <strong>Supply</strong>-<strong>Chain</strong> Cost, etc<br />
› St<strong>and</strong>ard practices<br />
EDI, CPFR, Cross-Training, etc<br />
• Pre-defined relationships between processes, metrics <strong>and</strong> practices<br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 4 | November 2, 10
End-to-End<br />
<strong>SCOR</strong> contains five key management process categories<br />
of activity which seamless link suppliers, enterprise<br />
supply-chains, <strong>and</strong> customers<br />
Deliver<br />
Suppliers’<br />
Supplier<br />
Source<br />
Make<br />
Supplier<br />
Deliver<br />
Return Return Return<br />
Plan<br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 5 | November 2, 10<br />
Source Make Deliver Source Make Deliver<br />
Return Return<br />
Your Company<br />
Customer<br />
Internal or External Internal or External<br />
<strong>SCOR</strong> Model<br />
Return<br />
Source<br />
Return Return<br />
Customer’s<br />
Customer
Performance Metrics<br />
Customer<br />
Internal<br />
<strong>SCOR</strong> metrics: St<strong>and</strong>ard Level 1 Metrics<br />
Attribute Metric (level 1)<br />
Reliability Perfect Order Fulfillment<br />
Responsiveness Order Fulfillment Cycle Time<br />
Agility (Flexibility) <strong>Supply</strong> <strong>Chain</strong> Flexibility<br />
<strong>Supply</strong> <strong>Chain</strong> Adaptability †<br />
Cost <strong>Supply</strong> <strong>Chain</strong> Management Cost<br />
Cost of Goods Sold<br />
Assets Cash-to-Cash Cycle Time<br />
† upside <strong>and</strong> downside adaptability metrics<br />
Return on <strong>Supply</strong> <strong>Chain</strong> Fixed Assets<br />
Return on Working Capital<br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 6 | November 2, 10
Best Practices<br />
Best practice: "A current, structured, proven <strong>and</strong> repeatable method for making<br />
a positive impact on desired operational results."<br />
› Current<br />
Must not be emerging <strong>and</strong> can not be antiquated<br />
› Structured<br />
Has clearly stated Goal, Scope, Process, <strong>and</strong> Procedure<br />
› Proven<br />
Success has been demonstrated in a working environment <strong>and</strong> can<br />
be linked to key metrics<br />
› Repeatable<br />
The practice has been proven in multiple environments.<br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 7 | November 2, 10
<strong>Supply</strong> <strong>Chain</strong> Assets – Human Capital<br />
• <strong>Supply</strong> <strong>Chain</strong> Skills<br />
› Skill: Capacity to deliver pre-determined results with minimal<br />
input of time <strong>and</strong> energy<br />
› Experience: The knowledge or skill acquired by observation or<br />
active participation<br />
› Aptitude: A natural, acquired, learned or developed ability to<br />
perform a certain kind of work at a certain level.<br />
› Training: A particular skill or type of behavior learned through<br />
instruction over a period of time<br />
› Competency: The state or quality of being qualified, having the<br />
ability, to perform a specific role.<br />
• Skills Assessment<br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 8 | November 2, 10
<strong>SCOR</strong> Hierarchy<br />
Level 1 Level 2 Level 3 Level 4 Level 5<br />
Scope Configuration Activity Workflow Transactions<br />
<strong>Supply</strong>-<strong>Chain</strong><br />
Source<br />
Differentiates<br />
Business<br />
Differentiates<br />
Complexity<br />
Defines Scope Differentiates<br />
Capabilities<br />
Framework<br />
Language<br />
S1<br />
Source<br />
Stocked Product<br />
Framework<br />
Language<br />
S1.2<br />
Receive Product<br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 9 | November 2, 10<br />
Names Tasks Sequences Steps Links<br />
Transactions<br />
Links, Metrics,<br />
Tasks <strong>and</strong><br />
Practices<br />
Framework<br />
Language<br />
Job Details Details of<br />
Automation<br />
Industry or<br />
Company<br />
Specific<br />
Language<br />
EDI<br />
XML<br />
Technology<br />
Specific<br />
Language<br />
St<strong>and</strong>ard <strong>SCOR</strong> definitions Company/Industry definitions
Maps to Organizations<br />
Level 1 Level 2 Level 3 Level 4 Level 5<br />
Scope Configuration Activity Workflow Transactions<br />
<strong>Supply</strong>-<strong>Chain</strong><br />
Source<br />
CxO<br />
EvP, SVP<br />
Strategic<br />
Decision-Making<br />
Enterprise<br />
<strong>Supply</strong>-<strong>Chain</strong><br />
Requirements<br />
SVP<br />
VP<br />
S1<br />
Source<br />
Stocked Product<br />
Line of Business<br />
Management<br />
Operations<br />
Strategy<br />
S1.2<br />
Receive Product<br />
VP, Director<br />
Line Manager<br />
Activities<br />
Management<br />
Fine-Tuning<br />
Operations<br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 10 | November 2, 10<br />
Manager<br />
Team Lead<br />
Team Lead<br />
Individuals<br />
Job Management Transaction<br />
Management<br />
Adjusting<br />
Process<br />
Performance<br />
EDI<br />
XML<br />
Tuning<br />
Technology<br />
Performance<br />
St<strong>and</strong>ard <strong>SCOR</strong> program Company/Industry implementation
The <strong>SCOR</strong> Project Roadmap<br />
Phase Name Deliverable Resolves<br />
Initial BUILD • Organizational Support Who is the sponsor?<br />
I DISCOVER<br />
II ANALYZE<br />
III MATERIAL<br />
IV WORK<br />
V IMPLEMENT<br />
• <strong>Supply</strong>-<strong>Chain</strong> Definition<br />
• <strong>Supply</strong>-<strong>Chain</strong> Priorities<br />
• Project Charter<br />
• Scorecard<br />
• Benchmark<br />
• Competitive Requirements<br />
• Geo Map<br />
• Thread Diagram<br />
• Disconnect Analysis<br />
• Transactions<br />
• Level 3, Level 4 Processes<br />
• Best Practices Analysis<br />
• Opportunity Analysis<br />
• Project Definition<br />
• Deployment Organization<br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 11 | November 2, 10<br />
What will the program<br />
cover?<br />
What are the strategic<br />
requirements of your<br />
supply-chain?<br />
Initial Analysis – where<br />
are the problems?<br />
Final Analysis – where<br />
are the solutions?<br />
How to deploy?
The 16-Week <strong>SCOR</strong> Program<br />
Level 1<br />
Level 2<br />
Level 3<br />
Level 4<br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 12 | November 2, 10<br />
<strong>and</strong> deploy
SUPPLY CHAIN ARCHITECTURE<br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 13 | November 2, 10
Business Strategy<br />
• A product or Service for each Market or Segment<br />
Cost<br />
Quality<br />
Performance<br />
Innovation<br />
Product 1 Product 2<br />
Product 3 Product 4<br />
Style<br />
Br<strong>and</strong><br />
Market �<br />
Product �<br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 14 | November 2, 10<br />
A B C D<br />
1 ✔<br />
2 ✔ ✔<br />
3 ✔ ✔<br />
4 ✔ ✔
<strong>Supply</strong> <strong>Chain</strong> Strategy<br />
• <strong>Supply</strong> <strong>Chain</strong> Competitive Attributes<br />
Customer<br />
Internal<br />
Attribute Strategy<br />
Reliability (RL) Consistently getting the orders right,<br />
product meets quality requirements<br />
Responsiveness (RS) The consistent speed of providing products/<br />
services to customers<br />
Agility (AG) The ability to respond to changes in the<br />
market (external influences)<br />
Cost (CO) The cost associated with managing <strong>and</strong><br />
operating the supply chain<br />
Assets (AM) The effectiveness in managing the supply<br />
chain’s assets in support of fulfillment<br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 15 | November 2, 10
<strong>Supply</strong> <strong>Chain</strong> Strategy<br />
• <strong>Supply</strong> <strong>Chain</strong> Competitive Attributes<br />
Customer<br />
Internal<br />
Attribute Required Performance<br />
Reliability (RL)<br />
Responsiveness (RS)<br />
Agility (AG)<br />
Cost (CO)<br />
Assets (AM)<br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 16 | November 2, 10<br />
S<br />
A<br />
A<br />
P<br />
P
<strong>Supply</strong> <strong>Chain</strong> Performance <strong>and</strong> Governance<br />
Metric My P A S Gap<br />
RL Perfect Order Fulfillment 82 74 81 88 6<br />
RS Order Fulfillment Cycle Time 6 10 6 3 --<br />
AG Flexibility 46 60 45 29 1<br />
CO SC Management Cost 5.1 9.5 6.7 3.9 --<br />
AM Cash-to-Cash Cycle Time 83 98 64 30 --<br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 17 | November 2, 10
<strong>Supply</strong> <strong>Chain</strong> Performance <strong>and</strong> Diagnosis<br />
• Diagnostic metric relationships enable root causing<br />
Metric Level<br />
Perfect Order Fulfillment 1<br />
L > On-time 2<br />
L > In-Full 2<br />
L > Correct Items 3<br />
L > Correct Quantities 3<br />
L > Perfect Documentation 2<br />
L > Initial Quality 2<br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 18 | November 2, 10
<strong>Supply</strong> <strong>Chain</strong> Configuration <strong>and</strong> Capabilities<br />
• High Level Material Flows <strong>and</strong> Practices<br />
• VMI<br />
• Kanban<br />
• Make-to-Order<br />
• S&OP<br />
• CPFR<br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 19 | November 2, 10
<strong>Supply</strong> <strong>Chain</strong> Processes<br />
• Work <strong>and</strong> Information Flows<br />
mp3 Factory mp3 HQ Retail, inc.<br />
S1.1<br />
Schedule Prod.<br />
Deliveries<br />
Customer P.O. Delivery Commit<br />
D2.2<br />
Receive, Enter,<br />
Validate Order<br />
C.O. = Customer Order, Inv. = Inventory,<br />
P.O. = Purchase Order, Prod. = Product<br />
C.O.<br />
D2.3<br />
Reserve Inv.<br />
Calculate Date<br />
C.O.<br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 20 | November 2, 10<br />
SOURCE<br />
S1<br />
Source Stocked<br />
Product<br />
S1.1:<br />
Schedule Product<br />
Deliveries<br />
S1.2:<br />
Receive Product<br />
S1.3:<br />
Verify Product<br />
S1.4:<br />
Transfer Product<br />
S1.5:<br />
Authorize Supplier<br />
Payment<br />
S2<br />
Source<br />
Make-to-Order<br />
Product<br />
S2.1:<br />
Schedule Product<br />
Deliveries<br />
S2.2:<br />
Receive Product<br />
S2.3:<br />
Verify Product<br />
S2.4:<br />
Transfer Product<br />
S2.5:<br />
Authorize Supplier<br />
Payment<br />
Enable Source<br />
ES.1: ES.2: ES.3:<br />
Manage Assess Supplier Maintain<br />
Sourcing<br />
Business Rules<br />
Performance Source Data<br />
ES.6:<br />
Manage<br />
Incoming<br />
Product<br />
ES.7:<br />
Manage<br />
Supplier<br />
Network<br />
S3<br />
Source<br />
Engineer-to-Order<br />
Product<br />
S3.1:<br />
Identify Sources of <strong>Supply</strong><br />
S3.2:<br />
Select Final Supplier(s)<br />
<strong>and</strong> Negotiate<br />
S3.3:<br />
Schedule Product<br />
Deliveries<br />
S3.4:<br />
Receive Product<br />
S3.5:<br />
Verify Product<br />
S3.6:<br />
Transfer Product<br />
S3.7:<br />
Authorize Supplier<br />
Payment<br />
ES.4:<br />
Manage<br />
Product<br />
Inventory<br />
ES.8: ES.9:<br />
Manage Manage<br />
Import/Export <strong>Supply</strong> <strong>Chain</strong><br />
Requirements Source Risk<br />
Inter-Company P.O.<br />
ES.5:<br />
Manage<br />
Capital Assets<br />
ES.10:<br />
Manage<br />
Supplier<br />
Agreements<br />
MAKE<br />
M1<br />
Make-to-Stock<br />
M1.1:<br />
Schedule Production<br />
Activities<br />
M1.2:<br />
Issue Product<br />
M1.3:<br />
Produce <strong>and</strong> Test<br />
M1.4:<br />
Package<br />
M1.5:<br />
Stage Product<br />
M1.6:<br />
Release Product<br />
to Deliver<br />
M1.7:<br />
Waste Disposal<br />
S2.1<br />
Schedule Prod.<br />
Deliveries<br />
D1.2<br />
Receive, Enter,<br />
Validate Order<br />
M2<br />
Make-to-Order<br />
M2.1:<br />
Schedule Production<br />
Activities<br />
M2.2:<br />
Issue Product<br />
M2.3:<br />
Produce <strong>and</strong> Test<br />
M2.4:<br />
Package<br />
Enable Make<br />
EM.1:<br />
Manage<br />
Production<br />
Rules<br />
EM.2:<br />
Manage<br />
Production<br />
Performance<br />
EM.6: EM.7:<br />
Manage Manage<br />
Transportation Production<br />
Network<br />
M2.5:<br />
Stage Product<br />
M2.6:<br />
Release Finished<br />
Product to Deliver<br />
M2.7:<br />
Waste Disposal<br />
EM.3:<br />
Manage Make<br />
Information<br />
EM.8:<br />
Manage<br />
Production<br />
Regulatory<br />
Compliance<br />
M3<br />
Engineer-to-Order<br />
M3.1:<br />
Finalize Engineering<br />
M3.2:<br />
Schedule Production<br />
Activities<br />
M3.3:<br />
Issue Product<br />
M3.4:<br />
Produce & Test<br />
M3.5:<br />
Package<br />
M3.6:<br />
Stage Product<br />
M3.7:<br />
Release Product<br />
to Deliver<br />
M3.8:<br />
Waste Disposal<br />
EM.4:<br />
Manage<br />
In-Process<br />
Products (WIP)<br />
EM.9:<br />
Manage<br />
<strong>Supply</strong> <strong>Chain</strong><br />
Make Risk<br />
EM.5:<br />
Manage<br />
Equipment <strong>and</strong><br />
Facilities<br />
DELIVER<br />
D1<br />
Deliver<br />
Stocked<br />
Product<br />
D1.1:<br />
Process Inquiry &<br />
Quote<br />
D1.2:<br />
Receive, Enter &<br />
Validate Order<br />
D1.3:<br />
Reserve Inventory &<br />
Determine Delivery<br />
Date<br />
D1.4:<br />
Consolidate Orders<br />
D1.5:<br />
Build Loads<br />
D1.6:<br />
Route Shipments<br />
D1.7:<br />
Select Carriers &<br />
Rate Shipments<br />
D1.8:<br />
Receive Product from<br />
Source or Make<br />
D1.9:<br />
Pick Product<br />
D1.10:<br />
Pack Product<br />
D1.11:<br />
Load Product<br />
& Generate<br />
Shipping Docs<br />
D1.12:<br />
Ship Product<br />
D1.13:<br />
Receive & Verify<br />
Product by Customer<br />
D1.14:<br />
Install Product<br />
D1.15:<br />
Invoice<br />
D2<br />
Deliver<br />
Make-to-<br />
Order<br />
D2.1:<br />
Process Inquiry &<br />
Quote<br />
D2.2:<br />
Receive, Configure,<br />
Enter & Validate<br />
Order<br />
D2.3:<br />
Reserve Resources &<br />
Determine Delivery<br />
Date<br />
D2.4:<br />
Consolidate Orders<br />
D2.5:<br />
Build Loads<br />
D2.6:<br />
Route Shipments<br />
D2.7:<br />
Select Carriers &<br />
Rate Shipments<br />
D2.8:<br />
Receive Product<br />
from Source or Make<br />
D2.9:<br />
Pick Product<br />
D2.10:<br />
Pack Product<br />
D2.11:<br />
Load Product &<br />
Generate Shipping<br />
Docs<br />
D2.12:<br />
Ship Product<br />
D2.13:<br />
Receive & Verify<br />
Product by Customer<br />
D2.14:<br />
Install Product<br />
D2.15:<br />
Invoice<br />
Enable Deliver<br />
ED.1: ED.2:<br />
Manage Assess Delivery<br />
Deliver<br />
Business Rules<br />
Performance<br />
ED.6: ED.7:<br />
Manage Manage<br />
Transportation Product Life<br />
Cycle<br />
ED.3:<br />
Manage<br />
Deliver<br />
Information<br />
D3<br />
Deliver<br />
Engineer-to-<br />
Order<br />
Product<br />
D3.1:<br />
Obtain & Respond to<br />
RFP/RFQ<br />
D3.2:<br />
Negotiate & Receive<br />
Contract<br />
D3.3:<br />
Enter Order, Commit<br />
Resources & Launch<br />
Program<br />
D3.4:<br />
Schedule Installation<br />
D3.5:<br />
Build Loads<br />
D3.6:<br />
Route Shipments<br />
D3.7:<br />
Select Carriers &<br />
Rate Shipments<br />
D3.8:<br />
Receive Product<br />
from Source or Make<br />
D3.9:<br />
Pick Product<br />
D3.10:<br />
Pack Product<br />
D3.11:<br />
Load Product &<br />
Generate Shipping<br />
Docs<br />
D3.12:<br />
Ship Product<br />
D3.13:<br />
Receive & Verify<br />
Product by Customer<br />
D3.14:<br />
Install Product<br />
D3.15:<br />
Invoice<br />
ED.4:<br />
Manage<br />
Finished<br />
Product<br />
Inventories<br />
ED.8: ED.9:<br />
Manage Manage<br />
Import/Export <strong>Supply</strong> <strong>Chain</strong><br />
Requirements Deliver Risk<br />
D4<br />
Deliver<br />
Retail<br />
Product<br />
D4.1:<br />
Generate Stocking<br />
Schedule<br />
D4.2:<br />
Receive Product at<br />
the Store<br />
D4.3:<br />
Pick Product from<br />
Backroom<br />
D4.4:<br />
Stock Shelf<br />
D4.5:<br />
Fill Shopping<br />
Cart<br />
D4.6:<br />
Checkout<br />
D4.7:<br />
Deliver <strong>and</strong>/or<br />
install<br />
ED.5:<br />
Manage<br />
Deliver Capital<br />
Assets<br />
D1.3<br />
Reserve Inv.<br />
Calculate Date
<strong>Supply</strong> <strong>Chain</strong> Architecture <strong>Overview</strong><br />
<strong>Supply</strong> <strong>Chain</strong><br />
Strategy<br />
<strong>Supply</strong> <strong>Chain</strong><br />
Performance<br />
Business Strategy<br />
<strong>Supply</strong> <strong>Chain</strong><br />
Configuration<br />
<strong>Supply</strong> <strong>Chain</strong><br />
Processes<br />
St<strong>and</strong>ard for <strong>Supply</strong> <strong>Chain</strong>: <strong>SCOR</strong> ®<br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 21 | November 2, 10<br />
<strong>Supply</strong> <strong>Chain</strong><br />
Assets<br />
<strong>Supply</strong> <strong>Chain</strong><br />
Skills
<strong>SCOR</strong><br />
CASE IN POINT<br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 22 | November 2, 10
ADVA Optical Networking<br />
• The Challenge<br />
• €370.2M Revenue Enterprise1<br />
• Rapid growth in dem<strong>and</strong> for storage, voice &<br />
data transport<br />
• Focus on capturing this growth while<br />
maintaining profitability<br />
• Needed to identify inventory drivers <strong>and</strong><br />
optimize inventory levels to enable ADVA to<br />
reach inventory reduction targets whilst<br />
improving customer satisfaction in Order<br />
Fulfillment Cycle Time (OFCT) <strong>and</strong> On-time<br />
Delivery (OTD)<br />
• Created a transformation plan that would<br />
allow ADVA to proactively plan, drive <strong>and</strong><br />
manage the inventory levels <strong>and</strong> better<br />
achieve the balance of cost <strong>and</strong> service<br />
1 Hoovers.com<br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 23 | November 2, 10<br />
• The Solution<br />
• Using <strong>SCOR</strong>, ADVA identified performance<br />
gaps in key metrics between current <strong>and</strong><br />
required to reach parity status<br />
• Also using <strong>SCOR</strong>, identified process<br />
disconnects, drivers of inventory <strong>and</strong><br />
projects required for improvement<br />
• Grouped <strong>and</strong> prioritized proposed projects<br />
based on potential impact <strong>and</strong> amount of<br />
effort/risk<br />
• Agreed to project list including:<br />
› New S&OP Process<br />
› Supplier scorecards <strong>and</strong> quarterly<br />
business reviews with suppliers,<br />
› Information transparency <strong>and</strong> others<br />
• Benefits Achieved<br />
• Gross inventory reduced from €59 million to<br />
€38 million in 10 months<br />
• Inventory days of supply reduced 47% from<br />
initial scorecard
Core Value 1<br />
• Improvement of operating results of an average of 3% in<br />
the initial <strong>SCOR</strong> implementation phase by means of cost<br />
reduction <strong>and</strong> improvement in customer services<br />
• Increase in profitability (between 2x <strong>and</strong> 6x) with regards<br />
to project investments costs within first 12 months of<br />
implementation<br />
• Reduction in IT costs through minimizing system<br />
customization <strong>and</strong> making better use of st<strong>and</strong>ard<br />
functionality<br />
• Continuous actualization of process change portfolio by<br />
continuous conversion of <strong>Supply</strong> <strong>Chain</strong> improvements<br />
with the objective of increasing annual profits by 1% to<br />
3%<br />
1 Poluha (2007) Application of the <strong>SCOR</strong> Model in <strong>Supply</strong> <strong>Chain</strong> Management New York, USA<br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 24 | November 2, 10
Douglas Pharmaceuticals Limited<br />
• The Challenge<br />
• Significant growth from 2003 to 2007<br />
› 300% increase in new product development<br />
› 122% growth in production volume<br />
› 61% growth in employees<br />
• Created the “perfect storm” of supply chain<br />
issues<br />
• Converted to new ERP in August 2006<br />
• “Burning Platform”:<br />
› Customer DIFOT (Export) Down to 20%<br />
› Product Lead Times Up to 8 months<br />
› New Product Introduction Lead Times Up to 9<br />
months<br />
› Stock Turns Down to 2.1x<br />
› YTD Sales Down 30%<br />
• Available Spare Capacity Unknown<br />
• Customer complaints impact new licensing<br />
opportunities <strong>and</strong> future earnings growth<br />
• Impact on 2007/8 earnings <strong>and</strong> shareholder<br />
value:<br />
› EBIT (15.9%)<br />
› Enterprise Value ($25.2M)<br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 25 | November 2, 10<br />
• The Solution<br />
• “Turning point” for organization – DIY not<br />
always best<br />
• Board m<strong>and</strong>ated review at its April 2007<br />
meeting<br />
• Process established to evaluate options<br />
• SCE program initiated using <strong>SCOR</strong><br />
• 17 week SCE program between May <strong>and</strong><br />
September 2007
Douglas Pharmaceuticals Limited – continued<br />
• The Solution<br />
• Benchmarking <strong>and</strong> Defect Analysis:<br />
› Established emphasis on reliability <strong>and</strong><br />
supply chain cost<br />
› Confirmed size <strong>and</strong> relative importance<br />
of current performance gaps<br />
› Provided early direction on root causes<br />
› Generated basis for calculating<br />
opportunity cost<br />
› Created immediate visibility over<br />
supply chain performance<br />
› Built confidence to move onto Phase<br />
Two<br />
• 24 problem areas impacting reliability<br />
<strong>and</strong> COG<br />
• Portfolio of 50 improvements<br />
addressed key problem areas<br />
• “Drive <strong>Chain</strong>” now forms basis of an<br />
enterprise wide transformation<br />
program<br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 26 | November 2, 10<br />
• Benefits Achieved<br />
Metric Improvement<br />
Sales per<br />
employee<br />
20%<br />
COGS % 10%<br />
Inventory days<br />
of supply<br />
Cash to cash<br />
cycle (days)<br />
Shareholder<br />
returns<br />
20%<br />
15%<br />
$4.1 million<br />
IRR 300%<br />
EV Uplift= $12.1m
Typical Potential Improvements 1<br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 27 | November 2, 10<br />
Area Improvement<br />
Raw materials purchase cost 25%<br />
Cost of Distribution 35%<br />
Total resource deployed 50%<br />
Manufacturing space 50%<br />
Investment in Tooling 50%<br />
Order cycle time 60%<br />
New product development cycle 60%<br />
Inventory 70%<br />
Paperwork <strong>and</strong> Documentation 80%<br />
Quality Defects 100%<br />
1 Hughes & Michels (1998) Transform your supply chain. Releasing value in business. London, UK
SAAB AB<br />
• Challenge<br />
• US$3.1B Aerospace Technology<br />
Enterprise1<br />
• Three strategic business segments:<br />
aeronautics, defense <strong>and</strong> security<br />
solutions, systems <strong>and</strong> products<br />
• Challenged to execute profitable <strong>and</strong><br />
customer adapted logistics intensive<br />
businesses<br />
› The degree of coordination of<br />
logistics operations highly impact<br />
Saabs cost level for logistics<br />
› Coordination enables CEL<br />
processes to ensure delivery to<br />
customers dem<strong>and</strong>s<br />
• Needed to build competitive<br />
operations, planning, logistics, <strong>and</strong><br />
support<br />
• To do so, wanted to move to a full<br />
1 lifecycle-based Hoovers.com<br />
support concept<br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 28 | November 2, 10<br />
• The Saab Common Solution<br />
• One backbone system (today based<br />
on ERP <strong>and</strong>/or Best of Breed)<br />
• Cross-functional collaboration <strong>and</strong><br />
common trust<br />
• Increased Interoperability<br />
• Align SCM Strategy with Corporate<br />
Strategy<br />
• Key Enablers<br />
› Common <strong>Supply</strong> <strong>Chain</strong> Frameworks<br />
<strong>and</strong> Roadmaps<br />
› St<strong>and</strong>ardization<br />
› Codification<br />
› Information Systems
SAAB Coordinated Effective Logistics (CEL)<br />
• Solution<br />
• Step by step approach - no “big bang”<br />
• Multiple supply chains <strong>and</strong> methods<br />
• Lack of structured methods <strong>and</strong> processes<br />
• Knowledge tied to individuals<br />
• Lack of information sharing<br />
• Use of the <strong>SCOR</strong> model<br />
› Common definitions <strong>and</strong> process mapping<br />
› Sustainable <strong>and</strong> structured methodology<br />
being used as framework for realization of<br />
all logistics <strong>and</strong> SCM activities within<br />
Project CEL throughout all of its phases;<br />
from cradle to the grave<br />
• Project management<br />
• Change management<br />
• Engineering technique<br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 29 | November 2, 10<br />
• Benefits Achieved<br />
• Creating a Saab Common Logistics <strong>and</strong><br />
<strong>Supply</strong> <strong>Chain</strong> Management Framework<br />
› Delivering incremental capabilities<br />
› Using <strong>SCOR</strong> Methodology, Processes <strong>and</strong><br />
Metrics hierarchy<br />
• Initial business cases have identified<br />
savings of 73 FTEs <strong>and</strong> a total of US$15M
Raytheon IDS<br />
• The Challenge<br />
• US$4.7B subdivision of US$23.1B Defense<br />
Services Provider1<br />
• Rapid growth but antiquated processes <strong>and</strong><br />
procurement focus in supply chain left IDS<br />
facing non-competitive operating costs<br />
• No skills within existing team to background <strong>and</strong><br />
skills for transformational change required<br />
1 Hoovers.com<br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 30 | November 2, 10<br />
• The Solution<br />
• <strong>SCOR</strong>/Six-Sigma program assessing all supply<br />
chain processes within IDS, with focus all<br />
<strong>SCOR</strong> process areas<br />
• 8550 people within Raytheon IDS, <strong>and</strong> 7600<br />
supplier partners went through transformation<br />
for accomplishing five key challenges:<br />
› Improving world-class performance<br />
› Connecting every employee to the business<br />
› Creating purposeful, collaborative partnerships<br />
› Accelerating top-line, double-digit growth<br />
› Achieving predictable, best-in-class bottom-line<br />
performance<br />
• Benefits Achieved<br />
• 37 Percent reduction in headcount but increase<br />
of college-educated population to 66%<br />
• 75% reduction in transactional processing for<br />
material acquisition<br />
• 25% improvement in SC Cost-to-Sales<br />
• $57M in bottom-line savings<br />
• 98% supplier conformance to contract
Comparative Data 1<br />
Improvement Area Range<br />
Delivery performance 16% - 28%<br />
Inventory Cost Reduction 25% - 60%<br />
Reduction in order fulfillment cycle time 30% - 50%<br />
Improvement to forecast accuracy 25% - 80%<br />
Increase in overall productivity 10% - 16%<br />
Lower supply chain costs 25% - 50%<br />
Improvement of fill rates 20% - 30%<br />
Improved capacity realization 10% - 20%<br />
1 Stephens (2000) 1997 Comparative Study Pittsburg, USA<br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 31 | November 2, 10
SASOL <strong>Supply</strong> <strong>Chain</strong> Optimization<br />
• The Challenge<br />
• US$16B annual South African Petrochemical<br />
Concern 1<br />
• Embarked on <strong>Supply</strong> <strong>Chain</strong> Optimization to<br />
identify synergies <strong>and</strong> improvement<br />
opportunities across multiple business units<br />
• Complex changing political environment <strong>and</strong><br />
introduction of substantial Managerial class<br />
without deep experience<br />
1 Hoovers.com<br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 32 | November 2, 10<br />
• The Solution<br />
• The SASOL <strong>Supply</strong> <strong>Chain</strong> Optimization Journey<br />
• Awareness – identified <strong>SCOR</strong> as a tool (2004)<br />
• Embarked on <strong>SCOR</strong> pilot project – tackling<br />
problem area to show benefits <strong>and</strong> underst<strong>and</strong><br />
process<br />
• First in-house project (to build internal success)<br />
• Approval for permanent Center of Excellence<br />
(CoE) competency<br />
• Prioritization of supply chain projects (project<br />
dem<strong>and</strong> exceeds supply)<br />
• Project 2, 3, 4…..X<br />
• Embraced “The <strong>SCOR</strong> Way” (2007)<br />
• Benefits Achieved<br />
• Ongoing CoE for supply chain optimization<br />
• Sample project generated IRR of 139% over the<br />
project lifetime<br />
• Estimated US$1B cost improvements over 3<br />
year period
Even More Companies <br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 33 | November 2, 10<br />
$200M Cost Improvements Single<br />
Division<br />
US$2.3B Savings supported with<br />
Merger<br />
$5B Working Capital<br />
$66M Revenue/Inventory<br />
€2M Improvements Single Division<br />
(Peroxides)
SUPPLY CHAIN COUNCIL<br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 34 | November 2, 10
<strong>SCC</strong>: An independent, non-profit global association<br />
• Formed in 1996 to create <strong>and</strong> evolve a st<strong>and</strong>ard industry process<br />
reference model of the supply chain for the benefit of helping companies<br />
rapidly <strong>and</strong> dramatically improve supply chain operations<br />
• <strong>SCC</strong> has established the supply chain world’s most widely accepted<br />
framework – the <strong>SCOR</strong>® process reference model – for evaluating <strong>and</strong><br />
comparing supply chain activities <strong>and</strong> their performance<br />
› It can be used to describe supply chains that are very simple or very<br />
complex using a common set of definitions <strong>and</strong> enabling a common<br />
underst<strong>and</strong>ing<br />
› It lets companies quickly determine <strong>and</strong> compare the performance of<br />
supply chain <strong>and</strong> related operations within their company or against<br />
other companies<br />
• <strong>SCC</strong> continually advances its tools <strong>and</strong> educates members about how<br />
companies are capitalizing on those tools<br />
› With membership open to all interested organizations<br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 35 | November 2, 10
Global Scope With Over 800 Member Organizations<br />
North<br />
America<br />
Member Distribution<br />
China<br />
Also developing chapters in<br />
India <strong>and</strong> the Middle East<br />
Australia/<br />
New<br />
Zeal<strong>and</strong><br />
Europe<br />
South Africa<br />
Latin America<br />
Southeast<br />
Asia<br />
Japan<br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 36 | November 2, 10<br />
Government<br />
SME<br />
End User<br />
Enabling Technology<br />
Consultant<br />
Non-Profit/Academic<br />
Member Affiliation<br />
0% 10% 20% 30% 40% 50%
Industry Membership Scope<br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 37 | November 2, 10
SCM Asset Returns: Superior Valuation<br />
• Comparison of Fortune‐1000 <strong>Council</strong> member company share <br />
price aggregate growth from 2003 – present to S&P 500 <strong>and</strong> <br />
DOW indices. <br />
• Growth inflected aLer 2 years, <strong>and</strong> the spread between <strong>SCOR</strong> <br />
index companies <strong>and</strong> other industrials has grown to almost 30 <br />
points. <br />
• Growth is increasing exponenPally: Compound interest on SC <br />
performance. <br />
• Correlates <strong>SCC</strong> Membership/<strong>SCOR</strong> investments with <br />
Shareholder value. <br />
• Same paSern evident in FTSE‐100, DAX, NIKKEI <strong>and</strong> other <br />
indices. <br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 38 | November 2, 10
<strong>SCC</strong> membership accelerates a company’s use of –<strong>and</strong><br />
benefits from – <strong>SCOR</strong> <strong>and</strong> related models<br />
Reference models,<br />
benchmarking, tools<br />
research <strong>and</strong> help from<br />
<strong>SCOR</strong> experts<br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 39 | November 2, 10<br />
Training, certification,<br />
career development <strong>and</strong><br />
volunteer opportunities<br />
Chapters, events <strong>and</strong><br />
forums to share <strong>SCOR</strong> <strong>and</strong><br />
supply chain knowledge<br />
<strong>and</strong> experience
Member benefits – Unlimited Employee Access to<br />
Resources<br />
<strong>SCOR</strong> A supply chain process reference model<br />
containing over 200 process elements, 550<br />
metrics, 500 best practices, <strong>and</strong> 200 skills<br />
classifications including risk <strong>and</strong> environmental<br />
management <br />
Related<br />
Frameworks<br />
Additional process reference models such as<br />
CCOR (customer chain) <strong>and</strong> DCOR (design<br />
chain)<br />
<strong>SCOR</strong>mark Benchmarking of supply chain performance against industry peers<br />
Research Ongoing research on supply chain processes, practices, metrics<br />
<strong>and</strong> skills both globally <strong>and</strong> by industry <strong>and</strong> geographic region<br />
Tools Templates, website, software <strong>and</strong> methods developed <strong>and</strong><br />
contributed by volunteer <strong>SCC</strong> working groups as well academics<br />
<strong>and</strong> third party providers<br />
Publications Case studies, articles, conference proceedings <strong>and</strong> newsletters<br />
Expert<br />
Network<br />
Access to staff, trainers <strong>and</strong> advisors to coach individuals <strong>and</strong><br />
teams in use of <strong>SCOR</strong><br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 40 | November 2, 10
Member benefits – Individual Capability Development<br />
Training Public <strong>and</strong> in-house training courses on<br />
the <strong>SCOR</strong> framework, its implementation,<br />
CCOR <strong>and</strong> DCOR models <strong>and</strong> more<br />
Certification Individual Employee <strong>SCOR</strong> Professional<br />
certification on underst<strong>and</strong>ing of, <strong>and</strong><br />
ability to use, the <strong>SCOR</strong> model as well as<br />
<strong>SCOR</strong> Academic certification for those<br />
entering the workforce from school<br />
Volunteering Participation on numerous committees <strong>and</strong><br />
working groups to develop new models,<br />
tools <strong>and</strong> practices in supply chain<br />
management<br />
Career<br />
Development<br />
Skills identification, career path<br />
identification, online job postings of<br />
positions requiring <strong>SCOR</strong> knowledge, <strong>and</strong><br />
in-person member networking<br />
opportunities<br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 41 | November 2, 10
Member benefits – Knowledge Networks<br />
Chapters Chapter meetings, networks <strong>and</strong> materials<br />
in local languages discussing supply chain<br />
issues of greatest regional interest<br />
Events Frequent webinars (over 80 archived for<br />
members) <strong>and</strong> annual regional conferences<br />
such as <strong>Supply</strong>-<strong>Chain</strong> World<br />
Forums Virtual <strong>and</strong> in-person discussion forums for<br />
networking <strong>and</strong> problem-solving among<br />
communities of common interest (such as<br />
industry special interest groups)<br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 42 | November 2, 10
For More Information<br />
W: WWW.SUPPLY-CHAIN.ORG<br />
E: INFO@SUPPLY-CHAIN.ORG<br />
T: +1 202 962 0440<br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> <strong>Council</strong>. ALL RIGHTS RESERVED. | SCW Europe <strong>SCOR</strong> & <strong>SCC</strong> <strong>Overview</strong> | 43 | November 2, 10